On October 16, the U.S. Department of Energy (DOE) finalized a $1.6 billion loan guarantee to accelerate the development of clean, affordable, reliable energy across the Midwest and central United States. This agreement will help finance an American Electric Power (AEP) subsidiary to upgrade nearly 5,000 miles of high-voltage transmission lines across Ohio, Indiana, Michigan, Oklahoma, and West Virginia. This expansion is critical as these regions are seeing rising electricity demand and pressure to maintain affordable service.
Preparing the Grid for the Future
America is experiencing a surge in electricity demand thanks to the rise of artificial intelligence, domestic manufacturing and electrification. The U.S. Energy Information Administration (EIA) expects U.S. electricity consumption to increase nearly 10% between 2020 and 2026 (1.7% annual growth). In the first quarter of 2025, AEP alone saw its commercial power load grow 12.3%, which illustrates the magnitude of the surge driven by increased demand.
Leveraging the Energy Dominance Financing Program
Administered by the DOE’s Loan Programs Office, the loan guarantee is the first finalized deal under the new Energy Dominance Financing (EDF) Program. The EDF Program was created under the One Big Beautiful Bill Act to maximize grid stability, energy production and strengthen critical mineral supply chains. The financing will support the replacement of legacy transmission lines with modern, higher-capacity conductors, a process that upgrades wires on existing towers to carry more electricity with fewer losses. These upgrades reduce grid congestion and improve efficiency, enhancing system reliability without requiring entirely new transmission lines or additional rights-of-way.
Making Affordability the Priority
One of the defining features of the EDF program is a requirement that the benefits of the federal loan guarantees are passed directly to consumers. In utilizing lower-cost capital with the backing of the DOE, AEP estimates this project will generate approximately $275 million in financing cost savings over the life of the loan, helping to keep electricity more affordable for households and businesses. By providing loan guarantees, the federal government is supporting necessary improvements to critical infrastructure projects while minimizing taxpayer risk.
A Milestone for the EDF Program and a Model for the Future
This agreement provides a blueprint for how federal-private partnerships can accelerate grid modernization. By prioritizing reliability and consumer protection, the DOE is delivering measurable benefits to consumers and the broader economy.