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What changed in AES Corporation's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of AES Corporation's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+775 added−804 removedSource: 10-K (2025-03-11) vs 10-K (2024-02-26)

Top changes in AES Corporation's 2024 10-K

775 paragraphs added · 804 removed · 572 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

276 edited+94 added−121 removed190 unchanged
Biggest changeNikola Bulgaria Wind 156 89 % 2010 2025 Electricity Security Fund Tucano Phase 1 Brazil Wind 155 24 % 2022-2023 2042 Unipar Guaimbê Brazil Solar 150 36 % 2018 2037 CCEE 13 | 2023 Annual Report Lancaster Area Battery (LAB) (3)(4) US-CA Energy Storage 127 75 % 2022 2037 PG&E Buffalo Gap I (3) US-TX Wind 121 100 % 2006 Chiriqui-Esti Panama Hydro 120 49 % 2003 2030 ENSA, Edemet, Edechi, Other Cavalier (4) US-VA Solar 116 75 % 2023 2043 Dominion Energy Delta (4) US-MS Wind 104 75 % 2023 2043 Amazon Cabra Corral Argentina Hydro 102 100 % 1995 Various Southland Energy—Alamitos Energy Center (5) US-CA Energy Storage 100 50 % 2021 2041 Southern California Edison East Line Solar (OpCo B) (2) US-AZ Solar 100 26 % 2020 2045 Salt River Project Central Line (OpCo B) (2) US-AZ Solar 100 26 % 2022 2039 Salt River Project Agricultural Improvement & Power District West Line (OpCo B) (2) US-AZ Solar 100 26 % 2022 2047 Salt River Project Agricultural Improvement & Power District Luna (3) US-CA Energy Storage 100 75 % 2022 2037 Clean Power Alliance of Southern California Vientos Bonaerenses Argentina Wind 100 100 % 2020 2024-2040 Various Vientos Neuquinos Argentina Wind 100 100 % 2020 2024-2040 Various Laurel Mountain Repowering (OpCo D) (4) US-WV Wind 99 75 % 2022 2037 AES Solutions Management, LLC McFarland B (4) US-AZ Solar 60 75 % 2023 2043 Amazon Energy Storage 30 Estrella US-CA Solar 56 50 % 2023 2038 Southern California Edison Energy Storage 28 Platteview (4) US-NE Solar 81 75 % 2023 2043 Omaha Public Power District Clover Creek (OpCo B) (2) US-UT Solar 80 50 % 2021 2046 UMPA Westwing 1 (4) US-AZ Energy Storage 77 75 % 2023 2043 APS AGV Solar Brazil Solar 76 36 % 2019 2040 Various, CCEE OpCo C (3) US-Various Solar 73 50 % 2021-2022 2041-2042 Various Boa Hora Brazil Solar 69 47 % 2019 2038 CCEE Mountain View Repowering (OpCo D) (3)(4) US-CA Wind 67 75 % 2022 2042 Southern California Edison San Fernando Colombia Solar 61 99 % 2021 2036 Ecopetrol Big Island Waikoloa (OpCo E) (3)(6) US-HI Solar 30 100 % 2022-2023 2047 HECO Energy Storage 30 Penonome I Panama Wind 55 49 % 2020 2030 ENSA, Edemet, Edechi Chiriqui-Los Valles Panama Hydro 54 49 % 1999 2030 ENSA, Edemet, Edechi, Other Bayasol Dominican Republic Solar 50 65 % 2021 2036 Ede Sur Agua Clara Dominican Republic Wind 50 65 % 2022 2039 Ede Norte Santanasol Dominican Republic Solar 50 65 % 2022 2038 Ede Sur Mountain View IV (OpCo E) (6) US-CA Wind 49 100 % 2012 2032 Southern California Edison Chiriqui-La Estrella Panama Hydro 48 49 % 1999 2030 ENSA, Edemet, Edechi, Other AM Solar (7) Jordan Solar 48 36 % 2019 2039 National Electric Power Company Ullum Argentina Hydro 45 100 % 1996 Various Lawa'i (3)(6) US-HI Solar 20 100 % 2018 2043 Kaua'i Island Utility Cooperative Energy Storage 20 OpCo D (2) US-Various Solar 38 75 % 2022-2023 2042-2043 Various Energy Storage 2 14 | 2023 Annual Report Kuihelni (4) US-HI Solar 14.5 100 % 2023 2048 HECO Energy Storage 14.5 Kekaha (3)(6) US-HI Solar 14 100 % 2019 2045 Kaua'i Island Utility Cooperative Energy Storage 14 Brisas Colombia Solar 27 99 % 2022 2037 Ecopetrol West Oahu Solar (6) US-HI Solar 12.5 100 % 2023 2048 HECO Energy Storage 12.5 Na Pua Makani (6) US-HI Wind 24 100 % 2020 2040 HECO Ilumina US-PR Solar 24 100 % 2012 2037 LUMA Energy Castilla Colombia Solar 21 99 % 2019 2034 Ecopetrol Tunjita Colombia Hydro 20 99 % 2016 2024-2039 Various Laurel Mountain ES US-WV Energy Storage 16 100 % 2011 Community Energy (4) US-Various Solar 14 75 % 2022 2024-2043 Various Southland Energy—AES Gilbert (Salt River (5) (8) US-AZ Energy Storage 10 50 % 2019 2039 Salt River Project Agricultural Improvement & Power District El Tunal Argentina Hydro 10 100 % 1995 Various Andres ES Dominican Republic Energy Storage 10 65 % 2017 Los Mina DPP ES Dominican Republic Energy Storage 10 65 % 2017 Pesé Solar Panama Solar 10 49 % 2021 2030 ENSA, Edemet, Edechi, Other Mayorca Solar Panama Solar 10 49 % 2021 2030 ENSA, Edemet, Edechi, Other Cedro Panama Solar 10 49 % 2021 2030 ENSA, Edemet, Edechi, Other Caoba Panama Solar 10 49 % 2021 2030 ENSA, Edemet, Edechi, Other Netherlands ES Netherlands Energy Storage 10 100 % 2015 Warrior Run ES US-MD Energy Storage 5 100 % 2016 5B Costa Norte Panama Solar 1 100 % 2021 2051 Costa Norte LNG Terminal 16,211 _____________________________ (1) AES Tietê hydro plants: Água Vermelha (1,396 MW), Bariri (143 MW), Barra Bonita (141 MW), Caconde (80 MW), Euclides da Cunha (109 MW), Ibitinga (132 MW), Limoeiro (32 MW), Mog-Guaçu (7 MW), Nova Avanhandava (347 MW), Promissão (264 MW), Sao Joaquim (3 MW) and Sao Jose (4 MW).
Biggest changeNikola Bulgaria Wind 156 89 % 2010 2025 Electricity Security Fund Cavalier US-VA Solar 156 75 % 2023-2024 2043 Dominion Energy Lancaster Area Battery (LAB) (3) US-CA Energy Storage 127 75 % 2022 2037 PG&E Calhoun US-MI Solar 125 75 % 2024 2039 Microsoft, MPPA Buffalo Gap I (3) US-TX Wind 121 100 % 2006 15 | 2024 Annual Report Chiriqui-Esti Panama Hydro 120 49 % 2003 2030 ENSA, Edemet, Edechi, Other Kuihelani US-HI Solar 60 100 % 2023-2024 2048 HECO Energy Storage 60 Cabra Corral Argentina Hydro 102 100 % 1995 Various Southland Energy—Alamitos Energy Center US-CA Energy Storage 100 50 % 2021 2041 Southern California Edison East Line Solar (OpCo B) (2) US-AZ Solar 100 26 % 2020 2045 Salt River Project Agricultural Improvement & Power District Central Line (OpCo B) (2) US-AZ Solar 100 26 % 2022 2039 Salt River Project Agricultural Improvement & Power District West Line (OpCo B) (2) US-AZ Solar 100 26 % 2022 2047 Salt River Project Agricultural Improvement & Power District Luna (OpCo D) (3) US-CA Energy Storage 100 75 % 2022 2037 Clean Power Alliance of Southern California Vientos Bonaerenses Argentina Wind 100 100 % 2020 2025-2040 Various Vientos Neuquinos Argentina Wind 100 100 % 2020 2025-2040 Various Mirasol Dominican Republic Solar 100 65 % 2024 2039 Ede Este Laurel Mountain Repowering (OpCo D) US-WV Wind 99 75 % 2022 2037 AES CE Solutions, LLC Estrella US-CA Solar 56 50 % 2023 2038 Clean Power Alliance of Southern California Energy Storage 28 Cavalier Solar A2 US-VA Solar 84 75 % 2024 2044 Microsoft Alamitos 2 US-CA Energy Storage 82 100 % 2024 2044 Southern California Edison Platteview US-NE Solar 81 75 % 2023 2043 Omaha Public Power District Clover Creek (OpCo B) (2) US-UT Solar 80 50 % 2021 2046 UMPA Westwing 1 US-AZ Energy Storage 80 100 % 2023-2024 2043-2044 APS OpCo D US-Various Solar 68 75 % 2022-2024 2042-2044 Various Energy Storage 12 Silver Peak US-CA Solar 50 75 % 2024 2044 Amazon Energy Storage 25 OpCo C (2) US-Various Solar 73 50 % 2021-2022 2041-2042 Various Mountain View Repowering (OpCo D) (3) US-CA Wind 67 75 % 2022 2042 Central Coast Community Energy, Silicon Valley Clean Energy Authority Madison US-VA Solar 63 75 % 2024 2039 Northrop Grumman Westwing 2A US-AZ Energy Storage 62 75 % 2024 2044 APS San Fernando Colombia Solar 61 99 % 2021 2036 Ecopetrol Big Island Waikoloa (OpCo E) (3) US-HI Solar 30 100 % 2022-2023 2047 HECO Energy Storage 30 Westwing 2B US-AZ Energy Storage 59 75 % 2024 2044 APS Penonome I Panama Wind 55 49 % 2020 2030 ENSA, Edemet, Edechi Chiriqui-Los Valles Panama Hydro 54 49 % 1999 2030 ENSA, Edemet, Edechi, Other Bayasol Dominican Republic Solar 50 65 % 2021 2036 Ede Sur Agua Clara Dominican Republic Wind 50 65 % 2022 2039 Ede Norte Santanasol Dominican Republic Solar 50 65 % 2022 2038 Ede Sur Mountain View IV (OpCo E) US-CA Wind 49 100 % 2012 2032 Southern California Edison 16 | 2024 Annual Report Chiriqui-La Estrella Panama Hydro 48 49 % 1999 2030 ENSA, Edemet, Edechi, Other AM Solar Jordan Solar 48 36 % 2019 2039 National Electric Power Company Ullum Argentina Hydro 45 100 % 1996 Various Lawa'i (3) US-HI Solar 20 100 % 2018 2043 Kaua'i Island Utility Cooperative Energy Storage 20 Kekaha (3) US-HI Solar 14 100 % 2019 2045 Kaua'i Island Utility Cooperative Energy Storage 14 Brisas Colombia Solar 27 99 % 2022 2037 Ecopetrol West Oahu Solar US-HI Solar 13 100 % 2023 2048 HECO Energy Storage 13 Na Pua Makani (OpCo E) US-HI Wind 24 100 % 2020 2040 HECO Ilumina US-PR Solar 24 100 % 2012 2037 LUMA Energy Castilla Colombia Solar 21 99 % 2019 2034 Ecopetrol Tunjita Colombia Hydro 20 99 % 2016 2025-2039 Various Laurel Mountain ES US-WV Energy Storage 16 100 % 2011 Community Energy US-Various Solar 14 75 % 2022 2030-2039 Various Esti Solar II Panama Solar 12 49 % 2024 2044 Minera Panama Southland Energy—AES Gilbert (Salt River (4) US-AZ Energy Storage 10 50 % 2019 2039 Salt River Project Agricultural Improvement & Power District El Tunal Argentina Hydro 10 100 % 1995 Various Andres ES Dominican Republic Energy Storage 10 65 % 2017 Los Mina DPP ES Dominican Republic Energy Storage 10 65 % 2017 Pesé Solar Panama Solar 10 49 % 2021 2030 ENSA, Edemet, Edechi, Other Mayorca Solar Panama Solar 10 49 % 2021 2030 ENSA, Edemet, Edechi, Other Cedro Panama Solar 10 49 % 2021 2030 ENSA, Edemet, Edechi, Other Caoba Panama Solar 10 49 % 2021 2030 ENSA, Edemet, Edechi, Other Netherlands ES Netherlands Energy Storage 10 100 % 2015 Los Santos Panama Solar 8 49 % 2024 2044 Minera Panama Warrior Run ES US-MD Energy Storage 5 100 % 2016 5B Colon Panama Solar 1 100 % 2021 2051 Costa Norte LNG Terminal 13,229 _____________________________ (1) Operated by AES under a concession contract granted for a term of 30 years, which expired on August 11, 2023.
In December 2023, AES completed the sale of an additional 10% ownership interest in AES Dominicana to the existing partners and a 10% interest to Grupo Popular's subsidiary, AFI Popular, selling 20% ownership interest in total. After this transaction, AES' ownership interest in AES Dominicana is 65%.
In December 2023, AES completed the sale of an additional 10% ownership interest in AES Dominicana to the existing partners and a 10% interest to Grupo Popular's subsidiary, AFI Popular, selling 20% ownership interest in total. After this transaction, AES' ownership interest in AES Dominicana is 65%.
