AEP Transmission, a subsidiary of American Electric Power, has secured a $1.6bn loan guarantee from the United States Department of Energy’s Loan Programs Office to replace approximately 8,000 kilometres of transmission lines across five states. The project spans Indiana, Michigan, Ohio, Oklahoma, and West Virginia. The financing is expected to generate $275mn in savings on borrowing costs, which the company states will be passed on to consumers through lower electricity bills.
A response to rising pressure on grid capacity
The programme targets the replacement of existing infrastructure by installing higher-capacity lines along current rights-of-way. The upgraded lines are designed to handle increased power loads and secure electricity supply in areas undergoing significant industrial expansion. American Electric Power estimates its network will need to support an additional 24 gigawatts of electricity demand by the end of the decade, driven by investments in data centres, artificial intelligence, and manufacturing.
The federally backed projects are expected to create around 1,100 construction jobs. The company plans to implement cost-sharing rate structures requiring large new industrial customers to contribute to infrastructure investment, thereby limiting the impact on existing customers.
Large-scale project across five regional networks
Initial work under the loan will involve about 160 kilometres of lines in Ohio and Oklahoma. Ohio will account for more than 3,400 kilometres of upgraded transmission lines across 76 projects, benefiting around 1.5 million customers. In Oklahoma, 1,434 kilometres will be replaced through 17 projects, serving an estimated 1.2 million customers.
Additional works will cover 1,410 kilometres in the Indiana Michigan Power (I&M) network, 26 kilometres in West Virginia, and further lines in Michigan. AEP plans to coordinate closely with local authorities and landowners during the siting process to minimise disruption and ensure efficient implementation.
First transaction under new administration framework
This loan marks the first transaction finalised under the current administration using the Loan Programs Office’s updated framework. It reflects federal support for expanding interconnected transmission networks and enabling industrial growth across the country.
American Electric Power intends to reinvest the savings generated into further projects to strengthen the reliability and capacity of its transmission grid.
