AES CORP

The AES Corporation is a global energy company accelerating the future of energy, operating in the electric power generation and utility distribution industries. The company owns and/or operates a generation portfolio of 34,740 MW ¹ diversified by technologies and fuel type, with 54% ² of generation capacity fueled by renewables including solar, hydro, wind, energy storage, and landfill gas, 29% ³ fueled by natural gas, 15% ⁴ coal-fired, and 2% ⁵ utilizing pet coke or oil. AES's six utility businesses distribute power to 2.7 million ⁶ customers, with its two U.S. utilities including generation capacity totaling 4,056 MW ⁷. The company operates across ten countries in its Renewables SBU and nine countries in its Energy Infrastructure SBU, with a significant presence in the United States, Chile, Argentina, Colombia, Panama, the Dominican Republic, Mexico, Bulgaria, Jordan, and Vietnam.

AES positions itself as a leading provider of renewable energy to data center companies, particularly in the U.S., and to large mining companies outside the U.S. The company has been consistently rated by Bloomberg New Energy Finance as one of the top two largest sellers globally of renewable power to corporate customers. AES Indiana and AES Ohio are described as two of the fastest growth U.S. utilities with projected double-digit rate base growth through 2027. The company's competitive advantages include a track record of providing customized solutions and delivering projects on time and on budget, a 46 GW ⁸ U.S. development pipeline at AES Clean Energy, and deep relationships with technology companies. No individual customer accounted for 10% or more of 2025 total revenue.

AES generates revenue through two primary business lines: generation and utilities. In generation, the company owns and/or operates power plants to sell power to wholesale customers such as utilities, industrial users, and other intermediaries, primarily under medium- or long-term power purchase agreements (PPAs) or short-term agreements in competitive markets. In utilities, the company owns and/or operates utilities to generate or purchase, transmit, distribute, and sell electricity to end-user customers in residential, commercial, industrial, and governmental sectors within defined service areas. Revenue from utilities is classified as regulated, while generation revenue is classified as non-regulated. The company measures operating performance of its SBUs using Adjusted EBITDA, a non-GAAP measure.

The Renewables SBU has generation facilities in ten countries with total operating installed capacity of 17,836 MW ⁹. AES Clean Energy, the U.S. renewables portfolio, has a generation capacity of 10,961 MW ¹⁰ across the U.S. with another 3,031 MW ¹¹ under construction, including 1,542 MW ¹² of wind, 939 MW ¹³ of solar, and 550 MW ¹⁴ of energy storage. AES Clean Energy has a 7.6 GW ¹⁵ backlog of projects, the majority expected to come online through 2029, and a 46 GW ¹⁶ development pipeline. In 2025, AES Clean Energy signed or was awarded 2,776 MW ¹⁷ of PPAs. AES Chile operates 2,195 MW ¹⁸ of renewable installed capacity excluding energy storage, with a market share of approximately 6% ¹⁹ as of December 31, 2025, and has 768 MW ²⁰ of energy storage systems in operation. AES Andes has long-term contracts with an average remaining term of approximately 14 years ²¹ with unregulated customers. In 2025, AES recognized $1.5 billion ²² related to the monetization of tax attributes to tax equity investors and transferability tax credit buyers relating to U.S. renewables projects, $166 million ²³ of which relates to solar projects owned by AES Indiana.

The Utilities SBU operates four utilities in El Salvador with installed operating capacity of 143 MW ²⁴, AES Indiana with installed operating capacity of 4,056 MW ²⁵, and AES Ohio as a transmission and distribution utility. AES Indiana serves approximately 533,000 ²⁶ customers and sold 15,579 GWh ²⁷ in 2025, while AES Ohio serves approximately 541,000 ²⁸ customers and sold 14,729 GWh ²⁹ in 2025. The El Salvador utilities serve 1,667,000 ³⁰ customers and sold 4,744 GWh ³¹ in 2025. AES Indiana expects to spend an estimated $4.2 billion ³² on capital projects from 2026 through 2028. AES Ohio is projecting to spend an estimated $1.6 billion ³³ on capital projects from 2026 through 2028. The Energy Infrastructure SBU comprises generation facilities using natural gas, LNG, coal, pet coke, diesel, and/or oil in nine countries with operating installed capacity of 12,705 MW ³⁴. The New Energy Technologies SBU includes ownership stakes in Fluence (28.19% ³⁵ economic interest as of December 31, 2025), Maximo, the AI Fund, Uplight, and 5B.

