On the same day that the Trump administration unveiled an “AI Action Plan” that calls for, among other things, expanding transmission capacity, the Department of Energy announced the cancellation of a nearly $5 billion loan guarantee that would have helped build an interregional power line designed to deliver 5,000 megawatts of electricity to the Midwest.
The Grain Belt Express is an 800-mile high-voltage transmission line planned to carry electricity from renewables projects in Kansas to more densely populated parts of the region. The project received a conditional commitment from DOE’s Loan Programs Office in November, under the Biden administration. Notably, the agreement didn’t require the federal government to shell out direct funds; instead, LPO agreed to act as a guarantor for the project, reducing risk for private lenders, but not making any payments itself unless the project failed.
But in a statement yesterday DOE said it had “terminated taxpayer-funded financial assistance” for the project. “After a thorough review of the project’s financials, DOE found that the conditions necessary to issue the guarantee are unlikely to be met and it is not critical for the federal government to have a role in supporting this project,” the statement said.
That decision, Latitude Media has learned, was made against the recommendation of career attorneys inside LPO, who advised the agency that rescinding the conditional commitment would constitute a breach of contract, and would be illegal. It was also made without the involvement of career staff who worked on the deal.
Conditional commitments are legally binding agreements, outlining key financial and commercial terms of the deal. In the case of Grain Belt Express, DOE is asserting that the project isn’t going to meet certain milestones that are required to finalize the loan.
But Grain Belt Express, which has already gone through two years of due diligence with LPO, still had a window of at least four months to reach financial close. Indeed, in the early months of this year, LPO career staff believed the project was moving in the right direction.
The project’s developer, Invenergy, declined to comment on whether it plans to pursue legal action against the Trump administration over the cancellation of the loan guarantee, but indicated that it plans to press on with the project using private financing. In a statement that nodded to the GOP’s stated priorities for power projects, the company said that “a privately financed Grain Belt Express transmission superhighway will advance President Trump’s agenda of American energy and technology dominance.”
Writing the Grain Belt Express loan guarantee
The federal government might not be able to cancel a conditional commitment without reason, but it also can’t legally disburse any funds or proceed with a finalized deal until certain criteria — project milestones outlined in the conditional commitment — are met. Conditions and deadlines vary from project to project, but in general LPO borrowers have between 12 and 18 months from conditional commitment to meet those conditions, and no more than two years.
It’s these “conditions precedent” in a conditional commitment that could offer an incoming administration an opportunity to cancel a loan, a former LPO official explained to Latitude Media.
“We try to be as specific as possible [in outlining the conditions] but there’s always room for nuance and different interpretations,” the former official said. In the case of Grain Belt Express, “the LPO director and Secretary Chris Wright would have been looking at how to say [conditions] haven’t been met…and use that as a reason for canceling.”
When the second Trump administration took office, LPO staff worried that a requirement to secure wind and solar contracts for a certain portion of the line’s capacity could prevent the loan from moving forward — particularly after the publication of an executive order that made it much harder to build wind power. Right up until the last few weeks, sources told Latitude Media, both the office and Invenergy were discussing how to bring the Grain Belt Express agreement more in line with the administration’s priorities, by expanding offtakers beyond wind power.
Ultimately though, those changes didn’t go through quickly enough. And when Energy Secretary Chris Wright stepped in to order the cancellation of the loan guarantee in mid-July, DOE’s general counsel didn’t seem to look to offtake numbers for legal justification at all.
In the brief letter the agency sent to Invenergy cancelling the loan, DOE’s undersecretary for infrastructure Wells Griffith noted that conditions precedent are “subject to the Department’s satisfaction in its sole and absolute discretion.” The only criteria he cited specifically was a broad requirement that DOE complete “a satisfactory due diligence review” of the borrower and the project.
Targeting transmission
If and when it’s completed, Grain Belt Express would be the country’s largest power pipeline. But its path to actually transmitting power has long been challenging.
