- Loan will be used to upgrade transmission lines in five states
- AEP says energy demand growth at levels not seen in a generation
- Upgrades will support data centers, AI, manufacturing
(Reuters) – American Electric Power has secured a $1.6 billion loan guarantee from the U.S. Department of Energy to upgrade nearly 5,000 miles of transmission lines across five states, the utility said on Oct. 16, as demand surges from power-hungry data centers.
AEP Transmission will upgrade power lines in Indiana, Michigan, Ohio, Oklahoma and West Virginia, primarily to support data centers, artificial intelligence and manufacturing.
Power consumption is expected to hit record highs in 2025 and 2026, driven by a surge in demand from data centers needed to run artificial intelligence technologies, according to the U.S. Energy Information Administration.
“AEP is experiencing growth in energy demand that has not been seen in a generation … the funds we will save through this program enable us to make additional investments,” said CEO Bill Fehrman.
Customers have committed to business expansions that will require an additional 24 gigawatts of electricity by the end of the decade, the utility said.
Nearly 100 miles of transmission lines across Ohio and Oklahoma will be the first to be supported by the loan guarantee.
AEP had received the conditional loan from former President Joe Biden’s administration. The loan stands to benefit customers in states that President Donald Trump won in last year’s election.
But despite Trump’s declaring an “energy emergency” on his first day of his second term, his administration is not approving all grid loans.
In July, the DOE canceled a $4.9 billion loan guarantee for the Grain Belt Express transmission project initiated by Biden, after opposition from farmers. It was meant to send power from wind and solar arrays in Kansas to Midwestern and Eastern cities.
AEP said this year it was considering adding $10 billion to its $54 billion five-year capital plan to meet higher demand.
The utility serves about 5.6 million customers in 11 states, and possesses the largest electric transmission system in the United States.
(Reporting by Pooja Menon in Bengaluru and Timothy Gardner in Washington. Editing by Sahal Muhammed and Mark Potter)