In 2025, AES completed construction of 3.2 GW ³⁶ of solar, energy storage, and wind, and signed or was awarded new long-term PPAs for 4.0 GW ³⁷ of renewables. The company's backlog of projects with signed contracts but not yet in operation reached 12.0 GW ³⁸, including 5.7 GW ³⁹ under construction. At AES Indiana, the company filed a partial settlement agreement for current rate review and a 20-year IRP. At AES Ohio, the company received PUCO approval for its distribution rate case and filed for new multi-year base distribution rates for 2027 through 2029. AES achieved its full year 2025 asset sale proceeds target of $400 to $500 million with the sale of a minority interest in AGIC for $450 million ⁴⁰ in the first quarter of 2025. The company also completed the acquisition of Crossvine Solar 1, LLC on May 16, 2025, including the development of 85 MW ⁴¹ of solar and 85 MW ⁴² (340 MWh) of energy storage.

Total revenue for 2025 was $12,233 million ⁴³ compared to $12,278 million ⁴⁴ in 2024. Net income decreased $640 million ⁴⁵ from $802 million ⁴⁶ to $162 million ⁴⁷. Net income attributable to AES Corporation was $910 million ⁴⁸ compared to $1,679 million ⁴⁹ in the prior year. Diluted earnings per share from continuing operations decreased $1.06 ⁵⁰ from $2.37 ⁵¹ to $1.31 ⁵². Adjusted EBITDA, a non-GAAP measure, increased $232 million ⁵³ from $2,639 million ⁵⁴ to $2,871 million ⁵⁵. Adjusted EPS, a non-GAAP measure, increased $0.20 ⁵⁶ from $2.14 ⁵⁷ to $2.34 ⁵⁸. Net cash provided by operating activities was $4,306 million ⁵⁹ compared to $2,752 million ⁶⁰ in 2024.

A primary growth vector is the expansion of renewable energy to serve data center demand driven by generative artificial intelligence. AES Clean Energy has a 46 GW ⁶¹ U.S. development pipeline and a 7.6 GW ⁶² backlog of projects, with the budget for construction of projects currently under construction and contracted projects over $12 billion ⁶³. In 2025, AES Clean Energy added over 2.1 GW ⁶⁴ of high-quality projects to its backlog. The company expects data center needs related to generative AI to be a significant accelerant to U.S. renewables market growth and seeks to capture a significant portion of this market expansion. AES has worked with several major technology companies to provide clean energy solutions and expects these relationships to expand. In Chile, AES is building wind, solar, and storage to supply AES Andes' agreements with mining customers, with a pipeline of 5.5 GW ⁶⁵ under development at different stages. AES Colombia is developing a pipeline of 1.3 GW ⁶⁶ of solar and wind projects, including six wind projects totaling 1,149 MW ⁶⁷ in La Guajira, and in 2025 executed an investment agreement with Ecopetrol S.A. for a partnership structure.

A second growth vector is the significant investment growth at AES's U.S. utilities. AES Indiana expects to spend an estimated $4.2 billion ⁶⁸ on capital projects from 2026 through 2028, including spending on power generation and renewable energy projects, TDSIC Plan investments, and other transmission and distribution projects. AES Ohio is projecting to spend an estimated $1.6 billion ⁶⁹ on capital projects from 2026 through 2028, including expected spending under Smart Grid Phase 1 and other transmission and distribution additions and improvements. Both utilities are seeing additional investment opportunities from data center growth in their service areas above existing rate base projections. AES Indiana and AES Ohio are working with several companies to provide solutions for electric service needs of data centers and advanced manufacturing facilities. AES Ohio filed an application on November 10, 2025 to establish a Three-Year Rate Plan describing investments to strengthen and modernize infrastructure, proposing rates for 2027, 2028, and 2029.

