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Alabama (US-AL)

Market Type: Deregulated (Retail Choice)
SSS Relevance: ⭐⭐⭐ High
Grid Carbon Intensity: ~326 gCO₂/kWh

SSS Factors: significant nuclear capacity, hydroelectric resources, no mandatory RPS, regulated market structure

1. Overview​

Alabama's electricity market is characterized by a regulated monopoly structure dominated by Alabama Power (a subsidiary of Southern Company), which serves the southern two-thirds of the state. Unlike deregulated markets, consumers cannot choose their providers. The Alabama Public Service Commission (PSC) regulates rates using a "formula rate" system that adjusts bills annually based on projected profits; notably, the state has not held a traditional rate case since 1982 1. Retail rates have been frozen through 2027 2.

The state is a top-10 U.S. electricity producer with a generation mix heavily reliant on nuclear power and natural gas. As of 2024, the fuel mix consists of approximately 44% nuclear, 45% natural gas, and 17% coal 3. Alabama ranks among the higher carbon intensity grids in the U.S., with a recent intensity of approximately 359 gCO2eq/kWh (September 2024–August 2025) 4. While total electric power CO2 emissions decreased by 7.8% between 2022 and 2023, the electric power sector still accounts for 43.1% of the state's total CO2 emissions 3.

Renewable energy adoption remains relatively low compared to the national average, accounting for approximately 9% to 11% of total utility-based generation as of 2024. The renewable portfolio is concentrated in hydropower (70% of renewables) and biomass (2% of total generation), with solar contributing less than 1% of total electricity 5. However, "clean energy" figures reported by utilities often exceed 30% by including nuclear power 5.

Despite per-kilowatt-hour rates near the national average (approx. 12.25¢–15.44¢/kWh), Alabama residents face some of the highest monthly bills in the country ($173–$178 average) due to high consumption levels driven by a hot climate and prevalent electric heating 2. Critics argue that high bills are exacerbated by allowed profit margins (13%–14.5% ROE) that are significantly higher than the industry average of ~9.5% 6.

2. Market Structure​

Alabama operates under a regulated, vertically integrated electricity market without retail choice or an Independent System Operator (ISO) 78.

Utility Providers​

The market is divided into three primary ownership structures:

  • Investor-Owned Utilities (IOU): Alabama Power Company (a subsidiary of Southern Company) is the state's sole investor-owned utility, serving approximately 57% of electricity customers 9.
  • Municipal Utilities: There are 26 municipally owned electric systems. The Alabama Municipal Electric Authority (rebranded as Energy Southeast) acts as a wholesale power provider for 11 member cities, while Electric Cities of Alabama represents roughly one million customers across 36 cities 9.
  • Electric Cooperatives: The state has 24 not-for-profit, member-owned cooperatives, primarily serving rural areas, represented by the Alabama Rural Electric Association 9.

Regulation and Rates​

  • Regulatory Oversight: The Alabama Public Service Commission (PSC) regulates investor-owned utilities. The PSC is currently an elected body, though proposals exist to change it to an appointed body 109.
  • Rate Structure: Unlike many states that utilize public rate cases, Alabama employs a formula-based rate structure. This adjusts bills annually based on projected profits rather than litigation-based rate hearings 11.
  • Recent Legislation: A 2024 law (Act No. 2024-21) prohibits local governments from restricting appliance usage based on energy source (e.g., gas vs. electric) 10.

Wholesale Market and Grid Management​

Alabama does not participate in a Regional Transmission Organization (RTO) or ISO. Instead, the grid is managed primarily by individual utilities like Southern Company, and wholesale power is traded through bilateral transactions rather than bid-based organized markets 712. Alabama remains outside the footprints of neighboring RTOs like MISO or SPP 13.

Legislative Activity (2026)​

Lawmakers are considering the Alabama Energy Rate Reform Act, which would cap Alabama Power's profits at the national average (approximately 9.7%) and mandate traditional public rate cases 10.

