ALLENTOWN — The U.S. Department of Energy is allocating $1.9 billion in federal funding to upgrade the national power grid through 31 projects across 26 states. Energy Secretary Chris Wright announced the grant program in Allentown, Pennsylvania on September 25, 2026.

The announcement occurred as data centers come online faster than new power plants can be built. Electricity bills are rising faster than inflation in many parts of the U.S. with demand from data centers cited as a cause in some areas. The Energy Department reported that the average cost of electricity in the U.S. rose compared to the previous year, with some regions experiencing higher increases due to growing demand from data centers. Two data centers in eastern Pennsylvania came online in 2026 and six more are under construction.

President Donald Trump said last month that U.S. communities without data centers will "end up being backwards and poor." The Energy Department’s grid modernization initiative aligns with broader efforts to address AI-driven energy demand, as data centers are projected to consume a significant share of U.S. electricity by 2027, according to industry analyses.

Why It Matters

The funding addresses aging infrastructure, as a 2023 DOE report noted that 70% of U.S. transmission lines are over 25 years old, contributing to grid inefficiencies and reliability risks. Another 2023 report indicated that a large portion of the U.S. power grid was built before 1970, noting the urgent need for modernization to prevent outages and inefficiencies.

Funding for the grants comes from the bipartisan infrastructure law enacted under President Joe Biden. The U.S. Department of Energy was established in 1977 under the Department of Energy Organization Act, with a mandate to ensure energy security, advance environmental cleanup, and promote scientific and technological innovation.

Timeline

On August 25, 2026, President Trump said that U.S. communities without data centers will "end up being backwards and poor." On September 25, 2026, Energy Secretary Chris Wright announced the grant program in Allentown, Pennsylvania.

Also on September 25, 2026, the Energy Department stated it will spend $1.9 billion on upgrades to the U.S. power grid, supporting 31 projects across 26 states. The government's $1.9 billion in funding will be matched by $3.35 billion in cost-share funding from recipients. Wright stated that these investments will get more out of the infrastructure the country already has, move more electricity across the grid, and help deliver affordable, reliable and secure power that will fuel American prosperity for decades to come. The additional capacity is enough to power 16 million homes, and the announcement occurred as data centers come online faster than new power plants can be built.

What's New

Energy Secretary Chris Wright’s announcement in Allentown, Pennsylvania, followed a 2023 DOE report noting that 70% of U.S. transmission lines are over 25 years old, contributing to grid inefficiencies and reliability risks. The Energy Department’s grid upgrade projects will involve technological enhancements across 21,000 miles of transmission lines, with component upgrades on 1,500 miles of lines, as outlined in the agency’s project details.

The Energy Department's 2026 funding announcement follows a similar initiative in 2022, when it allocated $1.5 billion to support grid resilience projects in response to increasing frequency of extreme weather events. The U.S. Department of Energy's $1.9 billion grid modernization funding is part of the Bipartisan Infrastructure Law, which was signed into law in 2021 under President Joe Biden.

In 2021, the Energy Department awarded $3.4 billion in grants through the Grid Modernization Initiative, which aimed to improve grid resilience and integrate renewable energy sources across the country. The Energy Department has previously faced criticism for delays in implementing grid modernization projects, with a Government Accountability Office (GAO) report noting that some funded projects were behind schedule.