The company's margin and cost outlook is influenced by several factors. The 2024 Base Rate Order at AES Indiana approved an increase in total annual operating revenue of $71 million ⁷⁰ with a return on common equity of 9.9% ⁷¹ and cost of long-term debt of 4.9% ⁷² on a rate base of approximately $3.5 billion ⁷³. A subsequent partial settlement agreement proposes an increase in AES Indiana's revenue of $90.7 million ⁷⁴ with a return on common equity of 9.75% ⁷⁵ and cost of long-term debt of 5.34% ⁷⁶ on a rate base of approximately $5.5 billion ⁷⁷. At AES Ohio, the 2024 DRC Settlement provides for an increase to annual distribution revenue requirement of $167.9 million ⁷⁸ with a return on equity of 9.999% ⁷⁹ and cost of long-term debt of 4.49% ⁸⁰ on a distribution rate base of $1.25 billion ⁸¹. The company recognized $1.5 billion ⁸² related to monetization of tax attributes in 2025, and tax credits under the Inflation Reduction Act have increased demand for renewables products. AES Clean Energy's contracted and advanced stage development backlog is described as resilient to recent changes in the IRA.

Operationally, AES is focused on executing its development and construction pipeline. The company completed construction of 3.2 GW ⁸³ of renewables and energy storage in 2025. As of December 31, 2025, the Renewables SBU had 5,502 MW ⁸⁴ under construction, with expected commercial operation dates ranging from the first half of 2026 to the second half of 2027 through 2028. The Utilities SBU had 225 MW ⁸⁵ under construction. AES is advancing the development of the Son My LNG terminal project in Vietnam with a design capacity of up to 9.6 million metric tonnes per annum ⁸⁶ and the Son My 2 CCGT project with a capacity of about 2,250 MW ⁸⁷. The company is also developing natural gas supply solutions in Panama using excess LNG facility capacity. As of December 31, 2025, the company and its subsidiaries had 8,336 ⁸⁸ full time/permanent employees.

Capital allocation priorities include funding development projects, debt service, and shareholder returns. The company's Stock Repurchase Program had $264 million ⁸⁹ remaining available for repurchase as of December 31, 2025, with cumulative repurchases from July 2010 through December 31, 2025 totaling 154.3 million ⁹⁰ shares for a total cost of $1.9 billion ⁹¹ at an average price per share of $12.12 ⁹². The Parent Company commenced a quarterly cash dividend in the fourth quarter of 2012 and increased it annually until 2025. The quarterly per-share cash dividend was $0.17595 ⁹³ for the fourth quarter of 2025, consistent with 2024. The first quarter 2026 cash dividend was declared on February 19, 2026 and is consistent with the fourth quarter 2025 cash dividend. No repurchases were made by The AES Corporation of its common stock in 2025, 2024, and 2023.

A key headwind is the expiration of long-term contracts. The AES Maritza plant has a 15-year PPA that expires in May 2026 ⁹⁴, and the company recorded a $264 million ⁹⁵ impairment at Maritza due to a reduction in expected cash flows after PPA expiration. The AES Puerto Rico coal-fired plant has a PPA with PREPA expiring in 2027 ⁹⁶. The Southland OTC units are contracted through Standby Capacity Purchase Agreements with California DWR for a three-year term commencing January 1, 2024, and the SWRCB OTC Policy requires shutdown and permanent retirement of remaining OTC generating units by December 31, 2026 ⁹⁷. The Alicura hydroelectric plant concession ended on January 9, 2026 ⁹⁸. The St. Nikola wind farm's Contract for Premium expired on March 15, 2025 ⁹⁹. The TEG and TEP pet coke-fired plants have PPAs expiring in 2027 ¹⁰⁰. The Merida III plant's PPA with CFE expired on December 8, 2025 ¹⁰¹ and the plant migrated to the Wholesale Electricity Market under a one-year permit until December 8, 2026 ¹⁰².