Andres has long-term contracts to sell regasified LNG to industrial users and third party power plants within the Dominican Republic, thereby capturing demand from industrial and commercial customers and for other power generation companies that had switched their operations to natural gas. AES partnered with Energas in a joint venture to operate the 50 km Eastern Pipeline from February 2020.
Andres has long-term contracts to sell regasified LNG to industrial users and third party power plants within the Dominican Republic, thereby capturing demand from industrial and commercial customers and for other power generation companies that had switched their operations to natural gas. AES partnered with Energas in a joint venture to operate the 50 km Eastern Pipeline in February 2020.
In addition to the Ministry of Energy, three main agencies are responsible for regulating the market agents and their activities, monitoring compliance with the laws and regulations, and the surveillance of operational compliance and management of the wholesale electricity market: • The Energy Regulatory Commission is responsible for the establishment of directives, orders, methodologies, and standards to regulate the electric and fuel markets, as well as granting permits. • The National Center for Energy Control, as an ISO, is responsible for managing the wholesale electricity market, transmission and distribution infrastructure, planning network developments, guaranteeing open access to network infrastructure, executing competitive mechanisms to cover regulated demand, and setting transmission charges. • The Electricity Federal Commission ("CFE") owns the transmission and distribution grids and is also the country's basic supplier.
In addition to the Ministry of Energy, three main agencies are responsible for regulating market agents and their activities, monitoring compliance with laws and regulations, and surveillance of operational compliance and management of the wholesale electricity market: • The Energy Regulatory Commission is responsible for the establishment of directives, orders, methodologies, and standards to regulate the electric and fuel markets, as well as granting permits. • The National Center for Energy Control, as an ISO, is responsible for managing the wholesale electricity market, transmission and distribution infrastructure, planning network developments, guaranteeing open access to network infrastructure, executing competitive mechanisms to cover regulated demand, and setting transmission charges. • The Electricity Federal Commission ("CFE") owns the transmission and distribution grids and is also the country's basic supplier.
One of its main objectives is to promote investment in non-conventional renewable sources to diversify the energy matrix. • The General Superintendence of Electricity and Telecommunications regulates the market and sets consumer prices, and, jointly with the distribution companies in El Salvador, developed the tariff calculation applicable from 2023 until 2027.
One of its main objectives is to promote investment in non-conventional renewable sources to diversify the energy matrix. • The General Superintendence of Electricity and Telecommunications regulates the market and sets consumer prices, and, jointly with the distribution companies in El Salvador, developed the tariff calculation originally applicable from 2023 until 2027.
The LNG supply contract has enough flexibility to divert volumes to the Dominican Republic, which increases the connectivity of our two onshore terminals and allows to optimize the LNG position of the portfolio. Colon LNG Marketing continues developing the LNG market in Latin America, with clients already established in Panama and Colombia.
The LNG supply contract has enough flexibility to divert volumes to the Dominican Republic, which increases the connectivity of our two onshore terminals and allows us to optimize the LNG position of the portfolio. Colon LNG Marketing continues developing the LNG market in Latin America, with clients already established in Panama and Colombia.
The principal markets and locations where we are engaged in the generation and supply of electricity (energy and capacity) are the California Independent System Operator ("CAISO"), PJM, and Puerto Rico. AES Southland, operating in the CAISO, is our most significant generation business.
The principal markets and locations where we are engaged in the generation and supply of electricity (energy and capacity) are the California Independent System Operator ("CAISO") and Puerto Rico. AES Southland, operating in the CAISO, is our most significant generation business.
Key Financial Drivers — Financial results are driven by many factors, including, but not limited to: • change in wind and solar resources due to heavy rains, hurricanes and other natural events that may affect the country; • constraints imposed by the capacity of transmission lines and potential delays on the transmission expansion projects; and • related to projects under construction, changes in execution cost and scope of work that may delay the operation of the new renewable plants.
Key Financial Drivers — Financial results are driven by many factors, including, but not limited to: • change in wind and solar resources due to heavy rains, hurricanes and other natural events that may affect the country; • constraints imposed by the capacity of transmission lines and potential delays on the transmission expansion projects; and • related to projects under construction, changes in execution cost and scope of work that may delay the operation of the new renewables plants.
Additional growth opportunities exist in the provision of operational and maintenance services associated with energy storage products, as well as the provision of digital applications and solutions to improve performance and economic output.
Additional growth opportunities exist in providing operational and maintenance services associated with energy storage products, as well as the provision of digital applications and solutions to improve performance and economic output.
For non-collectively bargained employees at certain levels in the organization, we offer annual incentives (bonus) and long-term compensation to reinforce the alignment between AES' employees and AES. Executive Officers The following individuals are our executive officers: Stephen Coughlin, 52 years old, has served as Executive Vice President and Chief Financial Officer since October 2021.
For non-collectively bargained employees at certain levels in the organization, we offer annual incentives (bonus) and long-term compensation to reinforce the alignment between AES' employees and AES. Executive Officers The following individuals are our executive officers: Stephen Coughlin, 53 years old, has served as Executive Vice President and Chief Financial Officer since October 2021.
Gluski , 66 years old, has been President, Chief Executive Officer and a member of our Board of Directors since September 2011 and is a member of the Innovation and Technology Committee. Under his leadership, AES has become a world leader in implementing clean technologies, including energy storage and renewable power. Prior to assuming his current position, Mr.
Gluski , 67 years old, has been President, Chief Executive Officer and a member of our Board of Directors since September 2011 and is a member of the Innovation and Technology Committee. Under his leadership, AES has become a world leader in implementing clean technologies, including energy storage and renewable power. Prior to assuming his current position, Mr.
The majority of our hydroelectric plants in Panama are based on run-of-the-river technology, with the exception of 223 MW Changuinola plant with regulation reservoirs and the 260 MW Bayano plant. Hydrological conditions have an important influence on profitability. Variations in hydrology can result in an excess or a shortfall in energy production relative to our contractual obligations.
The majority of our hydroelectric plants in Panama are based on run-of-the-river technology, with the exception of 223 MW Changuinola plant with regulating reservoirs and the 260 MW Bayano plant. Hydrological conditions have an important influence on profitability. Variations in hydrology can result in an excess or a shortfall in energy production relative to our contractual obligations.
AES Indiana has an exclusive right to provide electric service to the customers in its service area, covering about 528 square miles with an estimated population of approximately 969,000 people. AES Indiana owns and operates four generating stations, all within the state of Indiana. The first station, Petersburg, is coal-fired, and consists of four units.
AES Indiana has an exclusive right to provide electric service to the customers in its service area, covering about 528 square miles with an estimated population of approximately 968,000 people. AES Indiana owns and operates four generating stations, all within the state of Indiana. The first station, Petersburg, is coal-fired, and consists of four units.
AES El Salvador distribution rates are regulated by SIGET and are established through a traditional cost-based rate-setting process. AES El Salvador is permitted to recover its costs of providing distribution service as well as earn a regulated rate of return on assets, determined by the regulator, based on the utility's allowed regulated asset base, capital structure, and cost of capital.
AES El Salvador distribution rates are regulated by SIGET and are established through a traditional cost-based rate-setting process. AES El Salvador is permitted to recover its costs of providing distribution services as well as earn a regulated rate of return on assets, determined by the regulator, based on the utility's allowed regulated asset base, capital structure, and cost of capital.
Fluence Business Description — Fluence, created in 2018 as a joint venture by AES and Siemens AG, is a global energy storage technology and services company aligned with the AES strategy to drive decarbonization of the electric sector. Fluence is a leading global provider of energy storage products and services and artificial intelligence (AI)-enabled digital applications for renewables and storage.
Fluence Business Description — Fluence, created in 2018 as a joint venture by AES and Siemens AG, is a global energy storage technology and services company aligned with the AES strategy to drive decarbonization of the electric sector. Fluence is a leading global provider of energy storage products and services and AI-enabled digital applications for renewables and storage.
During 2022, new regulations associated with enviromental monitoring requirements were published, including Law 21,455, which is the framework on climate change; the Ventanas power plant new Operational Plan; emission standards for back up generators; and recently enacted Law 21,505, which promotes electric energy storage and electromobility.
During 2022, new regulations associated with environmental monitoring requirements were published, including Law 21,455, which is the framework on climate change; the Ventanas power plant new Operational Plan; emission standards for back up generators; and recently enacted Law 21,505, which promotes electric energy storage and electromobility.
Our New Energy Technologies SBU includes investments in new and innovative technologies to support leading-edge greener energy solutions. We measure the operating performance of our SBUs using Adjusted EBITDA, a non-GAAP measure. The Adjusted EBITDA by SBU for the year ended December 31, 2023 is shown below.
Our New Energy Technologies SBU includes investments in new and innovative technologies to support leading-edge greener energy solutions. We measure the operating performance of our SBUs using Adjusted EBITDA, a non-GAAP measure. The Adjusted EBITDA by SBU for the year ended December 31, 2024 is shown below.
The IRA includes increases, extensions, and/or new tax credits for onshore wind, solar, storage, and hydrogen projects. These changes in tax policy are supportive of our strategy to grow the AES Clean Energy business through development of our 51 GW U.S. pipeline.
The IRA includes increases, extensions, and/or new tax credits for onshore wind, solar, storage, and hydrogen projects. These changes in tax policy are supportive of our strategy to grow the AES Clean Energy business through the development of our 53 GW U.S. pipeline.
Coughlin received a bachelor's degree in commerce and finance from the University of Virginia and a Master of Business Administration degree from the University of California at Berkeley. Bernerd Da Santos , 60 years old, has served as Executive Vice President and President of the Renewables SBU since June 2023. Previously, Mr.
Coughlin received a bachelor's degree in commerce and finance from the University of Virginia and a Master of Business Administration degree from the University of California at Berkeley. Bernerd Da Santos , 61 years old, has served as Executive Vice President and President of the Renewables SBU since June 2023. Previously, Mr.
AES El Salvador owns and operates four solar farms, Opico Power, Moncagua, and Metapan with 4 MW, 3 MW and 15 MW of capacity, respectively; Meanguera del Golfo, a solar and battery storage facility with 0.6 MW capacity; AES Nejapa, a biomass power plant with 6 MW capacity; and 50% of Bosforo and Cuscatlan Solar, solar farms with 100 MW and 10 MW capacity, respectively.
AES El Salvador owns and operates four solar farms, Opico Power, Moncagua, and Metapan with 4 MW, 3 MW and 15 MW of capacity, respectively; Meanguera del Golfo, a solar and battery storage facility with 1 MW capacity; AES Nejapa, a biomass power plant with 6 MW capacity; and 50% of Bosforo and Cuscatlan Solar, solar farms with 100 MW and 10 MW capacity, respectively.
Coughlin joined AES in 2007 and spent his early years with the company leading Financial Planning & Analysis for AES’s renewables portfolio. Mr. Coughlin is a member of the boards of AES Clean Energy Development Holdings, LLC, AES U.S. Investments, Inc., AES U.S. Generation, LLC, and IPALCO. Mr.
Coughlin joined AES in 2007 and spent his early years with the company leading Financial Planning & Analysis for AES’ renewables portfolio. Mr. Coughlin is a member of the boards of AES Clean Energy Development Holdings, LLC, AES U.S. Investments, Inc., AES U.S. Generation, LLC, and IPALCO. Mr.
With the exception of our plants in the Dominican Republic and Panama, where we import LNG to utilize in the local market, we use gas from local suppliers in each market. 18% of the capacity of our generation fleet is coal-fired. In the U.S., most of our coal-fired plants are supplied from domestic coal.
With the exception of our plants in the Dominican Republic and Panama, where we import LNG to utilize in the local market, we use gas from local suppliers in each market. 16% of the capacity of our generation fleet is coal-fired. In the U.S., most of our coal-fired plants are supplied from domestic coal.
AES Ohio is a utility company that transmits and distributes electricity to approximately 539,000 retail customers in a 6,000 square mile area of West Central Ohio and is subject to regulatory authority—see Regulatory Framework and Market Structure below.
AES Ohio is a utility company that transmits and distributes electricity to approximately 537,000 retail customers in a 6,000 square mile area of West Central Ohio and is subject to regulatory authority—see Regulatory Framework and Market Structure below.
From July 2024 onwards, Bulgarian distribution companies serving the regulated market will source their electricity needs exclusively from the competitive segment of the market. Electricity outside the regulated market trades on one of the platforms of the Independent Bulgarian Electricity Exchange day-ahead market, intra-day market, or bilateral contracts market.
From July 2025 onwards, Bulgarian distribution companies serving the regulated market will source their electricity needs exclusively from the competitive segment of the market. Electricity outside the regulated market trades on one of the platforms of the Independent Bulgarian Electricity Exchange day-ahead market, intra-day market, or bilateral contracts market.
Beginning in June 2020, AES Indiana files an annual TDSIC rate adjustment for a return on, and of, 25 | 2023 Annual Report investments through March 31 with rates requested to be effective each November. Annual TDSIC plan update filings are required to be staggered by six months as ordered by the IURC and are filed each December.
Beginning in June 2020, AES Indiana files an annual TDSIC rate adjustment for a return on, and of, investments through March 31 with rates requested to be effective each November. Annual TDSIC plan update filings are required to be staggered by six months as ordered by the IURC and are filed each December.
The percentages for Adjusted EBITDA are the contribution by each SBU to the gross metric, i.e., the total Adjusted EBITDA by SBU, before deductions for Corporate. Our New Energy Technologies SBU generated losses for the year ended December 31, 2023.
The percentages for Adjusted EBITDA are the contribution by each SBU to the gross metric, i.e., the total Adjusted EBITDA by SBU, before deductions for Corporate. Our New Energy Technologies SBU generated losses for the year ended December 31, 2024.
