Wedoany.com Report-Oct. 17, American Electric Power (AEP.O) announced on Thursday that its subsidiary, AEP Transmission, 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 modernization project will take place in Indiana, Michigan, Ohio, Oklahoma, and West Virginia, primarily to meet rising electricity demand from data centers, artificial intelligence operations, and manufacturing facilities.

Electric power transmission pylon miniatures and American Electric Power logo are seen in this illustration taken, December 9, 2022.

According to the U.S. Energy Information Administration, nationwide power consumption is expected to reach record levels in 2025 and 2026 due to the rapid expansion of data centers required to support artificial intelligence technologies. AEP’s initiative aligns with this growing need, aiming to enhance grid reliability and efficiency across its service areas.

AEP President and CEO Bill Fehrman said: “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.” The company noted that its customers have committed to business expansions requiring an estimated 24 gigawatts of additional electricity by the end of the decade, underscoring the urgency of modernizing infrastructure.

The first stage of the project, supported by the loan guarantee, will involve upgrades to nearly 100 miles of transmission lines in Ohio and Oklahoma. These improvements are designed to strengthen regional grid stability and prepare the network for future load increases driven by advanced technology development.

Earlier this year, AEP stated that it was evaluating an expansion of its current five-year, $54 billion capital plan by as much as $10 billion to address accelerating demand growth. The company serves approximately 5.6 million customers in 11 states and operates the largest electric transmission system in the United States.

The Department of Energy’s support for AEP’s project reflects the federal government’s continued investment in power grid modernization to accommodate new energy consumption patterns. Despite some recent cancellations of other grid loan guarantees, such as the $4.9 billion Grain Belt Express project in July, AEP’s initiative has been approved to move forward, signaling recognition of its strategic importance in supporting energy reliability and economic development.

The utility emphasized that the planned upgrades will enhance service resilience, reduce transmission congestion, and facilitate access to cleaner and more diverse energy sources. By improving the capacity and efficiency of existing infrastructure, the company aims to better support regional industrial growth and ensure long-term system reliability.

AEP’s transmission modernization project represents a major step toward strengthening the U.S. power network at a time of rapid digitalization and technological transformation. The company expects that, combined with continued collaboration with federal and state regulators, the effort will help secure the energy supply necessary to sustain economic expansion across multiple sectors in the coming decade.