3. Clean Energy Policy​

Alabama does not have a mandatory Renewable Portfolio Standard (RPS) or a voluntary state-wide renewable energy target 14. As of 2026, the state remains without legislative requirements for utilities to generate electricity from renewable sources 15. Instead, the state's energy policy emphasizes "energy dominance" and economic development, focusing on a mix of traditional and alternative energy sources 16.

State Legislation and Regulations Recent legislative actions have focused on infrastructure and regulatory limits rather than clean energy mandates:

  • Senate Bill 71 (2026): Signed by Governor Kay Ivey in February 2026, this law prohibits state agencies from adopting environmental standards stricter than federal regulations and restricts the scientific research used for state regulations 16.
  • Powering Growth Plan (2025): Signed in May 2025, this legislation established the Alabama Energy Infrastructure Bank (AEIB) to secure energy infrastructure and mitigate supply chain issues 16.
  • Green Fleets Policy: State law requires state-owned vehicle fleets to meet specific annual increases in fuel economy to reduce petroleum dependency 16.

Utility and Corporate Goals While the state lacks mandates, the primary driver for decarbonization targets comes from the utility sector. Southern Company, the parent of Alabama Power, has committed to a goal of net-zero carbon emissions by 2050 17. Alabama Power plans to have approximately 670 MW of solar online by 2030 and is constructing a 150 MW battery storage system at the retired Plant Gorgas site, expected to operate by 2027 18.

Market Mechanisms and Regulatory Environment

  • Renewable Energy Mix: Approximately 8% of Alabama's net electricity generation comes from hydroelectric power, the state's largest renewable source, followed by biomass, with solar and wind representing smaller portions 15.
  • Net Metering and Fees: Alabama does not have a statewide net metering policy. While Alabama Power reversed a solar "integration cost" in early 2025, advocacy groups continue to challenge fees they view as punitive to private solar investment 19.
  • SREC Market: Due to the absence of an RPS with a solar carve-out, Alabama does not have a dedicated in-state Solar Renewable Energy Certificate (SREC) market 15.

Local and Regional Initiatives The state recently ranked second to last in the U.S. for energy efficiency efforts, though building codes for commercial and residential energy savings are in place 20. At the local level, the Central Alabama Climate Action Plan provides a voluntary framework for the Birmingham metro area to reduce emissions by 2050 18.

4. Utility Landscape​

Alabama’s electric utility landscape is dominated by a single major investor-owned utility (IOU), alongside significant presence from federal agencies, electric cooperatives, and municipal systems.

Investor-Owned Utilities (IOU)

  • Alabama Power Company: A subsidiary of the Southern Company, Alabama Power is the only major electric IOU in the state. It serves approximately 57% of the state's electricity customers and roughly 1.5 million customers across the southern two-thirds of the state 21. It is regulated by the Alabama Public Service Commission 9.

Federal and Public Power

  • Tennessee Valley Authority (TVA): This federal agency provides power directly to some areas and acts as a wholesaler to local distributors in North Alabama. It operates the Browns Ferry Nuclear Plant, the second-largest nuclear plant in the U.S. 22.
  • Electric Cooperatives: There are 23 rural electric cooperatives in Alabama, represented by the Alabama Rural Electric Association (AREA). These non-profit, member-owned organizations serve approximately one-fourth of the state's population. Notable cooperatives include Joe Wheeler EMC and Baldwin EMC 23.
  • Municipal Utilities: There are 36 municipal electric systems in the state, represented by Electric Cities of Alabama (ECA). The largest municipal utility is Huntsville Utilities, serving over 180,000 customers. The Alabama Municipal Electric Authority (AMEA) provides wholesale power to 11 of these member cities 24.

Generation and Wholesale Alabama ranks 7th nationally for net generation 25. Major generation hubs include the James H. Miller Jr. Plant (coal) and Plant Barry (natural gas and coal), both operated by Alabama Power, as well as the TVA's Browns Ferry Nuclear Plant 26. Additionally, PowerSouth Energy Cooperative serves as a generation and transmission (G&T) provider for 16 electric cooperatives and four municipal systems 9.

