The Department of Energy’s Loan Programs Office has closed a $1.6 billion loan guarantee to a subsidiary of American Electric Power, it announced today. LPO will act as a guarantor for the reconductoring and rebuilding of around 5,000 miles of transmission lines across Indiana, Michigan, Ohio, Oklahoma, and West Virginia.
The loan, which had first been announced as a conditional commitment in the last days of the Biden administration, is the first LPO has closed since President Trump took office in January. It comes after months of upheaval for the office, which has seen its work hampered by leadership turnover, mass layoffs, and paused and cancelled funding.
As Latitude Media reported in July, when the second Trump administration took the helm, LPO had 15 conditional commitments ready, totaling at least $30 billion. Since January, though, several projects have withdrawn from the negotiation process because of federal funding uncertainty.
During the first Trump administration, LPO closed just a single loan; it wasn’t until the Biden administration that the office got a big enough influx of funding and staff to become the juggernaut it was under director Jigar Shah. So when Trump took the helm for the second time, there was some question about whether his DOE would make use of the office at all.
But activity seems to be picking up. In addition to the AEP loan, earlier in October, DOE announced that LPO had restructured a previously approved loan with Lithium Americas Corp. to finance the construction of facilities for manufacturing lithium carbonate at Thacker Pass. And last week, it granted an extension to Gevo for its $1.46 billion conditional commitment for a sustainable aviation fuel project, until April 2026; the company said it is potentially revising the project’s scope to better match the Trump administration’s priorities.
The AEP loan is also the first closed loan under the Energy Dominance Financing Program, a new program established by the GOP’s “One Big Beautiful Bill” that replaces the previous Section 1706 program within the LPO, eliminating the latter’s focus on emissions reduction and clean energy.
Trump and transmission
Expanding transmission infrastructure is notoriously difficult, with some projects taking over a decade and having to go through multiple legal and regulatory hurdles before even starting construction.
But building new lines is essential to ensure that the grid is able to support the enormous increase in energy demand that the country is experiencing. And upgrading old lines — including through reconductoring, which can up to double capacity on existing power lines — can be a less politically challenging way of making the most of the existing grid.
The PJM region, where the AEP project would bring much-needed capacity upgrades, is at the heart of the U.S. load growth conversation. PJM’s latest load growth forecast projects a peak load growth of 32 gigawatts from 2024 to 2030, with 30 of those coming from the booming data center sector; the grid operator’s its annual auction in July closed at the $329 per megawatt-day price cap, a 22% increase over last year’s auction, which was itself a record.
The Trump administration’s record on transmission has been mixed so far. Better grid infrastructure is essential to achieving its goal of “energy abundance,” as highlighted in its AI Action Plan. And even as DOE saw a massive exodus of staff including from the Grid Deployment Office, Latitude Media reported in April that Trump’s GDO director said that Elon Musk’s Department of Government Efficiency “really liked” the office’s Transmission Facilitation Program — a $2.5 billion effort to build new transmission projects.
But the news also comes just a couple of months after DOE announced the cancellation of a conditional commitment for the Grain Belt Express project, which would have helped build an interregional power line designed to deliver 5,000 megawatts of electricity to the Midwest. The project, which was expected to carry electricity from renewables in Kansas to more densely populated parts of the region, has been over ten years in the making. If completed, it would be the country’s largest power pipeline in capacity.