AES primarily sells its energy in the wholesale electricity market where prices are largely regulated. In 2023, approximately 76% of the energy sold in the wholesale electricity market was produced by the hydropower plants, and 24% generated by the wind power plants.
AES primarily sells its energy in the wholesale electricity market where prices are largely regulated. In 2024, approximately 76% of the energy sold in the wholesale electricity market was produced by the hydropower plants, and 24% generated by the wind power plants.
The five coastal power plants comprising AES Southland are in areas that are critical for local reliability and play an important role in integrating the increasing amounts of renewable generation resources in California. The AES Southland Energy Infrastructure assets are composed of three once-through cooling ("OTC") power plants and two combined cycle gas-fired generation facilities.
The four coastal power plants comprising AES Southland are in areas that are critical for local reliability and play an important role in integrating the increasing amounts of renewable generation resources in California. The AES Southland Energy Infrastructure assets are composed of two once-through cooling ("OTC") power plants and two combined cycle gas-fired generation facilities.
Juan Ignacio Rubiolo , 47 years old, has served as Executive Vice President and President of the Energy Infrastructure SBU since March 2023. Prior to assuming his current position, Mr.
Juan Ignacio Rubiolo , 48 years old, has served as Executive Vice President and President of the Energy Infrastructure SBU since March 2023. Prior to assuming his current position, Mr.
See Item 7.— Management's Discussion and Analysis of Financial Condition and Results of Operations—SBU Performance Analysis of this Form 10-K for reconciliation and definitions of Adjusted EBITDA. 10 | 2023 Annual Report For financial reporting purposes, the Company's corporate activities are reported within "Corporate and Other" because they do not require separate disclosure.
See Item 7.— Management's Discussion and Analysis of Financial Condition and Results of Operations—SBU Performance Analysis of this Form 10-K for reconciliation and definitions of Adjusted EBITDA. For financial reporting purposes, the Company's corporate activities are reported within "Corporate and Other" because they do not require separate disclosure.
The fourth station, Georgetown, is a small peaking station that uses natural gas to power combustion turbines. In addition, AES Indiana helps meet its customers' energy needs with long-term contracts for the purchase of 300 MW of wind-generated electricity and 94 MW of solar-generated electricity.
The fourth station, Georgetown, is a peaking station that uses natural gas to power combustion turbines. In addition, AES Indiana helps meet its customers' energy needs with long-term contracts for the purchase of 200 MW of wind-generated electricity and 94 MW of solar-generated electricity.
AES Ohio's retail rates include various adjustment mechanisms including, but not limited to, the timely recovery of costs incurred related to power purchased through the competitive bid process, participation in the PJM RTO, severe storm damage, and energy efficiency. 26 | 2023 Annual Report The costs associated with providing high voltage transmission service and wholesale electric sales and ancillary services are subject to FERC jurisdiction.
AES Ohio's retail rates include various adjustment mechanisms including, but not limited to, the timely recovery of costs incurred related to power purchased through the competitive bid process, participation in the PJM RTO, severe storm damage, and energy efficiency. The costs associated with providing high voltage transmission service and wholesale electric sales and ancillary services are subject to FERC jurisdiction.
See Item 7.— Management’s Discussion and Analysis of Financial Condition and Results of Operations —SBU Performance Analysis—Non-GAAP Measures for reconciliation and definition. 22 | 2023 Annual Report Utilities Our Utilities SBU is the second largest contributor to our future growth, particularly in the U.S., where we are targeting a combined 10% annual growth in rate base at our two utilities: AES Indiana and AES Ohio.
See Item 7.— Management’s Discussion and Analysis of Financial Condition and Results of Operations —SBU Performance Analysis—Non-GAAP Measures for reconciliation and definition. 23 | 2024 Annual Report Utilities Our Utilities SBU is the second largest contributor to our future growth, particularly in the U.S., where we are targeting a combined 10% annual growth in rate base at our two utilities: AES Indiana and AES Ohio.
The Puerto Rico Energy Bureau is the main regulatory body. The bureau approves wholesale and retail rates, sets efficiency and interconnection standards, and oversees PREPA's compliance with Puerto Rico's renewable portfolio standard.
The Puerto Rico Energy Bureau is the main regulatory body. The bureau approves wholesale and retail rates, sets efficiency and interconnection standards, and oversees PREPA's compliance with Puerto Rico's renewables portfolio standard.
Tish Mendoza , 48 years old, has served as Executive Vice President and Chief Human Resources Officer since February 2021. Prior to assuming her current position, Ms.
Tish Mendoza , 49 years old, has served as Executive Vice President and Chief Human Resources Officer since February 2021. Prior to assuming her current position, Ms.
Key Financial Drivers — Financial results are driven by many factors, including, but not limited to: 34 | 2023 Annual Report • forced outages; • exposure to fluctuations of the Argentine peso; • timely collection of FONINVEMEM installments and outstanding receivables (see International Energy Markets and Regulatory Environment below); • natural gas prices and availability for contracted generation at TermoAndes; and • domestic energy demand and exports.
Key Financial Drivers — Financial results are driven by many factors, including, but not limited to: • forced outages; • exposure to fluctuations of the Argentine peso; • timely collection of FONINVEMEM installments and outstanding receivables (see International Energy Markets and Regulatory Environment below); • natural gas prices and availability for contracted generation at TermoAndes; and • domestic energy demand and exports.
Key Financial Drivers — The financial results of AES Clean Energy are primarily driven by the efficient construction and operation of renewable energy facilities across the U.S. under long-term PPAs, through which the energy price on the entire production of these facilities is determined.
Key Financial Drivers — The financial results of AES Clean Energy are primarily driven by the efficient construction and operation of renewable energy facilities across the U.S. under long-term PPAs (including long-term REC contracts), through which the energy price on the entire production of these facilities is determined.
AES Indiana and AES Ohio have implemented Uplight's consumer engagement solutions in support of energy efficiency and demand response programs, as well as piloted new solutions with Uplight. 5B Business Description — The Company has a strategic investment in 5B, a solar technology innovator with the mission to accelerate the transformation of the world to a clean energy future. 5B's technology design enables solar projects to be installed up to three times faster, while allowing for up to two times more energy within the same footprint and can sustain higher wind speeds than traditional solar plants.
AES Indiana and AES Ohio have implemented Uplight's consumer engagement solutions in support of energy efficiency and demand response programs, as well as piloted new solutions with Uplight. 5B Business Description — The Company has a strategic investment in 5B, a solar technology innovator with the mission to accelerate the transformation of the world to a clean energy future. 5B's prefabricated, pre-wired ground mount design enables solar projects to be installed up to three times faster, while allowing for up to two times more power within the same footprint and can sustain higher wind speeds than traditional solar plants.
AES Mexico Business Description — The TEG and TEP pet coke-fired plants, located in Tamuin, San Luis Potosi, supply power to their offtakers under long-term PPAs expiring in 2027 with a 90% availability guarantee. TEG and TEP secure their fuel under a long-term contract.
AES Mexico Business Description — The TEG and TEP pet coke-fired plants, located in Tamuin, San Luis Potosi, supply power to their offtakers under long-term PPAs expiring in 2027 with a 90% availability guarantee.
AES' six utility businesses distribute power to 2.6 million customers and AES' two utilities in the U.S. also include generation capacity totaling 3,500 MW. AES Indiana, our fully integrated regulated utility, and AES Ohio, our transmission and distribution regulated utility, each operate as the sole distributors of electricity within their respective jurisdictions.
AES' six utility businesses distribute power to 2.7 million customers and AES' two utilities in the U.S. also include generation capacity totaling 3,561 MW. AES Indiana, our fully integrated regulated utility, and AES Ohio, our transmission and distribution regulated utility, each operate as the sole distributors of electricity within their respective jurisdictions.
Key Financial Drivers — Financial results are driven by many factors, including, but not limited to: • contracting levels, providing additional benefits from improved operational performance, including performance incentives and/or excess energy sales; • changes in the methodology to calculate spot energy prices or Locational Marginal Prices, which impacts the excess energy sales; • improved operational performance and plant availability; and • changes in wind resources.
Key Financial Drivers — Financial results are driven by many factors, including, but not limited to: • contracting levels, providing additional benefits from improved operational performance, including performance incentives and/or excess energy sales; • changes in the methodology to calculate spot energy prices or Locational Marginal Prices, which impacts the excess energy sales; • improved operational performance and plant availability; and 20 | 2024 Annual Report • changes in wind resources.
PJM also administers the day-ahead and real-time energy markets, ancillary services market and forward capacity market for its members. Ohio law requires utilities to file either an Electric Security Plan ("ESP") or MRO plan to establish SSO rates. AES Ohio is currently operating pursuant to ESP 4, described in the paragraph below.
PJM also administers the day-ahead and real-time energy markets, ancillary services market and forward capacity market for its members. Electric Security Plan — Ohio law requires utilities to file either an Electric Security Plan ("ESP") or Market Rate Option ("MRO") plan to establish SSO rates. AES Ohio is currently operating pursuant to ESP 4, described below.
Among other matters, the order (i) establishes a revenue increase of $76 million for AES Ohio’s base rates for electric distribution service and (ii) provides for a return on equity of 9.999% and a cost of long-term debt of 27 | 2023 Annual Report 4.4% on a rate base of $783 million and based on a capital structure of 53.87% equity and 46.13% long-term debt.
Among other matters, the order (i) establishes a revenue increase of $76 million for AES Ohio’s base rates for electric distribution service and (ii) provides for a return on equity of 9.999% and a cost of long-term debt of 4.4% on a rate base of $783 million and based on a capital structure of 53.87% equity and 46.13% long-term debt.
Maritza is contracted under a 15-year PPA that expires in May 2026. AES Maritza is collecting receivables from NEK in a timely manner. However, NEK's liquidity position is subject to political conditions and regulatory changes in Bulgaria. The DG Comp is reviewing NEK’s PPA with AES Maritza pursuant to the European Union’s state aid rules.
Maritza is contracted under a 15-year PPA that expires in May 2026. AES Maritza is collecting receivables from NEK in a timely manner. However, NEK's liquidity position is subject to political conditions and regulatory changes in Bulgaria. 37 | 2024 Annual Report The DG Comp is reviewing NEK’s PPA with AES Maritza pursuant to the European Union’s state aid rules.
We do not have any planned major modifications of an existing source or plans to construct a new major source at this time which are expected to be subject to these regulations. Furthermore, the EPA, states, and other utilities are still evaluating potential impacts of the GHG regulations in our industry.
We do not have any planned major modifications of an existing source or plans to construct a new major source at this time which are expected to be subject to these regulations. Furthermore, the EPA, 48 | 2024 Annual Report states, and other utilities are still evaluating potential impacts of the GHG regulations in our industry.
Rubiolo has a Science Degree in Business from the Universidad Austral of Argentina, a Master of Project Management from the Quebec University in Canada and has completed the executive business and leadership program at the University of Virginia. How to Contact AES and Sources of Other Information Our principal offices are located at 4300 Wilson Boulevard, Arlington, Virginia 22203.
Rubiolo has a Science Degree in Business from the Universidad Austral of Argentina, a Master of Project Management from the Quebec University in Canada and has completed the executive business and leadership program at the University of Virginia. 55 | 2024 Annual Report How to Contact AES and Sources of Other Information Our principal offices are located at 4300 Wilson Boulevard, Arlington, Virginia 22203.
See Item 7.— Management's Discussion and Analysis of Financial Condition and Results of Operations—Key Trends and Uncertainties— 20 | 2023 Annual Report Macroeconomic and Political—Puerto Rico for further discussion of the long-term PPAs with PREPA. Key Financial Drivers — Financial results are driven by many factors, including, but not limited to, operational performance and plant availability.
See Item 7.— Management's Discussion and Analysis of Financial Condition and Results of Operations—Key Trends and Uncertainties—Macroeconomic and Political—Puerto Rico for further discussion of the long-term PPAs with PREPA. Key Financial Drivers — Financial results are driven by many factors, including, but not limited to, operational performance and plant availability.
They are responsible for implementing the economic dispatch of electricity in the wholesale market. The National Dispatch Center's objectives are to minimize the total cost of generation and maintain the reliability and security of the electric power system. Short-term power prices are determined on an hourly basis by the last dispatched generating unit.
They are responsible for implementing the economic dispatch of electricity in the wholesale market. The National Dispatch Center's objectives are to minimize the total cost of generation and maintain the reliability and security of the electric power system. Short-term power prices are 42 | 2024 Annual Report determined on an hourly basis by the last dispatched generating unit.
AES Colombia's commercial strategy aims to execute contracts with commercial and industrial customers and bid in public tenders, mainly with distribution companies, in order to reduce margin volatility with proper portfolio risk management. The remaining energy generated by our portfolio is sold to the spot market, including ancillary services.
AES Colombia's commercial strategy aims to execute contracts with commercial and industrial customers and bid in public tenders, mainly with distribution companies, in order to reduce margin volatility with proper portfolio risk management. The remaining energy generated by our portfolio is sold to the spot market, including ancillary 19 | 2024 Annual Report services.
The allowed rate of return and operating expenses deemed reasonable by the regulator are recovered through the regulated tariff that the utility charges to its customers. The tariff may be reviewed and reset by the regulator from time to time depending on local regulations, or the utility may seek a change in its tariffs.
The allowed rate of return and operating expenses deemed reasonable by the regulator are recovered through the regulated tariff that the utility charges to its customers. 11 | 2024 Annual Report The tariff may be reviewed and reset by the regulator from time to time depending on local regulations, or the utility may seek a change in its tariffs.
