Bills moving to lessen state incentives for data centers, require them to pay for energy increases

The Alabama Legislature is nearing final passage on bills that would reduce tax abatements for large data centers locating in the state. The Senate and House have unanimously passed companion bills to lessen the sales and use tax abatements on data centers from 30 years to 20 years. Lawmakers say they welcome data centers, but argue the facilities consume a large amount of water and energy and should be treated differently than other industries the state targets with incentives. The bills would also require data centers with 100 MW or more peak demand to pay for any increases in electricity costs rather than passing them on to nearby customers. While some lawmakers pushed to maintain the 30-year abatements, the bills ultimately passed with amendments to protect existing incentive agreements and encourage data centers to locate in former industrial sites. The legislation does not impact the state's two largest economic incentives, the Jobs Credit and Investment Credit, which can still be offered to data centers.