The U.S. Energy Department announced its largest-ever loan of $26.5 billion on Wednesday to bolster electric power in Georgia and Alabama, aiming to deliver over $7 billion in electricity cost savings.
The department will allocate the loan to subsidiaries of the utility Southern Company. The loan will facilitate the establishment of new gas power, upgrades to existing nuclear power plants and water power, improvement of battery storage systems, and enhancement of power lines.
Energy Secretary Chris Wright stated in a press call on Wednesday that this funding would enable data center development and the reshoring of American manufacturing. He also noted that this announcement aligns with Southern Company’s recent decision to maintain rates steady for the next few years in these states, The Hill reported.
Greg Beard, director of the department’s loan programs office, said Georgia Power is set to receive $22.5 billion, while Alabama Power will be allocated $4.1 billion. He noted that the energy backed by the funding would be sufficient to supply electricity to 15 million homes.
“This is the largest investment by the U.S. government ever in a non-crisis time,” Beard said.
Power Prices Surge Amid Coal Revival, AI Boom
The announcement follows a sharp rise in electricity prices in recent months, with rates climbing 6.3% year over year in January, far outpacing the broader inflation rate of 2.4%.
While some attribute the increase to President Donald Trump‘s push to revive coal production, the country’s most expensive and carbon-intensive energy source, and his broader opposition to wind and solar power, others point to surging electricity demand driven by the rapid expansion of hyperscaler data centers.
Trump asserted in his State Of The Union Address that America’s ‘Old Grid’ can’t handle the electricity needed by tech giants and suggested that major technology companies should generate their own electricity for AI data centers to prevent higher power bills for consumers. He also proposed a “Rate Payer Protection pledge,” stating that large tech firms must take responsibility for their energy needs.
The president also signaled that PJM, the largest grid operator in U.S., may have to hold emergency auctions for long-term power contracts, suggesting the administration is focused on controlling electricity costs rather than slowing AI expansion.
Microsoft Corp. (NASDAQ:MSFT), Amazon.com Inc. (NASDAQ:AMZN), and Anthropic are some of the companies that have vowed to pay the full electricity bills for their data centers.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Image via Shutterstock
Recent Comments