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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 in five states, mostly in the Midwest, to largely fossil fuel-fired energy.
AEP Transmission will upgrade power lines Indiana, michigan, ohioOklahoma and West Virginia, primarily to increase grid reliability and capacity Department of Energy Said. The project from AEP Transmission, a subsidiary of Ohio-based American Electric Power, aims to help meet growing electricity demand from data centers and artificial intelligence.
AEP produces electricity primarily from renewable resources such as wind and hydropower, as well as coal, natural gas and nuclear power.
Thursday’s announcement deepens the Trump administration’s commitment to traditional, polluting energy sources, even as it works to discourage the US from using clean energy.
The move comes as the Trump administration moved to revoke $7.6 billion in grants supporting hundreds of clean energy projects in 16 states, all of which voted for Democrat Kamala Harris in last year’s presidential election. The Energy Department said a total of 223 projects were eliminated after a review found they did not adequately address the country’s energy needs or were not economically viable.
The cancellations include up to $1.2 billion for California’s Hydrogen Hub, which aims to produce clean-burning hydrogen fuel to power ships and heavy-duty trucks. A hydrogen project in the Pacific Northwest that could cost up to $1 billion 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 massive tax-and-spend legislation approved by congressional Republicans and signed by the president this summer. donald trumpThe Energy Department said electric utilities receiving loans through the program must provide assurances to the government that the financial benefits from the financing will be passed on to customers.
That project and others being considered will help ensure Americans “will have access to affordable, reliable and secure energy for decades to come,” Energy Secretary Chris Wright said in a statement.
“The President has been clear: The United States must step back from the last administration’s energy cut agenda and strengthen our electric grid,” Wright said. He said modernizing the grid and expanding transmission capacity “will help the United States win the AI race and grow our manufacturing base.”
The power company said the upgrades supported by federal funding will replace existing transmission lines in existing rights-of-way with new lines that will be able to carry more energy.
The company said more than 2,000 miles of transmission lines serving 1.5 million people in Ohio will be replaced, as well as more than 1,400 miles of transmission lines serving 600,000 customers in Indiana and Michigan. An additional 1,400 miles in Oklahoma, which serves about 1.2 million people, and 26 miles in West Virginia, which serves 460,000 people, will be replaced.
The company said these projects will create approximately 1,100 construction jobs.
Bill Fehrman, AEP chairman, president and chief executive officer, said the loan guarantee will save customers money and improve reliability while supporting economic growth in the five states. “The funds we will save through this program will enable us to make additional investments to enhance service to our customers,” he said.
Wright, in a conference call with reporters, distinguished the AEP loan guarantee from a $4.9 billion federal loan guarantee that the department canceled in July. That money will fuel the planned Grain Belt Express, a new high-voltage transmission line to deliver solar and wind-generated electricity from the Midwest to eastern states.
The Energy Department said at the time that “the federal government did not have a significant role” in the first phase of the $11 billion project planned by Chicago-based Invenergy. The department also questioned whether the project could meet the strict financial conditions required, a claim Wright reiterated Thursday.
“Ultimately this is a commercial enterprise that needs private developers,” Wright said. The company has indicated that the Grain Belt project will go ahead.
Trump and Wright have repeatedly described wind and solar energy as unreliable and oppose efforts to combat climate change by moving away from fossil fuels. Wright said the Grain Belt Express loan was one of billions of dollars worth of commitments “thrown out the door” by former President Joe Biden’s administration after the 2024 election.