In line with the Green Blend strategy, AES Andes has committed to not build additional coal-based power plants and to advance the development of new renewables projects, including the implementation of BESS and other technological innovations that will provide greater flexibility and reliability to the system.
In line with the Green Blend strategy, AES Andes has committed to not build additional coal-based power plants and to advance the 33 | 2024 Annual Report development of new renewables projects, including the implementation of BESS and other technological innovations that will provide greater flexibility and reliability to the system.
The expansion of renewable capacity in the system is promoted by allowing the new power plants to sign contracts either with CAMMESA through the RenovAr program or directly by trading energy in the private market. During 2023, although the government increased prices to the end user, subsidies and the system deficit also increased.
The expansion of renewables capacity in the system is promoted by allowing new power plants to sign contracts either with CAMMESA through the RenovAr program or directly by trading energy in the private market. During 2024, although the government increased prices to the end user, subsidies and the system deficit also increased.
The Ethics and Compliance Department also has programs in place to prevent and detect criminal conduct, promote an organizational culture that encourages ethical behavior and a commitment to compliance with the law, and to monitor and enforce AES policies on corruption, bribery, money laundering and 54 | 2023 Annual Report associations with terrorists groups.
The Ethics and Compliance Department also has programs in place to prevent and detect criminal conduct, promote an organizational culture that encourages ethical behavior and a commitment to compliance with the law, and to monitor and enforce AES policies on corruption, bribery, money laundering and associations with terrorists groups.
AES Andes owns a diversified generation portfolio in Chile in terms of geography, technology, customers, and energy resources. AES Andes' generation plants are located near the principal electricity consumption centers, including Santiago, Valparaiso, and Antofagasta.
In Chile, AES owns a diversified generation portfolio in terms of geography, technology, customers, and energy resources. Our generation plants are located near the principal electricity consumption centers, including Santiago, Valparaiso, and Antofagasta.
Bulgaria’s power sector is supported by a diverse generation mix, universal access to the grid, and numerous cross-border connections with neighboring countries. In addition, it plays an important role in the energy balance in the southeast European region. Bulgaria has 13 GW of installed capacity enabling the country to meet and exceed domestic demand and export energy.
Bulgaria’s power sector is supported by a diverse generation mix, universal access to the grid, and numerous cross-border connections with neighboring countries. In addition, it plays an important role in the energy balance in the southeast European region. Bulgaria has 15,307 MW of installed capacity enabling the country to meet and exceed domestic demand and export energy.
Additional items that may have an impact on our businesses are discussed in Item 1A.— Risk Factors and Item 3.— Legal Proceedings . 5 | 2023 Annual Report Executive Summary Incorporated in 1981, AES is a global energy company accelerating the future of energy.
Additional items that may have an impact on our businesses are discussed in Item 1A.— Risk Factors and Item 3.— Legal Proceedings . 7 | 2024 Annual Report Executive Summary Incorporated in 1981, AES is a global energy company accelerating the future of energy.
From 2026 onwards, the regulated segment is expected to cease to exist. NEK will retain its capacity as the public provider of electricity until the end of June 2024, under which NEK acts as a single buyer and seller for all regulated transactions on the market.
From 2026 onwards, it is expected that the regulated segment will cease to exist. NEK will retain its capacity as the public provider of electricity until the end of June 2025, under which NEK acts as a single buyer and seller for all regulated transactions on the market.
To date, none of the states in which we operate have submitted plans identifying potential impacts to Company facilities. However, we cannot predict the possible outcome or potential impacts of this matter at this time.
To date, none of the states in which we operate have submitted plans that identify potential impacts to Company facilities. However, we cannot predict the possible outcome or potential impacts of this matter at this time.
In 2023, the ANLA begun the review of the reference terms for environmental impact studies and is working on a reform to the procedure for licensing process for non-conventional renewable energy projects.
In 2023, the ANLA begun the review of the reference terms for environmental impact studies and has been working on a reform to the procedure for licensing process for non-conventional renewable energy projects.
In addition, AES Indiana's rates include various adjustment mechanisms, including, but not limited to: (i) a rider to reflect changes in fuel and purchased power costs to meet AES Indiana's retail load requirements, referred to as the Fuel Adjustment Charge, (ii) a rider for the timely recovery of costs incurred to comply with environmental laws and regulations, including a return, (iii) a rider to reflect changes in ongoing RTO costs, (iv) riders for passing through to customers wholesale sales margins and capacity sales above and below established annual benchmarks, (v) a rider for a return on, and of, investments for eligible TDSIC improvements, and (vi) a rider for cost recovery, lost margin recoveries and performance incentives from AES Indiana's demand side management energy efficiency programs.
In addition, AES Indiana's rates include various adjustment mechanisms, including, but not limited to: (i) a rider to reflect changes in fuel and purchased power costs to meet AES Indiana's retail load requirements, referred to as the Fuel Adjustment Charge, (ii) a rider for the timely recovery of costs (including a return) to comply with environmental laws and regulations and investments in renewable energy projects, and recovery of costs related to generation consumables and environmental allowance expenses, referred to as the ECCRA, (iii) a rider to reflect changes in ongoing RTO costs, (iv) riders for passing through to customers wholesale sales margins and capacity sales above and below established annual benchmarks, (v) a rider for the timely recovery of costs (including a return) incurred for eligible TDSIC improvements, and (vi) a rider for cost recovery, lost margin recoveries and performance incentives from AES Indiana's demand side management energy efficiency programs.
The SMS requires continuous safety performance monitoring, risk assessment, and performance of periodic integrated environmental, health, and safety audits. The SMS provides a consistent framework for all AES operational businesses and construction projects to set expectations for risk identification and reduction, measure performance, and drive continuous improvements.
The SMS requires continuous safety performance monitoring, risk assessment, and performance of periodic integrated environmental, health, and safety audits. The SMS provides a consistent framework for all AES operational businesses and construction projects to set expectations for risk identification and reduction, measure performance, and drive continuous 53 | 2024 Annual Report improvements.
AES El Salvador Business Description — AES El Salvador is the majority owner of four of the five distribution companies operating in El Salvador (CAESS, CLESA, EEO and DEUSEM). AES El Salvador's territory covers 77% of the country and accounted for 4,293 GWh of the market energy sales during 2023.
AES El Salvador Business Description — AES El Salvador is the majority owner of four of the five distribution companies operating in El Salvador (CAESS, CLESA, EEO and DEUSEM). AES El Salvador's territory covers 77% of the country and accounted for 4,499 GWh of the market energy sales during 2024.
Agency for International 53 | 2023 Annual Report Development and he previously worked as an associate at the law firms of White & Case and Freshfields. Mr. Freedman received a B.A. from Columbia University and a J.D. from the Georgetown University Law Center. Andrés R.
Agency for International Development and he previously worked as an associate at the law firms of White & Case and Freshfields. Mr. Freedman received a B.A. from Columbia University and a J.D. from the Georgetown University Law Center. Andrés R.
In December 2021 and 2022, AES Indiana received equity capital contributions of $275 million and $253 million, respectively, from AES and CDPQ on a proportional share basis to be used for funding needs related to AES Indiana’s TDSIC and replacement generation projects. AES Ohio Business Description — DPL is a holding company whose principal subsidiary is AES Ohio.
In 2024 and 2022, AES Indiana received equity capital contributions of $225 million and $253 million, respectively, from AES and CDPQ on a proportional share basis to be used for funding needs related to AES Indiana’s TDSIC and replacement generation projects. AES Ohio Business Description — DPL is a holding company whose principal subsidiary is AES Ohio.
The IURC considers all allowable costs for ratemaking purposes, including a fair return on assets used and useful to providing service to customers. AES Indiana's tariff rates for electric service to retail customers consist of basic rates and approved charges.
The IURC sets tariff rates for electric service provided by AES Indiana. The IURC considers all allowable costs for ratemaking purposes, including a fair return on assets used and useful to providing service to customers. AES Indiana's tariff rates for electric service to retail customers consist of basic rates and approved charges.
Southland Energy — AES Huntington Beach Energy, LLC and AES Alamitos Energy, LLC, (collectively "Southland Energy") each operate under 20-year tolling agreements with Southern California Edison ("SCE") to provide 1,387 MW of combined cycle gas-fired generation (through 2040), The contracts are RAPAs with annual energy tolling put options.
Southland Energy — AES Huntington Beach Energy, LLC and AES Alamitos Energy, LLC, (collectively "Southland Energy") each operate under 20-year tolling agreements with Southern California Edison ("SCE") to provide 1,387 MW of combined cycle gas-fired generation (through 2040). The contracts are Resource Adequacy Purchase Agreements (“RAPAs”) with annual energy tolling put options.
AES Dominicana has entered into a new long-term LNG purchase contract through the second half of 2034 to cover the expected dispatch for Andres and Los Mina.
AES Dominicana has a long-term LNG purchase contract through the second half of 2034 to cover the expected dispatch for Andres and Los Mina.
We have two lines of business: generation and utilities. Our Renewables, Utilities, and Energy Infrastructure SBUs participate in our first business line, generation, in which we own and/or operate power plants to generate and sell power to customers, such as utilities, industrial users, and other intermediaries.
Our Renewables, Utilities, and Energy Infrastructure SBUs participate in our first business line, generation, in which we own and/or operate power plants to generate and sell power to customers, such as utilities, industrial users, and other intermediaries.
Smart Grid Comprehensive Settlement — In October 2020, AES Ohio entered into a Stipulation and Recommendation (settlement) with the staff of the PUCO and various customers, and organizations representing customers of AES Ohio and certain other parties with respect to, among other matters, AES Ohio's applications pending at the PUCO for (i) approval of AES Ohio's plan to modernize its distribution grid ("Smart Grid Phase 1"), (ii) findings that AES Ohio passed the Significantly Excessive Earnings Test ("SEET") for 2018 and 2019, and (iii) findings that AES Ohio's current ESP 1 satisfies the SEET and the more favorable in the aggregate ("MFA") regulatory test.
Smart Grid Comprehensive Settlement — On October 23, 2020, AES Ohio entered into a Stipulation and Recommendation (the Settlement) with the staff of the PUCO, various customers and organizations representing customers of AES Ohio and certain other parties with respect to, among other matters, AES Ohio's applications pending at the PUCO for (i) approval of AES Ohio's plan to modernize its distribution grid (Smart Grid Phase 1), (ii) findings that DP&L passed the SEET for 2018 and 2019, and (iii) findings that AES Ohio's ESP 1 satisfies the SEET and the more favorable in the aggregate (MFA) regulatory test.
The SEN has an installed capacity of 31,466 MW, and represents 99% of the installed generation capacity of the country. CEN coordinates all generation and transmission companies in the SEN. CEN minimizes the operating costs of the electricity system, while maximizing service quality and reliability requirements.
The SEN has an installed capacity of 35,461 MW and represents 99% of the installed generation capacity of the country. CEN coordinates all generation and transmission companies in the SEN. CEN minimizes the operating costs of the electricity system, while maximizing service quality and reliability requirements.
For example, AES has worked with several major technology companies to provide clean energy solutions to power their network of data centers and we see these relationships growing as utilization of generative artificial intelligence drives the expansion of data center use. In 2023, AES Clean Energy signed or was awarded 4,770 MW of PPAs.
For example, AES has worked with several major technology companies to provide clean energy solutions to power their network of data centers and we see these relationships growing as utilization of generative artificial intelligence drives the expansion of data center use. In 2024, AES Clean Energy signed or was awarded 3,506 MW of PPAs.
These certifications are included as exhibits to this Annual Report on Form 10-K. Our CEO provided a certification pursuant to Section 303A of the New York Stock Exchange Listed Company Manual on April 27, 2023. Our Code of Business Conduct ("Code of Conduct") and Corporate Governance Guidelines have been adopted by our Board of Directors.
These certifications are included as exhibits to this Annual Report on Form 10-K. Our CEO provided a certification pursuant to Section 303A of the New York Stock Exchange Listed Company Manual on May 16, 2024. Our Code of Business Conduct ("Code of Conduct") and Corporate Governance Guidelines have been adopted by our Board of Directors.
Development Strategy — In order to explore new business opportunities, AES El Salvador created AES Soluciones, an LED public lighting service provider and the main commercial and industrial solar photovoltaic EPC provider in the country.
Development Strategy — In order to explore new business opportunities, AES El Salvador created AES 29 | 2024 Annual Report Soluciones, an LED public lighting service provider and the main commercial and industrial solar photovoltaic EPC provider in the country.
AES Andes' diverse generation portfolio provides flexibility for the management of contractual obligations with regulated and unregulated customers, provides backup energy to the spot market and facilitates operations under a variety of market and hydrological conditions. 31 | 2023 Annual Report AES Andes' Green Blend strategy aims to reduce carbon intensity and incorporate renewable energy to extend our existing conventional PPAs.
Our diverse generation portfolio provides flexibility for the management of contractual obligations with customers, provides backup energy to the spot market, and facilitates operations under a variety of market and hydrological conditions. AES Andes' Green Blend strategy aims to reduce carbon intensity and incorporate renewable energy to extend our existing conventional PPAs.
AES Jordan Business Description — In Jordan, AES has a 37% controlling interest in Amman East, a 472 MW oil/gas-fired plant fully contracted with the national utility under a 25-year PPA expiring in 2033, and a 36% controlling interest in the IPP4 plant, a 250 MW oil/gas-fired peaker plant fully contracted with the national utility until 2039.