Regulatory and macroeconomic constraints are significant. The company faces risks from changes in environmental laws, including GHG regulations, CCR regulation, and water discharge rules. The EPA published final rules in May 2024 regulating GHGs from existing EGUs and requiring carbon capture and sequestration for new baseload stationary combustion turbines, though the EPA published a final rule on February 18, 2026 to rescind the 2009 greenhouse gas endangerment finding. The company's operations in Argentina face risks from currency devaluation (the Argentine peso devalued against the USD by approximately 22% ¹⁰³ in 2024 and 29% ¹⁰⁴ in 2025), high inflation, and currency controls. In Chile, the decarbonization plan includes complete retirement of the SEN coal fleet by the end of 2040 ¹⁰⁵ and carbon neutrality by 2050 ¹⁰⁶. The company faces risks from the DG Comp review of NEK's PPA with AES Maritza pursuant to EU state aid rules. In Ohio, House Bill 15, effective August 14, 2025, eliminates the LGR rider and changes the regulatory framework, which could be material to results of operations, financial condition, and cash flows.

The company faces material risks from the expiration of long-term contracts, including the AES Maritza PPA expiring in May 2026 ¹⁰⁷ which resulted in a $264 million ¹⁰⁸ impairment, and the AES Puerto Rico PPA expiring in 2027 ¹⁰⁹. Regulatory risks are significant, particularly from environmental regulations including GHG rules, CCR regulation, and water discharge requirements, with the EPA's May 2024 rules requiring carbon capture for new combustion turbines and regulating existing EGUs, though the February 18, 2026 rescission of the endangerment finding creates uncertainty. The company has substantial indebtedness of approximately $30 billion ¹¹⁰ on a consolidated basis as of December 31, 2025, with approximately $6.0 billion ¹¹¹ recourse debt of the Parent Company and approximately $23.2 billion ¹¹² non-recourse debt, and $20 million ¹¹³ of debt classified as current related to defaults. Currency risk is material, with the Argentine peso devaluing approximately 22% ¹¹⁴ in 2024 and 29% ¹¹⁵ in 2025, and the company recognized net foreign currency transaction losses of $79 million ¹¹⁶ in 2025. The company's development projects face substantial uncertainties including interconnection delays, with the average time for receiving interconnection approvals in the U.S. being over four years ¹¹⁷, and a significant backlog of interconnection requests for renewables and battery storage projects.

Management's message emphasizes AES's strategic positioning as the next-generation energy company with over four decades of experience, focused on partnering with large corporations to deliver electricity, particularly renewable energy to data center companies and large mining companies. The tone is confident regarding execution, highlighting that in 2025 the company signed long-term contracts for 4.0 GW ¹¹⁸ of renewables, bringing the backlog to 12.0 GW ¹¹⁹, and completed construction of 3.2 GW ¹²⁰ of solar, energy storage, and wind. Management states that AES Indiana and AES Ohio are now two of the fastest growth U.S. utilities with projected double-digit rate base growth through 2027. The three strategic priorities emphasized are: first, executing on the renewables growth strategy with a focus on data center demand driven by generative AI; second, pursuing the most ambitious investment growth in the history of the U.S. utilities to improve reliability and service quality while maintaining low rates; and third, achieving financial objectives including asset sale proceeds, as demonstrated by achieving the full year 2025 target of $400 to $500 million with the $450 million ¹²¹ AGIC sale. Management notes that Adjusted EBITDA increased $232 million ¹²² to $2,871 million ¹²³ and Adjusted EPS increased $0.20 ¹²⁴ to $2.34 ¹²⁵.