DOE closes $1.6 billion transmission loan guarantee for utility giant
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The Energy Department on Thursday finalized a $1.6 billion loan guarantee for American Electric Power to optimize and rebuild around 5,000 miles of transmission lines across five states.
Why it matters: Getting new interstate lines approved is really hard even as power demand rises, and grid analysts see lots of potential in boosting capacity along existing infrastructure and corridors.
State of play: The project will upgrade lines in Indiana, Michigan, Ohio, Oklahoma, and West Virginia, per AEP and DOE.
- The financing will support the replacement of lines in existing rights-of-way with new lines that can transmit more power, the company said.
- AEP claimed that financing at a "preferred interest rate" will save its customers roughly $275 million over the life of the loan.
"This loan guarantee will not only help modernize the grid and expand transmission capacity but will help position the United States to win the AI race and grow our manufacturing base," Energy Secretary Chris Wright said in a statement.
The intrigue: Republicans once assailed loan guarantees (see Solyndra) but have come to embrace them for preferred projects.
- DOE, in Thursday's announcement, credited changes to the program in the GOP budget law.
Flashback: The Biden administration announced the conditional commitment of this loan just days before President Trump took office earlier this year.
- "This one started under the Biden administration, but it's a good project," Wright told reporters. "Not all of them are nonsense."
Zoom in: Wright compared this project to another loan guarantee the department canceled for what would have been for a wholly new power line — Invenergy's Grain Belt Express — connecting renewable energy in the Great Plains to other parts of the country.
- Wright said it was a lot more expensive (because it was a new power line) and was capitalizing on an "arbitrage" of stranded renewable energy.
- "Most private energy development is funded by private capital, as it should be," Wright said. "We're looking for those cases where bringing in government capital is necessary."
What's next: "Approximately 100 miles of transmission lines across Ohio and Oklahoma are the first projects to be supported by the loan guarantee," AEP said.
Editor's note: This story has been updated with comments from Wright.