AES Jordan Business Description — In Jordan, AES has a 10% ownership interest in Amman East, a 472 MW oil/gas-fired plant fully contracted with the national utility under a 25-year PPA expiring in 2033, and a 10% ownership interest in the IPP4 plant, a 250 MW oil/gas-fired peaker plant fully contracted with the national utility until 2039.
AES Colombia’s installed capacity accounted for approximately 6% of system capacity at the end of 2023. AES Colombia is dependent on hydrological conditions, which influence generation and spot prices of non-contracted generation in Colombia.
AES Colombia’s installed capacity accounted for approximately 5% of system capacity at the end of 2024. AES Colombia is dependent on hydrological conditions, which influence generation and spot prices of non-contracted generation in Colombia.
In October 2019, we received formal approval as a government-mandated investor in the Son My LNG terminal project in partnership with PetroVietnam Gas. In September 2021, we signed the joint venture agreement with PetroVietnam Gas and established Son My LNG Terminal LLC in April 2022.
In October 2019, we received formal approval as a government-mandated investor in the Son My LNG terminal project in partnership with PetroVietnam Gas. In September 2021, we signed a joint venture agreement with PetroVietnam Gas, and in April 2022, established Son My LNG Terminal LLC, in which AES has a 39% interest.
AES expects to utilize this technology in conjunction with ongoing automation and digital initiatives to speed up delivery time and lower costs. 5B technology has been deployed at multiple locations in AES for a total of 23 MW across five projects in Panama, Chile, El Salvador, and the U.S., with future deployments expected across markets in the AES portfolio. 39 | 2023 Annual Report International Energy Markets and Regulatory Environment Chile The Chilean electricity industry is divided into three business segments: generation, transmission, and distribution.
AES expects to utilize this technology in conjunction with ongoing automation and digital initiatives to speed up delivery time and lower costs. 5B technology has been deployed at multiple locations in AES for a total of 23 MW across five projects in Panama, Chile, El Salvador, and the U.S., with future deployments expected across markets in the AES portfolio, including a 69 MW project in Puerto Rico. 40 | 2024 Annual Report Energy Markets and Regulatory Environment Chile The Chilean electricity industry is divided into three business segments: generation, transmission, and distribution.
AES Panama Business Description — AES owns and operates a natural gas-fired power plant with 381 MW of generation 36 | 2023 Annual Report capacity. Furthermore, AES operates an LNG regasification facility, a 180,000 cubic meter storage tank, and a truck loading facility.
AES Panama Business Description — AES owns and operates a natural gas-fired power plant with 381 MW of generation capacity. Furthermore, AES owns and operates an LNG regasification facility, a 180,000 cubic meter net storage tank, and a truck loading facility.
This strategy de-links company's PPAs from legacy fossil resources, grows its renewable energy portfolio, and delivers a competitive, reliable energy solution.
This strategy de-links our PPAs from legacy fossil resources, grows our renewable energy portfolio, and delivers a competitive, reliable energy solution.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

71 edited+23 added−16 removed174 unchanged
Biggest changeContinued slowing in China’s economic growth, demand for commodities and/or material changes in policy could result in lower economic growth and lower demand for electricity in our key markets, which could have a material adverse effect on our results of operations, financial condition and prospects. We may not have adequate risk mitigation or insurance coverage for liabilities.
Biggest changeFurther, the Chinese market has driven global materials demand and pricing for commodities, many of which are produced in our key electricity markets in South America. Volatility in economic growth in China could result in lower economic growth and lower demand for electricity in our key markets. We may not have adequate risk mitigation or insurance coverage for liabilities.
The management teams of our equity method investments may not have the level of experience, technical expertise, human resources, management and other attributes necessary to operate these projects or businesses optimally, and they may not share our business priorities, which could have a material adverse effect on value of such investments as well as our growth, business, financial condition, results of operations and prospects.
The management teams of our equity method investments may not have the level of experience, technical expertise, human resources, management and other attributes necessary to operate these projects or businesses optimally, and they may not share our business priorities, which could have a material adverse effect on the value of such investments as well as our growth, business, financial condition, results of operations and prospects.
Furthermore, changes in laws or regulations or changes in the application or interpretation of regulatory provisions in jurisdictions where we operate, particularly at our utilities where electricity tariffs are subject to regulatory review or approval, could adversely affect our business, including: • changes in the determination, definition or classification of costs to be included as reimbursable or pass-through costs to be included in the rates we charge our customers, including but not limited to costs incurred to upgrade our power plants to comply with more stringent environmental regulations; • changes in the determination of an appropriate rate of return on invested capital or that a utility's operating income or the rates it charges customers are too high, resulting in a rate reduction or consumer rebates; • changes in the definition or determination of controllable or non-controllable costs; • changes in tax law; • changes in law or regulation that limit or otherwise affect the ability of our counterparties (including sovereign or private parties) to fulfill their obligations (including payment obligations) to us; • changes in environmental law that impose additional costs or limit the dispatch of our generating facilities; • changes in the definition of events that qualify as changes in economic equilibrium; • changes in the timing of tariff increases; • other changes in the regulatory determinations under the relevant concessions; • other changes related to licensing or permitting which affect our ability to conduct business; or • other changes that impact the short- or long-term price-setting mechanism in the our markets.
Furthermore, changes in laws or regulations or changes in the application or interpretation of regulatory provisions in jurisdictions where we operate, particularly at our utilities where electricity tariffs are subject to regulatory review or approval, could adversely affect our business, including: • changes in the determination, definition or classification of costs to be included as reimbursable or pass-through costs to be included in the rates we charge our customers, including but not limited to costs incurred to upgrade our power plants to comply with more stringent environmental regulations; • changes in the determination of an appropriate rate of return on invested capital or that a utility's operating income or the rates it charges customers are too high, resulting in a rate reduction or consumer rebates; • changes in the definition or determination of controllable or non-controllable costs; • changes in tax law; • changes in law or regulation that limit or otherwise affect the ability of our counterparties (including sovereign or private parties) to fulfill their obligations (including payment obligations) to us; • changes in environmental law that impose additional costs or limit the dispatch of our generating facilities; • changes in the definition of events that qualify as changes in economic equilibrium; • changes in the timing of tariff increases; • other changes in the regulatory determinations under the relevant concessions; • other changes related to licensing or permitting which affect our ability to conduct business; or • other changes that impact the short- or long-term price-setting mechanism in our markets.
If any of the credit ratings of the The AES Corporation and its subsidiaries were to be downgraded, our ability to raise capital on favorable terms could be impaired and our borrowing costs could increase. Furthermore, counterparties may no longer be willing to accept general unsecured commitments by The AES Corporation to provide credit support.
If any of the credit ratings of The AES Corporation and its subsidiaries were to be downgraded, our ability to raise capital on favorable terms could be impaired and our borrowing costs could increase. Furthermore, counterparties may no longer be willing to accept general unsecured commitments by The AES Corporation to provide credit support.
In addition, severe weather and natural disasters, such as hurricanes, floods, tornadoes, icing events, earthquakes, dam failures and tsunamis can be destructive and could prevent us from operating our business in the normal course by causing power outages and property damage, reducing revenue, affecting the availability of fuel and water, causing injuries and loss of life, and requiring us to incur additional costs, for example, to restore service and repair damaged facilities, to obtain replacement power and to access available financing sources.
In addition, severe weather and natural disasters, such as hurricanes, floods, tornadoes, icing events, earthquakes, dam failures, wildfires and tsunamis can be destructive and could prevent us from operating our business in the normal course by causing power outages and property damage, reducing revenue, affecting the availability of fuel and water, causing injuries and loss of life, and requiring us to incur additional costs, for example, to restore service and repair damaged facilities, to obtain replacement power and to access available financing sources.
Our ability to arrange for financing on either a recourse or non-recourse basis and the costs of such capital are dependent on numerous factors, some of which are beyond our control, including: general economic and capital market conditions; the availability of bank credit; the availability of tax equity investors; the financial condition, performance and prospects of AES as well as our competitors; and changes in tax and securities laws.
Our ability to arrange for financing on either a recourse or non-recourse basis and the costs of such capital are dependent on numerous factors, some of which are beyond our control, including: general economic and capital market conditions; the availability of bank credit; the availability of tax equity investors and/or transferability tax credit buyers; the financial condition, performance and prospects of AES as well as our competitors; and changes in tax and securities laws.
Volatility in market prices for fuel and electricity may result from, among other things: • plant availability in the markets generally; • availability and effectiveness of transmission facilities owned and operated by third parties; • competition and new entrants; • seasonality, hydrology and other weather conditions; • illiquid markets; • transmission, transportation constraints, inefficiencies and/or availability; • renewables source contribution to the supply stack; • increased adoption of distributed generation; • energy efficiency and demand side resources; • available supplies of coal, natural gas, and crude oil and refined products; • generating unit performance; • natural disasters, terrorism, wars, embargoes, pandemics and other catastrophic events; • energy, market and environmental regulation, legislation and policies; • general economic conditions that impact demand and energy consumption; and • bidding behavior and market bidding rules.
Volatility in market prices for fuel and electricity may result from, among other things: • plant availability in the markets generally; • availability and effectiveness of transmission facilities owned and operated by third parties; • competition and new entrants; • seasonality, hydrology and other weather conditions; 59 | 2024 Annual Report • illiquid markets; • transmission, transportation constraints, inefficiencies and/or availability; • renewables source contribution to the supply stack; • increased adoption of distributed generation; • energy efficiency and demand side resources; • available supplies of coal, natural gas, and crude oil and refined products; • generating unit performance; • natural disasters, terrorism, wars, embargoes, pandemics and other catastrophic events; • energy, market and environmental regulation, legislation and policies; • general economic conditions that impact demand and energy consumption; and • bidding behavior and market bidding rules.
Changes in temperature, precipitation and snow pack conditions also could affect the amount and timing of hydroelectric generation. To the extent that hydrological conditions result in droughts or other conditions negatively affect our hydroelectric generation business, such as has happened in Panama in 2019 and Brazil in 2021, our results of operations can be materially adversely affected.
Changes in temperature, precipitation and snow pack conditions also could affect the amount and timing of hydroelectric generation. To the extent that hydrological conditions result in droughts or other conditions negatively affect our hydroelectric generation business, such as has happened in Panama in 2019, Brazil in 2021 and Colombia in 2024, our results of operations can be materially adversely affected.
This level of indebtedness and related security could have other consequences, including: • making it more difficult to satisfy debt service and other obligations; • increasing our vulnerability to general adverse industry and economic conditions, including adverse changes in foreign exchange rates, interest rates and commodity prices; • reducing available cash flow to fund other corporate purposes and grow our business; • limiting our flexibility in planning for, or reacting to, changes in our business and the industry; • placing us at a competitive disadvantage to our competitors that are not as highly leveraged; and • limiting, along with financial and other restrictive covenants relating to such indebtedness, our ability to borrow additional funds, pay cash dividends or repurchase common stock.
This level of indebtedness and related security could have other consequences, including: • making it more difficult to satisfy debt service and other obligations; • increasing our vulnerability to general adverse industry and economic conditions, including adverse changes in foreign exchange rates, interest rates and commodity prices; • reducing available cash flow to fund other corporate purposes and grow our business; • limiting our flexibility in planning for, or reacting to, changes in our business and the industry; • placing us at a competitive disadvantage to our competitors that are not as highly leveraged; and 71 | 2024 Annual Report • limiting, along with financial and other restrictive covenants relating to such indebtedness, our ability to borrow additional funds, pay cash dividends or repurchase common stock.
See Item 7.— Management's Discussion and Analysis—Critical Accounting Policies and Estimates—Pension and Other Postretirement Plans and Note 15— Benefit Plans included in Item 8.— Financial Statements and Supplementary Data . Impairment of long-lived assets would negatively impact our consolidated results of operations and net worth.
See Item 7.— Management's Discussion and Analysis—Critical Accounting Policies and Estimates—Pension and Other Postretirement Plans and Note 16— Benefit Plans included in Item 8.— Financial Statements and Supplementary Data . Impairment of long-lived assets would negatively impact our consolidated results of operations and net worth.
COVID-19 or another pandemic could have material and adverse effects on our results of operations, financial condition and cash flows due to, among other factors: • further decline in customer demand as a result of general decline in business activity; • further destabilization of the markets and decline in business activity negatively impacting customers’ ability to pay for our services when due or at all, including downstream impacts, whereby the utilities’ customers are unable to pay monthly bills or receiving a moratorium from payment obligations, resulting in inability on the part of utilities to make payments for power supplied by our generation companies; • decline in business activity causing our commercial and industrial customers to experience declining revenues and liquidity difficulties that impede their ability to pay for power that we supply; • government moratoriums or other regulatory or legislative actions that limit changes in pricing, delay or suspend customers’ payment obligations or permit extended payment terms applicable to customers of our utilities or to our offtakers under power purchase agreements, in particular, to the extent that such measures are not mitigated by associated government subsidies or other support to address any shortfall or deficiencies in payments; • claims by our PPA counterparties for delay or relief from payment obligations or other adjustments, including claims based on force majeure or other legal grounds; • further decline in spot electricity prices; • the destabilization of the markets and decline in business activity negatively impacting our customer growth in our service territories at our utilities; • negative impacts on the health of our essential personnel and on our operations as a result of implementing stay-at-home, quarantine, curfew and other social distancing measures; • delays or inability to access, transport and deliver fuel to our generation facilities due to restrictions on business operations or other factors affecting us and our third-party suppliers; • delays or inability to access equipment or the availability of personnel to perform planned and unplanned maintenance or disruptions in supply chain, which can, in turn, lead to disruption in operations; • a deterioration in our ability to ensure business continuity, including increased cybersecurity attacks related to the work-from-home environment; 60 | 2023 Annual Report • further delays to our construction projects, including at our renewables projects, and the timing of the completion of renewables projects; • delay or inability to receive the necessary permits for our development projects due to delays or shutdowns of government operations; • delays in achieving our financial goals, strategy and digital transformation; • deterioration of the credit profile of The AES Corporation and/or its subsidiaries and difficulty accessing the capital and credit markets on favorable terms, or at all, and a severe disruption and instability in the global financial markets, or deterioration in credit and financing conditions, which could affect our access to capital necessary to fund business operations or address maturing liabilities on a timely basis; • delays or inability to complete asset sales on anticipated terms or to redeploy capital as set forth in our capital allocation plans; • increased volatility in foreign exchange and commodity markets; • deterioration of economic conditions, demand and other related factors resulting in impairments to long-lived assets; and • delay or inability in obtaining regulatory actions and outcomes that could be material to our business, including for recovery of COVID-19 related losses and the review and approval of our rates at our U.S. regulated utilities.
