The foundations for Indre Ålvik as an industrial district were laid in 1905, when Bjølvefossen A/S was incorporated to exploit the Bjølvo waterfalls for hydroelectric energy. In 1907, the village still had only 74 inhabitants, as little activity took place until Bjølvefossen A/S was sold to Elektrokemisk A/S in 1913. After this, construction of the Bjølvefossen hydroelectric plant commenced. The construction was however stalled due to concession disputes, as it was claimed that the work on the plant had begun before Norwegian escheat laws had been put in force in 1907.
The disputes were solved in 1916 and both the plant and factories were completed by 1919, producing calcium carbide for a brief time. The village's population briefly rose by 500 workers, but most left shortly thereafter, as financial problems and an accident destroying the pipelines that supplied water from the hydroelectric reservoir brought production to a halt. This forced Bjølvefossen A/S to default on large loans.[10] Large-scale production was only resumed in 1928, when, after the pledgees had established contact with C. Tennant's Sons & Co., Bjølvefossen A/S was given major sales contracts for ferrosilicon to the British steel industry, in an effort to open a price war with the European ferrosilicon syndicate.[11] Production was briefly hit by the Great depression, but quickly rebounded and a production line for ferrochrome was established in 1934, the same year that the company saw its first profit.[12]
Ålvik gained a road connection to Bergen in 1937, when the Fyksesund Bridge was opened.[13] Nearly all of the village's infrastructure was owned by Bjølvefossen A/S for a long time, to a great extent making it a company town, and it was a separate regulatory area until 1965.[14]