American Electric Power (AEP), via its subsidiary AEP Transmission, has secured a $1.6bn loan guarantee from the US Department of Energy's Loan Programs Office to upgrade power lines in the US.

This funding will be used to enhance around 5,000 miles of transmission lines across Indiana, Michigan, Ohio, Oklahoma, and West Virginia.  

The project involves replacing existing transmission lines with new ones capable of carrying more energy.  

The upgrades are expected to provide enhanced reliability and facilitate new economic growth opportunities by increasing power capacity in the communities served by AEP.  

The company estimates the creation of around 1,100 construction jobs through these upgrades. 

Additionally, the project is anticipated to save customers around $275m in financing costs over the loan's duration, resulting in reduced expenses reflected in their bills. 

AEP said it is experiencing a surge in energy demand, with customers committing to expansions requiring an additional 24GW of electricity by the end of the decade.  

The enhancements have been primarily aimed at supporting data centres, AI, and manufacturing advancements, signifying generational increase in the electric system's load. 

AEP is exploring federal funding and implementing rate structures to ensure that new large customers contribute to infrastructure investments.  

This strategy aims to mitigate rate impacts on existing customers.  

AEP chair, president, and CEO Bill Fehrman said: “AEP is experiencing growth in energy demand that has not been seen in a generation. As the first company to close a new loan with the Trump Administration under this programme, we are excited to get to work on these projects to improve the service we provide to our customers.  

“This loan saves our customers money and improves reliability while supporting economic growth in our states. The funds we will save through this programme enable us to make additional investments to enhance service for our customers.” 

AEP plans to collaborate with local communities and landowners in siting these critical transmission lines.  

The initial projects, which encompass around 100 miles of transmission lines in Ohio and Oklahoma, will receive backing through the loan guarantee, with additional funding and projects to follow. 

Earlier this year, AEP entered into a strategic partnership with KKR and PSP Investments to sell a 19.9% equity interest in its Ohio, Indiana, and Michigan transcos.