Regional or global outbreaks of infectious or contagious diseases, such as occurred during the COVID-19 pandemic, could have material and adverse effects on our results of operations, financial condition and cash flows due to, among other factors: • decline in customer demand as a result of general decline in business activity; • destabilization of the markets and decline in business activity negatively impacting customers’ ability to pay for our services when due or at all, including downstream impacts, whereby the utilities’ customers are unable to pay monthly bills or receiving a moratorium from payment obligations, resulting in inability on the part of utilities to make payments for power supplied by our generation companies; • decline in business activity causing our commercial and industrial customers to experience declining revenues and liquidity difficulties that impede their ability to pay for power that we supply; • government moratoriums or other regulatory or legislative actions that limit changes in pricing, delay or suspend customers’ payment obligations or permit extended payment terms applicable to customers of our utilities or to our offtakers under power purchase agreements, in particular, to the extent that such measures are not mitigated by associated government subsidies or other support to address any shortfall or deficiencies in payments; • claims by our PPA counterparties for delay or relief from payment obligations or other adjustments, including claims based on force majeure or other legal grounds; • decline in spot electricity prices; • the destabilization of the markets and decline in business activity negatively impacting our customer growth in our service territories at our utilities; • negative impacts on the health of our essential personnel and on our operations as a result of implementing stay-at-home, quarantine, curfew and other social distancing measures; • delays or inability to access, transport and deliver fuel to our generation facilities due to restrictions on business operations or other factors affecting us and our third-party suppliers; • delays or inability to access equipment or the availability of personnel to perform planned and unplanned maintenance or disruptions in supply chain, which can, in turn, lead to disruption in operations; • a deterioration in our ability to ensure business continuity, including increased cybersecurity attacks related to a work-from-home environment; • delays to our construction projects, including at our renewables projects, and the timing of the completion of renewables projects; • delay or inability to receive the necessary permits for our development projects due to delays or shutdowns of government operations; • delays in achieving our financial goals, strategy and digital transformation; • deterioration of the credit profile of The AES Corporation and/or its subsidiaries and difficulty accessing the capital and credit markets on favorable terms, or at all, and a severe disruption and instability in the global financial markets, or deterioration in credit and financing conditions, which could affect our access to capital necessary to fund business operations or address maturing liabilities on a timely basis; • delays or inability to complete asset sales on anticipated terms or to redeploy capital as set forth in our capital allocation plans; • increased volatility in foreign exchange and commodity markets; • deterioration of economic conditions, demand and other related factors resulting in impairments to long-lived assets; and 63 | 2024 Annual Report • delay or inability in obtaining regulatory actions and outcomes that could be material to our business, including for recovery of related losses and the review and approval of our rates at our U.S. regulated utilities.
Some of our subsidiaries participate in defined benefit pension plans and their net pension plan obligations may require additional significant contributions. We have 28 defined benefit plans, five at U.S. subsidiaries and the remaining plans at foreign subsidiaries, which cover substantially all of the employees at these subsidiaries.
Some of our subsidiaries participate in defined benefit pension plans and their net pension plan obligations may require additional significant contributions. We have 27 defined benefit plans, five at U.S. subsidiaries and the remaining plans at foreign subsidiaries, which cover substantially all of the employees at these subsidiaries.
None of the projects that are in default are owned by subsidiaries that, individually or in the aggregate, meet the applicable standard of materiality in The AES Corporation's revolving credit facility or other debt agreements to trigger an event of default or permit acceleration under such indebtedness.
None of the projects that are in default are owned by subsidiaries that, individually or in the aggregate, meet the applicable standard of materiality in The AES Corporation's revolving credit facilities or other debt agreements to trigger an event of default or permit acceleration under such indebtedness.
We have implemented measures to help prevent unauthorized access to our systems and facilities, including certain measures to comply with mandatory regulatory reliability standards. To date, cyber-attacks have not had a material impact on our operations or financial results.
We have implemented measures to help prevent unauthorized access to our systems and facilities, including certain measures to comply with mandatory regulatory reliability standards. To date, cyber breaches have not had a material impact on our operations or financial results.
In particular, in the U.S., AES’ renewable energy generation growth strategy depends in part on federal, state and local government policies and incentives that support the development, financing, ownership and operation of renewable energy generation projects, including investment tax credits, production tax credits, accelerated depreciation, renewable portfolio standards, feed-in-tariffs and similar programs, renewable energy credit mechanisms, and tax exemptions.
In particular, in the U.S., AES’ renewable energy generation growth strategy depends in part on federal, state and local government policies and incentives that support the development, financing, ownership and operation of renewable energy generation projects, including investment tax credits, production tax credits, accelerated depreciation, renewable portfolio standards, feed-in-tariffs and similar programs, REC mechanisms and compliance programs, and tax exemptions.
Objections of or challenges by local communities or interest groups may delay or impede permitting for our development projects. Additionally, in the U.S., there is a significant backlog of interconnection requests for renewables projects and the average time for receiving interconnection approvals is over four years, with significant variations across projects.
Objections of or challenges by local communities or interest groups may delay or impede permitting for our development projects. Additionally, in the U.S., there is a significant backlog of interconnection requests for renewables and battery storage projects and the average time for receiving interconnection approvals is over four years, with significant variations across projects and regions.
However, as a result of future mix of 71 | 2023 Annual Report distributions, write-down of assets, dispositions and other changes to our financial position and results of operations, one or more of these subsidiaries, individually or in the aggregate, could fall within the applicable standard of materiality and thereby upon an acceleration of such subsidiary's debt, trigger an event of default and possible acceleration of Parent Company indebtedness.
However, as a result of future mix of distributions, write-down of assets, dispositions and other changes to our financial position and results of operations, one or more of these subsidiaries, individually or in the aggregate, could fall within the applicable standard of materiality and thereby upon an acceleration of such subsidiary's debt, trigger an event of default and possible acceleration of Parent Company indebtedness.
Any impairment of long-lived assets could have a material adverse effect on our business, financial condition, results of operations, and prospects. 65 | 2023 Annual Report Risks associated with Governmental Regulation and Laws Our operations are subject to significant government regulation and could be adversely affected by changes in the law or regulatory schemes.
Any impairment of long- 66 | 2024 Annual Report lived assets could have a material adverse effect on our business, financial condition, results of operations, and prospects. Risks associated with Governmental Regulation and Laws Our operations are subject to significant government regulation and could be adversely affected by changes in the law or regulatory schemes.
The control and management of these risks depend upon adequate development and training of personnel and on operational procedures, preventative maintenance plans, and specific programs supported by quality control systems, which may not prevent the occurrence and impact of these risks. 55 | 2023 Annual Report In addition, our battery storage operations also involve risks associated with lithium-ion batteries.
The control and management of these risks depend upon adequate development and training of personnel and on operational procedures, preventative maintenance plans, and specific programs supported by quality control systems, which may not prevent the occurrence and impact of these risks. In addition, our battery storage operations also involve risks associated with lithium-ion batteries.
If any of the foregoing risks materialize, costs may increase or revenues may decrease and there could be a material adverse effect on our results of operations, financial condition,cash flows and reputation. Concerns about data privacy have led to increased regulation and other actions that could impact our businesses.
If any of the foregoing risks materialize, costs may increase or revenues may decrease and there could be a material adverse effect on our results of operations, financial condition, cash flows and reputation. 70 | 2024 Annual Report Concerns about data privacy have led to increased regulation and other actions that could impact our businesses.
Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects. 66 | 2023 Annual Report Some of our U.S. businesses are subject to the provisions of various laws and regulations administered by FERC, NERC and by state utility commissions that can have a material effect on our operations.
Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects. 67 | 2024 Annual Report Some of our U.S. businesses are subject to the provisions of various laws and regulations administered by FERC, NERC and by state utility commissions that can have a material effect on our operations.
As part of this strategy, we routinely utilize fixed price or indexed forward physical purchase and sales contracts, futures, financial swaps, and option contracts traded in the over-the-counter markets or on exchanges. We also enter into contracts which help us manage our interest rate exposure.
As part 65 | 2024 Annual Report of this strategy, we routinely utilize fixed price or indexed forward physical purchase and sales contracts, futures, financial swaps, and option contracts traded in the over-the-counter markets or on exchanges. We also enter into contracts which help us manage our interest rate exposure.
The remaining terms of the power sales contracts of our generation plants range from one to more than 20 years. In many cases, we also limit our exposure to fluctuations in fuel prices by entering into long-term contracts for fuel with a limited number of suppliers.
The remaining terms of the power sales contracts of our generation plants range from one to more than 20 years. In many cases, we also limit our exposure to fluctuations in fuel prices by entering into long- 60 | 2024 Annual Report term contracts for fuel with a limited number of suppliers.
For example, our subsidiaries may instruct contractors to begin the construction process or seek to procure equipment without having 59 | 2023 Annual Report financing, a PPA or critical permits in place (or enter into a PPA, procurement agreement or other agreement without agreed financing). If the project does not proceed, our subsidiaries may retain certain liabilities.
For example, our subsidiaries may instruct contractors to begin the construction process or seek to procure equipment without having financing, a PPA or critical permits in place (or enter into a PPA, procurement agreement or other agreement without agreed financing). If the project does not proceed, our subsidiaries may retain certain liabilities.
We continue to assess potential threats and vulnerabilities and make investments to address them, including global monitoring of networks and systems, identifying and implementing new technology, improving user awareness through employee security training, and updating our security policies as well as those for third-party providers.
We continue to assess potential threats and vulnerabilities and make investments to address them, including global monitoring of networks and systems, identifying and 62 | 2024 Annual Report implementing new technology, improving user awareness through employee security training, and updating our security policies as well as those for third-party providers.
Supreme Court ruled that such permitting would only be required if such sources also must obtain a new source review permit for increases in other regulated pollutants. For further discussion of the regulation of GHG 68 | 2023 Annual Report emissions, see Item 1. — Business—Environmental and Land-Use Regulations—U.S. Environmental and Land-Use Legislation and Regulations—Greenhouse Gas Emissions above.
In 2016, the U.S. Supreme Court ruled that such permitting would only be required if such sources also must obtain a new source review permit for increases in other regulated pollutants. For further discussion of the regulation of GHG emissions, see Item 1. — Business—Environmental and Land-Use Regulations—U.S. Environmental and Land-Use Legislation and Regulations—Greenhouse Gas Emissions above.
Any such developments could impede the realization of our U.S. renewables strategy by resulting in, among other items, lack of a satisfactory market for the development and/or financing of our U.S. renewable energy projects, abandoning the development of certain U.S. renewable energy projects, a loss of our investments in the projects, and/or reduced project returns.
Any such developments could impede the realization of our U.S. renewables strategy by resulting in, among other items, lack of a satisfactory market for the development and/or financing of our U.S. renewable energy 57 | 2024 Annual Report projects, abandoning the development of certain U.S. renewable energy projects, a loss of our investments in the projects, and/or reduced project returns.
The theft, damage or improper disclosure of sensitive electronic data collected by us can subject us to penalties for 69 | 2023 Annual Report violation of applicable privacy laws, subject us to claims from third parties, require compliance with notification and monitoring regulations, and harm o ur reputation.
The theft, damage or improper disclosure of sensitive electronic data collected by us can subject us to penalties for violation of applicable privacy laws, subject us to claims from third parties, require compliance with notification and monitoring regulations, and harm o ur reputation.
However, we may not cover the entire exposure of our 64 | 2023 Annual Report assets or positions to market price or interest rate volatility, and the coverage will vary over time. Furthermore, the risk management practices we have in place may not always perform as planned.
However, we may not cover the entire exposure of our assets or positions to market price or interest rate volatility, and the coverage will vary over time. Furthermore, the risk management practices we have in place may not always perform as planned.
For example, The AES Corporation's revolving credit facility and outstanding senior notes include events of default for certain bankruptcy related events involving material subsidiaries and relating to accelerations of outstanding material debt of material subsidiaries or any subsidiaries that in the aggregate constitute a material subsidiary; or • result in foreclosure on the assets that are pledged under the non-recourse financings, resulting in write-downs of assets and eliminating any and all potential future benefits derived from those assets.
For example, The AES Corporation's revolving credit facilities and outstanding senior notes include events of default for certain bankruptcy related events 72 | 2024 Annual Report involving material subsidiaries and relating to accelerations of outstanding material debt of material subsidiaries or any subsidiaries that in the aggregate constitute a material subsidiary; or • result in foreclosure on the assets that are pledged under the non-recourse financings, resulting in write-downs of assets and eliminating any and all potential future benefits derived from those assets.
