AEP's Texas unit secures up to $3.26 billion US loan to boost power grid (updated)

American Electric Power

08/07/2026 14:30

Adds background in paragraphs 7-8
AEP  expects loan to finance nearly 100 grid projects across Texas
Projects include about 2,800 miles of new transmission infrastructure, Energy Department says    
Loan will help with power demand from data centers and oil, gas production 
Trump administration axed loan in 2025 for transmission project to carry wind and solar power
By Timothy Gardner and Pooja  Menon

    July 8 (Reuters) - American Electric Power AEP.O said on Wednesday it has secured a loan of up to $3.26 billion from the U.S. Department of Energy to help boost electricity transmission on the Texas grid.
Power consumption in the U.S., which hit its second straight annual record high in 2025, will rise further in 2026 and 2027, driven by data centers and artificial intelligence as well as the electrification of vehicles and appliances, according to the U.S. Energy Information Administration.
AEP Texas said that the federal financing is expected to save customers about $685 million over 30 years and support nearly 100 projects across Texas aimed at enhancing grid reliability.
The DOE said the loan from the Office of Energy Dominance Financing, formerly known as the Loan Programs Office, will finance projects including replacing existing low-capacity wires with advanced conductors, a process known as reconductoring, and constructing new transmission infrastructure spanning about 2,800 miles (4,500 km). 
The projects will double the power-carrying capacity of upgraded transmission infrastructure, reduce power interruptions, and connect new power plants and electricity generation to the grid, the department said. 
The projects will help meet power demand from data centers, manufacturing, and oil and natural gas development in the Permian Basin, the country's top producer of those fossil fuels, it said. 
ERCOT, the Texas grid manager, launched a plan in 2025 to install extra-high-voltage transmission infrastructure to relieve congestion from increased power needs of oil majors, data centers, electric vehicle charging and cryptocurrency mining. 

     That plan could impose nearly $100 billion in lifetime costs on Texas ratepayers and result in irreversible property losses for thousands of landowners across the state, according to estimates from the nonpartisan Texas Public Policy Foundation.
  

     Nearly a year ago, the administration of President Donald Trump axed a conditional $4.9 billion loan guarantee for the Grain Belt Express transmission project to send power from wind and solar energy in Kansas to cities in the Midwest and East.
Farmers had opposed the Grain Belt, U.S. financing of which had been approved by the administration of former President Joe Biden, as the project had filed dozens of eminent domain, or compulsory acquisition, petitions against landowners.
AEP Texas also said it has signed letters of agreement supporting up to 41 gigawatts of potential new power demand, known as new load additions, through 2030.

(Reporting by Pooja Menon in Bengaluru and Timothy Gardner in Washington; Additional reporting by Tim McLaughlin in Boston, Editing by Sahal Muhammed, Andrea Ricci and Mark Porter)
((Pooja.Menon@thomsonreuters.com;))