TVA gets $250 million from U.S. Department of Energy for grid upgrades

The U.S. Department of Energy plans to send $250 million to the Tennessee Valley Authority for grid upgrades that federal and TVA officials said Tuesday will lower power costs and ease congestion, though they did not say by how much.

The money will help fund 84 transmission and distribution projects across eight states, DOE said. With about $331 million in cost-share funding, the total investment is about $581 million. The department said the projects are expected to add about 2.5 gigawatts of grid capacity and support about 800 jobs.

“This is over half a billion dollars that is going into one of the fundamental requisites for America to function,” Deputy Energy Secretary James Danly said during his announcement at TVA headquarters in Knoxville.

The award comes from DOE’s Grid Resilience and Innovation Partnerships, or GRIP, program, created under the 2021 Infrastructure Investment and Jobs Act to help the grid withstand extreme weather and other disruptions. Final funding, project scope and schedules still depend on signed agreements and environmental, permitting and regulatory reviews, the department said.

The award builds on DOE’s earlier selection of TVA for its Speed to Power through Accelerated Reconductoring and other Key Transmission Technology Upgrades, SPARK, program. Under that $159.7 million project, TVA plans to upgrade about 125 miles of existing transmission lines in Tennessee, Alabama and North Carolina.

Tuesday’s award appears to stem from a grant first announced in October 2024, under President Joe Biden, when DOE selected TVA and 10 local power companies for $250 million in GRIP funding for 84 projects. At the time, TVA said the projects would help connect more solar power and link TVA to the Southwest Power Pool to tap up to 800 megawatts of wind energy. DOE’s release Tuesday did not say whether those plans remain part of the project. 

“The rates are going to go down because the cost of transmission will be dropped,” Danly said. He did not say when bills might drop.

Danly, who lives in Murfreesboro and called himself a TVA ratepayer, tied the grant to President Donald Trump’s declaration of a national energy emergency after taking office in 2025. He blamed “years of very, very bad policy,” including what he described as too much reliance on wind and solar power, for strained grids and rising power bills elsewhere. In a written statement, Danly attributed those policies to “the previous administration.”

“Tennessee is a boom state that’s open for business,” Danly said, adding that the state’s electricity rates are lower than those in 80% of states.

“While the rest of the country has been led astray, here in the Tennessee Valley, things are looking good, and they’re going to get better,” he said.

TVA President and CEO Mike Skaggs said the grants will help TVA deploy advanced technologies and make its system more efficient and reliable. The grants “provide meaningful investment into our system, which will benefit our ratepayers by supporting affordable, competitive rates as we prepare for the future,” he said.

Data centers have driven much of TVA’s growing demand for power. The utility has said data centers made up 18% of its industrial load in 2025, a share it expects to double in the region by 2030.

When asked how the grant relates to data centers, Skaggs said the money is tied to work on five transmission lines, none directly connected to a data center. He said the lines may still carry some data center load, but the upgrades are not being made to serve one. He did not say which lines.

U.S. Rep. Chuck Fleischmann, who chairs the House appropriations subcommittee that funds DOE, praised Skaggs. “You stepped up at a time when we really needed a hero to lead TVA,” Fleischmann told him. TVA, he said, “is in a much better place today than it was four, six months ago, definitely a year ago.”

Fleischmann said TVA came up Saturday on Air Force One with Trump and U.S. Sen. Bill Hagerty. “Only President Trump would say, ‘I like that guy,’” Fleischmann said of Skaggs, adding that the president asked, “What more can I do for TVA?”

“Other parts of the country are having brownouts,” Fleischmann said. “It is so important who governs.”

The grant comes as TVA works to meet rising demand, much of it from data centers, while trying to keep those costs off other customers’ bills. In August, TVA’s board approved a separate, higher rate class for data centers. Local governments across the state have paused data center projects due to resident concerns, and Gov. Bill Lee has signed onto a Trump administration pledge meant to protect ratepayers from data center costs.