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AEP receives $1.6 billion in federal loan guarantees to upgrade power lines

The utility announced on Thursday that its unit, American Electric Power, had secured a $1.6billion loan guarantee from the U.S. Department of Energy to upgrade transmission lines in five states. This comes as the demand for power from data centers is surging.

AEP Transmission is upgrading power lines in Indiana and Michigan as well as Ohio, Oklahoma, and West Virginia. This will primarily support data centers, artificial intelligent, and manufacturing.

According to the U.S. Energy Information Administration, power consumption will reach record levels in 2025 and in 2026. This is due to a surge of demand for data centers that run artificial intelligence technology.

Bill Fehrman, CEO of AEP, said: "We are experiencing a growth in energy consumption that we haven't seen for a long time. The funds we save with this program will allow us to invest in other areas."

The utility stated that customers have committed to expanding their businesses, which will require 24 additional gigawatts by the end the decade.

The first loan guarantees will cover nearly 100 miles of transmission line in Ohio and Oklahoma.

The company reported a January profit of $1.1 million.

Receive a 10% discount

A conditional loan commitment is part of the Investing in America program by former U.S. president Joe Biden.

AEP announced earlier this year that it would be reducing its emissions.

Consideration

The company has added $10 billion to its five-year capital program of $54 billion in order to meet the increased demand.

The utility has about 5.6 millions customers across 11 states and the largest transmission system of electricity in the U.S.

(source: Reuters)