At our businesses where cost recovery is available, recovery of costs to restore service and repair damaged facilities is or may be subject to regulatory approval, and any determination by the regulator not to permit timely and full recovery of the costs incurred.
At our businesses where cost recovery is available, recovery of costs to restore service and repair damaged facilities is or may be subject to regulatory approval, and any determination by the 64 | 2024 Annual Report regulator not to permit timely and full recovery of the costs incurred.
Certain of our subsidiaries are in default with respect to all or a portion of their outstanding indebtedness. The total debt classified as current in our Consolidated Balance Sheets related to such defaults was $325 million as of December 31, 2023.
Certain of our subsidiaries are in default with respect to all or a portion of their outstanding indebtedness. The total debt classified as current in our Consolidated Balance Sheets related to such defaults was $540 million as of December 31, 2024.
Accordingly, we may be required to provide some other form of assurance, such as a letter of credit and/or collateral, to backstop or replace any credit support by The AES Corporation, which reduces our available credit. There can be no assurance that counterparties will accept such guarantees or other assurances. The market price of our common stock may be volatile.
Accordingly, we may be required to provide some other form of assurance, such as a letter of credit and/or collateral, to backstop or replace any credit support by The AES Corporation, which reduces our available credit. There can be no assurance that counterparties will accept such guarantees or other assurances.
Therefore, The AES Corporation's ability to make payments on its indebtedness and to fund its other obligations is dependent not only on the ability of its subsidiaries to generate cash, but also on the ability of the subsidiaries to distribute cash to it in the form of dividends, fees, interest, tax sharing payments, loans or otherwise.Our subsidiaries face various restrictions in their ability to distribute cash.
Therefore, The AES Corporation's ability to make payments on its indebtedness and to fund its other obligations is dependent not only on the ability of its subsidiaries to generate cash, but also on the ability of the subsidiaries to distribute cash to it in the form of dividends, fees, interest, tax sharing payments, loans or otherwise.
As of December 31, 2023, Fluence continues to report that a material weakness in its internal control over revenue recognition and related inventory has not yet been remediated. Such material weakness can impact the reliability of the Fluence financial information that we may include as part of our financial information.
As of December 31, 2024, Fluence continues to report that a material weakness in its internal control over revenue recognition has not yet been remediated. Such material weakness can impact the reliability of the Fluence financial information that we may include as part of our financial information.
Any loss or corruption of confidential or proprietary data through a breach may: • impact our operations, revenue, strategic objectives, customer and vendor relationships; • expose us to legal claims and/or regulatory investigations and proceedings; • require extensive repair and restoration costs for additional security measures to avert future attacks; • impair our reputation and limit our competitiveness for future opportunities; and • impact our financial and accounting systems and, subsequently, our ability to correctly record, process and report financial information.
Any loss or corruption of confidential or proprietary data through a breach of our systems or certain of our third party vendor systems may: • impact our operations, revenue, strategic objectives, customer and vendor relationships; • expose us to negative publicity, legal claims, regulatory investigations and proceedings and associated penalties or liabilities; • require extensive repair and restoration costs for additional security measures to avert future attacks; • impair our reputation and limit our competitiveness for future opportunities; and • impact our financial and accounting systems and, subsequently, our ability to correctly record, process and report financial information.
The EPA has brought suit against and obtained settlements with many companies for allegedly making major 67 | 2023 Annual Report modifications to a coal-fired generating units without proper permit approvals and without installing best available control technology.
The EPA has brought suit against and obtained settlements with many companies for allegedly making major 68 | 2024 Annual Report modifications to coal-fired generating units without proper permit approvals and without installing best available control technology.
We are in the business of generating and distributing electricity, which involves certain risks that can adversely affect financial and operating performance, including: • changes in the availability of our generation facilities or distribution systems due to increases in scheduled and unscheduled plant outages, equipment failure, failure of transmission systems, labor disputes, disruptions in fuel supply, poor hydrologic and wind conditions, inability to comply with regulatory or permit requirements, or catastrophic events such as fires, floods, storms, hurricanes, earthquakes, dam failures, tsunamis, explosions, terrorist acts, vandalism, cyber-attacks or other similar occurrences; and • changes in our operating cost structure, including, but not limited to, increases in costs relating to gas, coal, oil and other fuel; fuel transportation; purchased electricity; operations, maintenance and repair; environmental compliance, including the cost of purchasing emissions offsets and capital expenditures to install environmental emission equipment; transmission access; and insurance.
We are in the business of generating and distributing electricity, which involves certain risks that can adversely affect financial and operating performance, including: • changes in the availability of our generation facilities or distribution systems due to increases in scheduled and unscheduled plant outages, equipment failure, failure of transmission systems, labor disputes, disruptions in fuel supply, poor hydrologic and wind conditions, inability to comply with regulatory or permit requirements, or catastrophic events such as fires, floods, storms, hurricanes, earthquakes, dam failures, tsunamis, explosions, terrorist acts, vandalism, cyber-attacks or other similar occurrences; and • changes in our operating cost structure, including, but not limited to, increases in costs relating to gas, coal, oil and other fuel; fuel transportation; purchased electricity; operations, maintenance and repair; environmental compliance, including the cost of purchasing emissions offsets and capital expenditures to install environmental emission equipment; transmission access; and insurance. 56 | 2024 Annual Report Our businesses require reliable transportation sources (including related infrastructure such as roads, ports and rail), power sources and water sources to access and conduct operations.
In 2023, the Company's subsidiaries operated businesses that had total CO 2 emissions of approximately 34 million metric tonnes, approximately 11 million of which were emitted by our U.S. businesses (both figures are ownership adjusted). The Company uses CO 2 emission estimation methodologies supported by "The Greenhouse Gas Protocol" reporting standard on GHG emissions.
In 2024, the Company's subsidiaries operated businesses that had total direct CO 2 emissions of approximately 28 million metric tonnes, approximately 10 million of which were emitted by our U.S. businesses (both figures are ownership adjusted). The Company uses CO 2 emission estimation methodologies supported by "The Greenhouse Gas Protocol" reporting standard on GHG emissions.
Competition is increasing and could adversely affect us. The power production markets in which we operate are characterized by numerous strong and capable competitors, many of whom may have extensive and diversified developmental or operating experience (including both domestic and international) and financial resources similar to, or greater than, ours.
The power production markets in which we operate are characterized by numerous strong and capable competitors, many of whom may have extensive and diversified developmental or operating experience (including both domestic and international) and financial resources similar to, or greater than, ours.
During 2023, the Netherlands, Bulgaria, and Vietnam adopted legislation to implement Pillar 2 effective as of January 1, 2024. We will continue to monitor the issuance of draft legislation in other non-EU countries where the Company operates that are considering Pillar 2 amendments. The impact to the Company remains unknown but may be material.
The Netherlands, Bulgaria, and Vietnam adopted legislation to implement Pillar 2 effective as of January 1, 2024. The impact to the Company during 2024 was not material. We will continue to monitor the issuance of draft legislation in other non-EU countries where the Company operates that are considering Pillar 2 amendments.
Most of the subsidiaries are obligated, pursuant to loan agreements, indentures or non-recourse financing arrangements, to satisfy certain restricted payment covenants or other conditions before they may make distributions. Business performance and local accounting and tax rules may also limit dividend distributions.
Our subsidiaries face various restrictions in their ability to distribute cash. Most of the subsidiaries are obligated, pursuant to loan agreements, indentures or non-recourse financing arrangements, to satisfy certain restricted payment covenants or other conditions before they may make distributions. Business performance and local accounting and tax rules may also limit dividend distributions.
If these suppliers cannot perform, we would seek to meet our fuel requirements by purchasing fuel at market prices, exposing us to market price volatility and the risk that fuel and transportation may not be available during certain periods at any price, which could adversely impact the profitability of the affected business and our results of operations, and could result in a breach of agreements with other counterparties, including, without limitation, offtakers or lenders.
If these suppliers cannot perform, we would seek to meet our fuel requirements by purchasing fuel at market prices, exposing us to market price volatility and the risk that fuel and transportation may not be available during certain periods at any price, which could adversely impact the profitability of the affected business and our results of operations, and could result in a breach of agreements with other counterparties, including, without limitation, offtakers or lenders. 61 | 2024 Annual Report The financial performance of our facilities is dependent on the credit quality of, and continued performance by, suppliers and customers.
In addition, if a joint venture partner becomes insolvent or bankrupt or is otherwise unable to meet its obligations to or share of liabilities for the joint venture, we may be responsible for meeting certain obligations of the joint ventures to the extent provided for in our governing documents or applicable law.
In addition, if a joint venture partner becomes insolvent or bankrupt or otherwise fails to meet its obligations to or share of liabilities for the joint venture, we may be responsible for meeting certain obligations of the joint ventures to the extent provided for in our governing documents or applicable law, or may assume additional obligations in order to preserve such projects.
Counterparties to these agreements may breach or may be unable to 61 | 2023 Annual Report perform their obligations, due to bankruptcy, insolvency, financial distress or other factors. Furthermore, in the event of a bankruptcy or similar insolvency-type proceeding, our counterparty can seek to reject our existing PPA under the U.S.
Counterparties to these agreements may breach or may be unable to perform their obligations, due to bankruptcy, insolvency, financial distress or other factors. Furthermore, in the event of a bankruptcy or similar insolvency-type proceeding, our counterparty can seek to reject our existing PPA under the U.S. Bankruptcy Code or similar bankruptcy laws, including those in Puerto Rico.
As of December 31, 2023, we had approximately $27 billion of outstanding indebtedness on a consolidated basis, of which approximately $4.5 billion was recourse debt of the Parent Company and approximately $22.1 billion was non-recourse debt.
As of December 31, 2024, we had approximately $29 billion of outstanding indebtedness on a consolidated basis, of which approximately $5.7 billion was recourse debt of the Parent Company and approximately $22.7 billion was non-recourse debt.
Some of these business lines are dependent upon favorable regulatory incentives to support continued investment, and there is significant uncertainty about the extent to which such favorable regulatory incentives will be available in the future.
Some of these business lines are dependent upon favorable regulatory incentives to support continued investment, and there is significant uncertainty about the extent to which such favorable regulatory incentives, in particular, those associated with the U.S. Inflation Reduction Act of 2022, will be available in the future.
Risks Related to our Indebtedness and Financial Condition We have a significant amount of debt. As of December 31, 2023, we had approximately $27 billion of outstanding indebtedness on a consolidated basis. All outstanding borrowings under The AES Corporation's revolving credit facility are unsecured.
The impact to the Company remains unknown but may be material. Risks Related to our Indebtedness and Financial Condition We have a significant amount of debt. As of December 31, 2024, we had approximately $29 billion of outstanding indebtedness on a consolidated basis. All outstanding borrowings under The AES Corporation's revolving credit facilities are unsecured.
Further, our operations may experience volatility in revenues and operating margin caused by regulatory and economic difficulties, political instability and currency devaluations, which may increase the uncertainty of cash flows from these businesses.
Further, our operations may experience volatility in revenues and operating margin caused by regulatory and economic difficulties, political instability and currency devaluations, which may increase the uncertainty of cash flows from these businesses. Any of these factors could have a material, adverse effect on our business, results of operations and financial condition.
For example, in the third quarter of 2022, the Inflation Reduction Act (the “IRA”) was signed into law in the United States. The IRA includes provisions that are expected to benefit the U.S. clean energy industry, including increases, extensions and/or new tax credits for onshore and offshore wind, solar, storage and hydrogen projects.
For example, the U.S. Inflation Reduction Act of 2022 includes provisions that benefit the U.S. clean energy industry, including increases, extensions and/or new tax credits for onshore and offshore wind, solar, storage and hydrogen projects.
A counterparty's breach by of a PPA or other agreement could also result in the breach of other agreements, including the affected businesses debt agreements. Any failure of a supplier or customer to fulfill its contractual obligations could have a material adverse effect on our financial results. We may incur significant expenditures to adapt our businesses to technological changes.
Any failure of a supplier or customer to fulfill its contractual obligations could have a material adverse effect on our financial results. We may incur significant expenditures to adapt our businesses to technological changes.
The equipment at our plants requires periodic upgrading, improvement or repair and replacement equipment or parts may be difficult to obtain in circumstances where we rely on a single supplier or a small number of suppliers.
In addition, a portion of our generation facilities were constructed many years ago and may require significant capital expenditures for maintenance. The equipment at our plants requires periodic upgrading, improvement or repair and replacement equipment or parts may be difficult to obtain in circumstances where we rely on a single supplier or a small number of suppliers.
This trend of volatility in wholesale prices could continue and could have a material adverse impact on the financial performance of our existing generation assets to the extent they currently sell or buy power into the spot market to serve our contracts or will seek to sell power into the spot market once our contracts expire. 57 | 2023 Annual Report Adverse economic developments in China could have a negative impact on demand for electricity in many of our markets.
Volatility in wholesale prices could have a material adverse impact on the financial performance of our existing generation assets to the extent they currently sell or buy power into the spot market to serve our contracts or will seek to sell power into the spot market once our contracts expire.
Acquisitions have been a significant part of our growth strategy historically and more recently as we grow our renewables business. Although acquired businesses may have significant operating histories, we may have limited or no history of owning and operating certain of these businesses, and possibly limited or no experience operating in the country or region where these businesses are located.
Although acquired businesses may have significant operating histories, we may have limited or no history of owning and operating certain of these businesses, and possibly limited or no experience operating in the country or region where these businesses are located.
In particular, there has been an increased focus on the U.S. energy grid believed to be related to the Russia/Ukraine conflict. Such an attack, by hacking, malware or other means, may interrupt our operations, cause property damage, affect our ability to control our infrastructure assets, cause the release of sensitive customer information or limit communications with third parties.
