As energy prices soar and load growth requires additional grid capacity, states need to unlock large-scale electricity investments that protect ratepayers from a growing affordability crisis. It’s critical that policymakers and advocates understand the policy tools at their disposal to keep transmission and clean energy investments affordable. One key tool is enabling and incentivizing alternative finance mechanisms, such as public funding models, to reduce total project costs as well as the costs passed on to ratepayers.
We invited a panel of experts to dive into recent state-level policy wins related to innovative financing mechanisms for investments in clean energy and the grid, highlighting California’s SB 254 and Alabama’s SB 304. Our expert panel included Sam Uden, Managing Director at Net-Zero California, and Daniel Tait, Executive Director for Energy Alabama.
Powering Growth in Alabama: SB 304
Learn more by watching the webinar at 04:50
Daniel Tait from Energy Alabama provided an overview of Alabama’s Powering Growth Act (SB 304), enacted in May 2025, and how it bolsters energy affordability while advancing Alabama’s clean energy future.
- The Powering Growth Act addresses rising energy demand by providing financing and support to electric providers through the creation of an Energy Infrastructure Bank and a Strategic Energy Infrastructure Development Fund. It also allows the State Industrial Development Authority to make loans, provide financial assistance, and procure long-lead time energy infrastructure components for eligible projects. In the bill:
- Funding is generation source agnostic
- 40 percent of funding is reserved for rural areas
- No single electric provider can receive the majority of the funding
- Administering authority must provide annual performance reporting to the state
- Working with public power was essential for passing this bill, as these financing mechanisms may be seen as a threat to investor capital for investor-owned utilities.
- Next steps include attempting to raise the bonding limit and expand eligible projects to include all energy infrastructure needed to bolster the grid, not just those that support economic development.
Financing Transmission in California: SB 254 and AB 1207
Learn more by watching the webinar at 18:34
Sam Uden from Net-Zero California provided an overview of California’s legislative success in utilizing alternative financing mechanisms to allow for faster, lower-cost transmission infrastructure through SB 254 and AB 1207.
- SB 254 established the Transmission Infrastructure Accelerator, which functions as a task force of existing state agencies to identify high-priority transmission lines and facilitate public financing to streamline deployment and lower project costs. Of note, the bill:
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- Centralizes decision-making without creating an entirely new agency
- Prioritizes public ownership, but does not require it
- AB 1207, a reauthorization of California’s cap-and-invest program, allocates part of auction proceeds to a revolving fund for this Accelerator.
- There were three key ingredients to this legislative success:
- The bills directly addressed energy affordability, a key topic in the 2025 legislative session, by keeping transmission costs down.
- Advocates presented a credible analytical foundation that showed how public financing could generate significant ratepayer savings.
- Advocates crafted a clear message of achieving ratepayer savings while building the same infrastructure, and countered opposition from investor-owned utilities by partnering with ratepayer advocates, large energy users, and environmental nonprofits.
- Next steps include staffing up the Accelerator, coordinating complex implementation preparation, and securing more funding from ongoing budget discussions.
Q&A
Learn more by watching the Q&A at 34:50
Q: How do IOUs act as a barrier to passing this kind of legislation? What are other forms of opposition, and how do you move past these barriers?
Q: How can these financing mechanisms be structured to protect low income households or prioritize affordability for energy-burdened consumers?
Q: What are the lessons learned on different messaging tactics? What strategies work to garner support from important partners to move messaging along?
Q: What is the role of alternative financing in advancing the deployment of renewable energy technology?
Q: Looking forward to the implementation of these financing mechanisms, what are the potential barriers and your next steps?