5. SSS-Eligible Resources​

ResourceTypeCapacity (MW)SSS EligibleNotes
Farley NuclearNuclear1,800✅ YesOperating nuclear

6. EAC/REC Registry Infrastructure​

Alabama does not operate a state-specific Renewable Energy Certificate (REC) registry due to the absence of a Renewable Portfolio Standard (RPS) with a solar carve-out or similar mandate 27. Instead, the state relies on regional and national tracking systems to issue, transfer, and retire Energy Attribute Certificates (EACs).

The primary tracking system used for generators in Alabama is the North American Renewables Registry (NAR), managed by APX. This platform serves as the default registry for states outside the footprint of specific regional systems, allowing generators to "mint" certificates for every megawatt-hour (MWh) of renewable energy produced 28.

Additionally, the Midwest Renewable Energy Tracking System (M-RETS) is utilized for specific projects, particularly those involving the Southeastern Power Administration (SEPA) or projects selling into markets that recognize M-RETS certificates 27. In limited cases, projects may utilize the PJM Generation Attribute Tracking System (PJM-GATS) if the energy is delivered into the PJM grid footprint, or the North American Renewables Registry (NAR) for broader voluntary market coverage 27.

For end-users, the primary interaction with RECs occurs through utility programs rather than direct registry access. Alabama Power's "Clean Energy Select" program allows customers to purchase RECs sourced from in-state solar farms (e.g., Fort Rucker and Anniston Army Depot) and out-of-state wind farms 27. Green-e® Energy provides third-party certification for many of these state RECs to ensure they meet strict environmental standards and are not double-counted 27.

The tracking lifecycle involves:

  • Issuance: Creation of a unique electronic certificate upon generation of 1 MWh.
  • Identification: Assignment of a serial number detailing facility location, technology type, and vintage.
  • Retirement: The permanent cancellation of the certificate to prevent double-counting and finalize the environmental claim 29.

7. Grid Emissions​

Grid Carbon Intensity: 326 gCO₂eq/kWh (annual average)

Generation Mix​

Scope 2 Reporting​

  • SB 253 requires Scope 2 reporting for companies >$1B revenue

Source: EPA eGRID, EIA, state regulatory filings

References​

Sources & Last Updated​

Research Date: 2026-03-09
Data Sources: EIA, EPA eGRID, state regulatory filings, SerpAPI research aggregation

This page was generated using automated research and may contain inaccuracies. Verify critical data with primary sources.

Footnotes​

  1. Nicholas Institute for Energy, Environment & Sustainability ↩

  2. Find Energy ↩ ↩2

  3. U.S. Energy Information Administration (EIA) (.gov) ↩ ↩2

  4. Low-Carbon Power ↩

  5. Alabama Reflector ↩ ↩2

  6. Energy Alabama ↩

  7. Energy Star (.gov) ↩ ↩2

  8. MOST Policy Initiative ↩

  9. Southeast Energy Efficiency Alliance ↩ ↩2 ↩3 ↩4 ↩5 ↩6

  10. Alabama Retail Association ↩ ↩2 ↩3

  11. Energy Toolbase ↩

  12. Federal Energy Regulatory Commission (.gov) ↩

  13. The George Washington University ↩

  14. DSIRE ↩

  15. Maine.gov ↩ ↩2 ↩3

  16. Alabama Governor's Office (.gov) ↩ ↩2 ↩3 ↩4

  17. Alabama Power ↩

  18. alabama.gov ↩ ↩2

  19. Southern Environmental Law Center ↩

  20. Inside Climate News ↩

  21. Southeast Energy Efficiency Alliance, Southeast Energy Efficiency Alliance ↩

  22. Southeast Energy Efficiency Alliance, GridInfo ↩

  23. Alabama Rural Electric Association of Cooperatives, Southeast Energy Efficiency Alliance ↩

  24. Electric Cities of Alabama, Southeast Energy Efficiency Association +5, Electric Cities of Alabama ↩

  25. GridInfo ↩

  26. Power Technology +2, GridInfo ↩

  27. SRECTrade ↩ ↩2 ↩3 ↩4 ↩5

  28. U.S. Environmental Protection Agency (.gov), resource-solutions.org ↩

  29. U.S. Environmental Protection Agency (.gov) ↩