Controversy about the project stemmed initially from local opposition by landowners in the project’s path, many of whom are concerned about the potential impacts on agriculture.
But for years, that fight played out largely in the courts. It wasn’t until recently that the project landed in the Trump administration’s crosshairs.
In the spring, the far-right Senator Josh Hawley of Missouri began to publicly take issue with the project and its impact on farmers, and twice called on DOE to cancel the commitment. Earlier this month, Missouri’s attorney general opened an investigation into the project; he also asked the state’s Public Service Commission to reevaluate the project’s approvals, which he said had been “based on seemingly false assumptions and fraudulent data.”
Then, in July, Sen. Hawley took the issue straight to the top. Hawley told reporters that when he was talking with Trump about the project earlier this month, the president “got Chris Wright on the line right there.”
Transmission lines — while technically technology-agnostic — are necessary for sending energy produced in remote geographies like the windy plains of Kansas to load centers. But getting them built, especially in the U.S., requires clearing legal and regulatory hurdles that can make the process stretch to a decade or longer.
The International Energy Agency estimates that nearly 50 million miles (80 million kilometers) of power lines will need to be added or replaced globally by 2040 in order to meet climate and clean energy goals. In 2023, the same year that IEA did that analysis, the United States electricity sector added just 55 miles of new transmission.
According to Rob Gramlich, president of the transmission and power markets-focused consultancy Grid Strategies, federal support could be particularly impactful for interregional transmission lines “where it’s hardest to find any other way to recover costs.”
“It is very hard to find state regulators to approve cost recovery for a multi-state line like this,” Gramlich said. “I’ve always thought that DOE should have a big pot of money for interregional transmission, and that should be the main focus of DOE spending across all of its programs.”
For more about the transmission bottleneck, listen to Rob Gramlich’s interview on Catalyst with Shayle Kann:
Today, the need for these lines is higher than ever. Demand for power is soaring, thanks to electrification, the onshoring of manufacturing, and a rapid expansion of data centers.
The new demand for power from the tech sector has been celebrated by the Trump administration, which announced the $100 billion “Stargate” joint venture between OpenAI, Oracle, and SoftBank to finance and build the world’s largest data center supercomputers. But even though renewables, and especially solar, are the cheapest and fastest energy infrastructure to build, the Trump administration is intent on pushing fossil fuels and only fossil fuels to power these new facilities — and undermining transmission as well.
What this means for LPO
Prior to Grain Belt Express, LPO really hasn’t been a “significant player” when it comes to transmission projects, said Gramlich.
“It wasn’t until [Infrastructure Investment and Jobs Act] and [Inflation Reduction Act] that there was any money [specifically] for transmission,” he explained. “Transmission probably could have qualified earlier under the loan program, but I don’t recall any serious attempt to do that.”
Given the fate of this loan, though, it appears increasingly unlikely that LPO will expand its role in supporting transmission.
“It does call into question the Department of Energy’s actual support for transmission,” Gramlich said. “It was encouraging when Secretary Wright said one of his nine priorities on day one was transmission. But if it’s not supporting lines like this, I don’t really know what that means.”
The decision to cancel the loan guarantee — including going over the heads of the experts at LPO who worked on the deal — is likely to be a “huge deterrent” for companies who might consider applying for a loan, the former LPO official said. “For transmission developers, it’s more expensive to go to the private debt market, but it feels like it would be a lot more trustworthy at this stage.”
Jen Downing, who led LPO’s Energy Infrastructure Reinvestment Program during the Biden administration, warned Congress of that exact scenario in a letter she sent to key House and Senate committees last week, before the Grain Belt Express loan was officially canceled.
“Cancelling any loans could spell the end of LPO’s loan making because no serious borrower would spend a year or more of their time and millions of dollars in advisor fees obtaining a loan if they thought it could be cancelled on a political whim,” wrote Downing, who was a federal employee, not a Biden appointee.
“This is bigger than killing a deal; it undermines the credibility of the federal government.”
