The Department of Energy said Thursday that it had finalized a $1.6 billion loan guarantee to upgrade around 5,000 miles of transmission lines.
The grid upgrades would ease the flow of electricity in Indiana, Michigan, Ohio, Oklahoma, and West Virginia. The project, which will address lines owned by American Electric Power (AEP), won’t add any new routes, but it will help existing ones carry more power.
AEP is one of the largest utilities and transmission line owners in the U.S., with operations spanning 11 states. The 5,000 miles that will be upgraded represent around 13% of the company’s total network.
The loan guarantee was initiated under the Biden administration just days before President Trump was inaugurated. Previously, the Trump administration has cited approvals occurring between Election Day and Inauguration Day as justification for canceling projects.
It’s unclear what distinguished this grid modernization project from others that the Trump administration is considering canceling or in the process of canceling.
In Minnesota, the Department of Energy is moving to cancel a $467 million grant that would have helped unlock 28 gigawatts of new generating capacity, most of which would have been solar and wind. Another in Oregon would have issued $250 million in grants to connect half a dozen renewable projects.
But the largest transmission project the Trump administration wants to axe is a $630 million grant to modernize California’s grid. In many ways, it’s similar to the AEP project, looking to wring more out of the existing grid to ease congestion. As planned, the California project would test advanced conductors and dynamic line rating devices, both of which would allow old rights-of-way to carry more electricity. That’s frequently a cheaper option than building new power lines.
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The AEP project will also rewire the lines with new conductors. The loan guarantee will allow the utility giant to secure a lower interest rate, saving the company at least $275 million, which it says will benefit its customers.
Energy Secretary Chris Wright said that the loan will “ensure lower electricity costs across the Midwestern region of the United States.” Already, the states included in the project have among the lowest electricity rates in the nation.
The loans are to be issued from the Loan Programs Office, which the GOP has renamed the Energy Dominance Financing Program. The office was established under the Energy Policy Act in 2005. Historically, the office had focused on clean energy and manufacturing projects. The loss rate on its loans is around 3%, far below that of private sector lenders.
