WASHINGTON (AP) — The Energy Department said Thursday it has finalized a $1.6 billion loan guarantee to a subsidiary of one of the nation’s largest power companies to upgrade nearly 5,000 miles of transmission lines across five states, mostly in the Midwest, for energy powered largely by fossil fuels.
AEP Transmission modernize power lines in Indiana, Michigan, Ohio, Oklahoma and West Virginia to improve grid reliability and capacity, the Department of Energy said. The project, first proposed under the Biden administration, aims to meet growing demand for electricity from data centers and artificial intelligence.
Ohio-based American Electric Power, which owns AEP Transmission, is one of the nation’s largest utilities, serving 5.6 million customers in 11 states. It primarily produces electricity from coal, natural gas and nuclear power, as well as renewable resources such as wind and hydroelectric power.
Thursday’s announcement reinforces the Trump administration’s commitment to traditional, dirty energy sources, even as it works to discourage the United States from using clean energy.
Earlier this month, the administration canceled $7.6 billion in grants intended to support hundreds of clean energy projects in 16 states, all of which voted for Democrat Kamala Harris in last year’s presidential election. A total of 223 projects were abandoned after a review determined they did not adequately meet the country’s energy needs or were not economically viable, the Energy Ministry said.
Cancellations include up to $1.2 billion for California’s hydrogen hub aimed at developing clean-burning hydrogen fuels to power ships and heavy trucks. A hydrogen project costing up to $1 billion in the Pacific Northwest was also canceled.
The loan guarantee finalized Thursday is the first offered by the Trump administration under the recently renamed Energy Dominance Financing program, created by the American energy giant. tax and spending law approved this summer by congressional Republicans and signed by President Donald Trump. Power utilities that receive loans under this program must assure the government that the financial benefits of the financing will be passed on to customers, the Energy Ministry said.
The project and other planned projects will help ensure that Americans “have access to affordable, reliable, and safe energy for decades to come,” Energy Secretary Chris Wright said in a statement.
“The president has been clear: America must abandon the energy subtraction agenda of previous administrations and strengthen our power grid,” Wright said, adding that modernizing the grid and expanding transmission capacity “will help the United States win the AI race and grow our manufacturing base.”
The improvements supported by federal funding will replace existing transmission lines in existing rights-of-way with new lines capable of carrying more energy, the power company said.
More than 2,000 miles of transmission lines in Ohio serving 1.5 million people will be replaced, along with more than 1,400 miles in Indiana and Michigan serving 600,000 customers, the company said. An additional 1,400 miles in Oklahoma, serving about 1.2 million people, and 26 miles in West Virginia, serving 460,000 people, will be replaced.
The projects will create approximately 1,100 construction jobs, the company said.
The loan guarantee will save customers money and improve reliability while supporting economic growth in all five states, said Bill Fehrman, AEP president and CEO. “The funds we will save through this program will allow us to make additional investments to improve service to our customers,” he added.
Wright, in a conference call with reporters, distinguished the AEP loan guarantee from a $4.9 billion federal loan guarantee. the department canceled in July. This money would have boosted the project Express Grain Belta new high-voltage transmission line intended to carry solar and wind electricity from the Midwest to the Eastern states.
The Department of Energy said at the time that it was “not essential for the federal government to play a role” in the first phase of the $11 billion project planned by Chicago-based Invenergy. The ministry also questioned whether the project could meet the strict financial conditions required, a claim Wright repeated Thursday.
“At the end of the day, this is a commercial enterprise that needs private developers,” Wright said. The company said the Grain Belt project is moving forward.
Trump and Wright have repeatedly derided wind and solar power as unreliable and opposed efforts to combat climate change by move away from fossil fuels. Wright said the Grain Belt Express loan was among billions of dollars in commitments “rushed through” in the final days of former President Joe Biden’s administration.
The loan guarantee to AEP was among those conditionally approved under Biden, a fact Wright acknowledged to reporters.
“Not all of the (Biden era) plans were nonsense,” he said, adding that he was “happy to move forward” with the transmission upgrade.