Such an attack, by hacking, malware or other means, may interrupt our operations, cause property damage, affect our ability to control our infrastructure assets, cause the release of sensitive customer information or limit communications with third parties.
We cannot guarantee the extent to which our security measures will prevent future cyber-attacks and security breaches or that our insurance coverage will adequately cover any losses we may experience.
We cannot guarantee the extent to which our security measures will prevent future cyber-attacks and security breaches or that our insurance coverage will adequately cover any losses we may experience. Further, we do not control certain of our joint ventures or our equity method investments and cannot guarantee that their efforts will be effective.
Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects. 63 | 2023 Annual Report We do not control certain aspects of our joint ventures or our equity method investments.
Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects. We do not control certain aspects of our joint ventures or our equity method investments. We have invested in some joint ventures in which our subsidiaries share operational, management, investment and/or other control rights with our joint venture partners.
If we were to acquire any of these types of businesses, there can be no assurance that we will be successful in transitioning them to private ownership or that we will not incur unforeseen obligations or liabilities. The COVID-19 pandemic, or the future outbreak of any other highly infectious or contagious diseases, could impact our business and operations.
If we were to acquire any of these types of businesses, there can be no assurance that we will be successful in transitioning them to private ownership or that we will not incur unforeseen obligations or liabilities. Competition is increasing and could adversely affect us.
Cyber-attacks and data security breaches could harm our business. Our business relies on electronic systems and network technologies to operate our generation, transmission and distribution infrastructure. We also use various financial, accounting and other infrastructure systems. Our infrastructure may be targeted by nation states, hacktivists, criminals, insiders or terrorist groups.
Cyber-attacks and data security breaches could harm our business. Our business relies on electronic systems and network technologies to operate our generation, transmission and distribution infrastructure. We also use various financial, accounting and other infrastructure systems. Additionally, we store and use customer, employee, and other personal information and other confidential and sensitive information.
However, on January 19, 2021, the D.C. Circuit vacated and remanded the ACE Rule. Subsequently, on June 30, 2022, the Supreme Court reversed the judgment of the D.C.
In 2019, the EPA promulgated the Affordable Clean Energy (ACE) Rule which would have replaced the EPA's 2015 Clean Power Plan Rule ("CPP"). However, on January 19, 2021, the D.C. Circuit vacated and remanded the ACE Rule. Subsequently, on June 30, 2022, the Supreme Court reversed the judgment of the D.C.
If development efforts are not successful, we may abandon certain projects, resulting in, writing off the costs incurred, expensing related capitalized development costs incurred and incurring additional losses associated with any related contingent liabilities. Our acquisitions may not perform as expected.
If development efforts are not successful, we may abandon certain projects, resulting in, writing off the costs incurred, expensing related capitalized development costs incurred and incurring additional losses associated with any related contingent liabilities. 58 | 2024 Annual Report We do a significant amount of business outside the U.S., including in developing countries.
Further, our actual cash requirements may be greater than expected and our cash flows may not be sufficient to repay all of the outstanding debt as it becomes due.
Further, our actual cash requirements may be greater than expected and our cash flows may not be sufficient to repay all of the outstanding debt as it becomes due. In that event, we may not be able to borrow money, sell assets, raise equity or otherwise raise funds on acceptable terms to refinance our debt as it becomes due.
Limitations or interruptions in this infrastructure or at the facilities of our subsidiaries, including as a result of third parties intentionally or unintentionally disrupting this infrastructure or the facilities of our subsidiaries, could impede their ability to produce electricity. In addition, a portion of our generation facilities were constructed many years ago and may require significant capital expenditures for maintenance.
The availability and cost of this infrastructure affects capital and operating costs and levels of production and sales. Limitations or interruptions in this infrastructure or at the facilities of our subsidiaries, including as a result of third parties intentionally or unintentionally disrupting this infrastructure or the facilities of our subsidiaries, could impede their ability to produce electricity.
Any of these factors could have a material, adverse effect on our business, results of operations and financial condition. 56 | 2023 Annual Report Our businesses may incur substantial costs and liabilities and be exposed to price volatility as a result of risks associated with the wholesale electricity markets.
Our businesses may incur substantial costs and liabilities and be exposed to price volatility as a result of risks associated with the wholesale electricity markets.
There are also severe bottlenecks in the transmission system and the build-out of renewables to meet policy goals for renewable deployment will require substantial upgrades to the transmission network. In certain cases, our subsidiaries may enter into obligations in the development process even though they have not yet secured financing, PPAs, or other important elements for a successful project.
In certain cases, our subsidiaries may enter into obligations in the development process even though they have not yet secured financing, PPAs, or other important elements for a successful project.
The AES Corporation's ability to make payments on its outstanding indebtedness is dependent upon the receipt of funds from our subsidiaries. The AES Corporation is a holding company with no material assets other than the stock of its subsidiaries. Almost all of The AES Corporation's cash flow is generated by the operating activities of its subsidiaries.
See Note 12 —Obligations included in Item 8. — Financial Statements and Supplementary Data for a schedule of our debt maturities. The AES Corporation's ability to make payments on its outstanding indebtedness is dependent upon the receipt of funds from our subsidiaries. The AES Corporation is a holding company with no material assets other than the stock of its subsidiaries.
In 2010, the EPA adopted regulations pertaining to GHG emissions that require new and existing sources of GHG emissions to potentially obtain new source review permits from the EPA prior to construction or modification. In 2016, the U.S.
The impact of the results of further proceedings and potential future greenhouse gas emissions regulations remains uncertain, but it could be material. 69 | 2024 Annual Report In 2010, the EPA adopted regulations pertaining to GHG emissions that require new and existing sources of GHG emissions to potentially obtain new source review permits from the EPA prior to construction or modification.
Bankruptcy Code or similar bankruptcy laws, including those in Puerto Rico. We may not be able to enter into replacement agreements on terms as favorable as our existing agreements, and may have to sell power at market prices.
We may not be able to enter into replacement agreements on terms as favorable as our existing agreements, and may have to sell power at market prices. A counterparty's breach by of a PPA or other agreement could also result in the breach of other agreements, including the affected businesses debt agreements.
We have also located our plants in different geographic areas in order to mitigate the effects of regional economic downturns; however, there can be no assurance that our efforts will be effective. 58 | 2023 Annual Report Our renewable energy projects and other initiatives face considerable uncertainties. Wind, solar, hydrogen, and energy storage projects are subject to substantial risks.
There can be no assurance that the outcomes of such matters will not have a material adverse effect on our consolidated financial position. Our renewable energy projects and other initiatives face considerable uncertainties. Wind, solar, hydrogen, and energy storage projects are subject to substantial risks.
Our generation businesses cannot always obtain government guarantees and if they do, the government may not have an investment grade credit rating.
Our generation businesses cannot always obtain government guarantees and if they do, the government may not have an investment grade credit rating. We have also located our plants in different geographic areas in order to mitigate the effects of regional economic downturns; however, there can be no assurance that our efforts will be effective.
Any refinancing of our debt could result in higher interest rates or more onerous covenants that restrict our business operations. See Note 11 — Debt included in Item 8. — Financial Statements and Supplementary Data for a schedule of our debt maturities.
In addition, our ability to refinance existing or future indebtedness will depend on the capital markets and our financial condition at that time. Any refinancing of our debt could result in higher interest rates or more onerous covenants that restrict our business operations.
Removed
Our businesses require reliable transportation sources (including related infrastructure such as roads, ports and rail), power sources and water sources to access and conduct operations. The availability and cost of this infrastructure affects capital and operating costs and levels of production and sales.
Added
Our existing interconnection requests may also be subject to regulatory changes that could negatively impact the timing or cost associated with obtaining interconnection approval.
Removed
There can be no assurance that the outcomes of such matters will not have a material adverse effect on our consolidated financial position. We do a significant amount of business outside the U.S., including in developing countries.
Added
Some RTOs, such as PJM, have recently implemented or are considering accelerated or supplemental interconnection processes for high-capacity factor resources, which could result in delays or cost increases to existing or future interconnection requests of intermittent renewable energy projects, such as solar and wind.
Removed
The Chinese market has been driving global materials demand and pricing for commodities over the past decade. Many of these commodities are produced in our key electricity markets.
Added
Additional measures could be considered by RTOs, transmission owners, or governmental authorities to foster or accelerate deployment or utilization of certain high-capacity factor technologies in a manner that negative impacts the development or solar or wind projects.
Removed
After experiencing rapid growth for more than a decade, China’s economy has experienced decreasing foreign and domestic demand, weak investment, factory overcapacity and oversupply in the property market, and has experienced a significant slowdown in recent years. U.S. tariffs have also had a negative impact on China's economic growth.
Added
There are also severe bottlenecks in the transmission system and the build-out of renewables to meet policy goals for renewable deployment will require substantial upgrades to the transmission network. These upgrades may also be delayed by the accelerated or supplemental interconnection of high-capacity factor resources, as discussed above.
Removed
Further, China's Zero COVID strategy contributed to a significant decrease in GDP growth in 2022 and its GDP growth in 2023 was below growth rates in the years preceding the pandemic.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe CISO briefs the Board of Directors on the effectiveness of our cyber risk management program, typically on a semi-annual basis, and provides off-cycle updates as needed. We consider cybersecurity as part of the enterprise risk process, including organized and structured reporting protocols. The prioritization of cybersecurity risk is aligned with overall risk management processes.
Biggest changeThe Board of Directors oversees our cybersecurity risk exposures and the steps taken by management to monitor and mitigate cybersecurity risks. The CISO briefs the Board of Directors on the effectiveness of our cyber risk management program, typically on a semi-annual basis, and provides off-cycle updates as needed.
Our employees participate in training, including phishing exercises, monthly safety meetings, and an annual cybersecurity awareness update. We also periodically host tabletop exercises with management and other employees to practice rapid cyber incident response. 73 | 2023 Annual Report We face cybersecurity risks in connection with our business.
Our employees participate in training, including phishing exercises, monthly safety meetings, and an annual cybersecurity awareness update. We also periodically host tabletop exercises with management and other employees to practice rapid cyber incident response. We face cybersecurity risks in connection with our business.
The CISO is responsible for assessing and managing our cyber risk management 72 | 2023 Annual Report program. In this role, the CISO informs senior management regarding the prevention, detection, mitigation, and remediation of cybersecurity incidents and supervises such efforts. Our CISO has extensive experience assessing and managing cybersecurity programs and cybersecurity risk.
The CISO is responsible for assessing and managing our cyber risk management program. In this role, the CISO informs senior management regarding the prevention, detection, mitigation, and remediation of cybersecurity incidents and supervises such efforts. Our CISO has extensive experience assessing and managing cybersecurity programs and cybersecurity risk. Our CISO has served in that position since 2024.
In addition, the Company’s management team considers risks relating to cybersecurity, among other significant risks, and applicable mitigation plans to address such risks, at monthly performance review meetings.
We consider cybersecurity as part of the enterprise risk process, including organized and structured reporting protocols. The prioritization of cybersecurity risk is aligned with overall risk management processes. In addition, the Company’s management team considers risks relating to cybersecurity, among other significant risks, and applicable mitigation plans to address such risks, at monthly performance review meetings.
Our CISO has served in that position since 2020. The CISO manages a global team of cybersecurity professionals with broad experience and expertise, including in cybersecurity threat assessments and detection, cloud security, mitigation technologies, cybersecurity training, incident response, cyber forensics, insider threats and regulatory compliance.
The CISO manages a global team of cybersecurity professionals with broad experience and expertise, including in cybersecurity threat assessments and detection, cloud security, mitigation technologies, cybersecurity training, incident response, cyber forensics, insider threats and regulatory compliance. We rely on threat intelligence as well as other information obtained from governmental, public, or private sources, including contracted external consultants.
We have also established an Incident Response Team and associated protocol led by our CISO that governs our assessment, response, and notifications internally and externally upon the occurrence of a cybersecurity incident.
The Global Leadership Team, as well as the Vice President Global Financial Planning and Analytics, Treasurer, and Vice President Internal Audit, among others, participate in such meetings. 74 | 2024 Annual Report We have also established an Incident Response Team and associated protocol led by our CISO that governs our assessment, response, and notifications internally and externally upon the occurrence of a cybersecurity incident.
Removed
We rely on threat intelligence as well as other information obtained from governmental, public, or private sources, including contracted external consultants. The Board of Directors oversees our cybersecurity risk exposures and the steps taken by management to monitor and mitigate cybersecurity risks.
Removed
The Executive Leadership Team, as well as the Chief Accounting Officer, Chief Risk Officer, Vice President Global Financial Planning and Analytics, Treasurer, and Vice President Internal Audit, among others, participate in such meetings.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeHowever, in a few instances, no accompanying project financing exists for the facility, and in a few of these cases, the land interest may not be subject to any encumbrance and is owned outright by the subsidiary or affiliate.
Biggest changeHowever, in a few instances, no accompanying project financing exists for the facility, and in a few of these cases, the land interest may not be subject to any encumbrance and is owned outright by the subsidiary or affiliate. 75 | 2024 Annual Report

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThere are ongoing proceedings in the Mexican courts concerning AES Mérida's attempt to enforce the Award and CFE's attempt to challenge the Award. AES Mérida believes that it has meritorious claims and defenses and will assert them vigorously in this dispute; however, there can be no assurances that it will be successful in its efforts.
Biggest changeAES Mérida believes that it has meritorious claims and defenses and will assert them vigorously in this dispute; however, there can be no assurances that it will be successful in its efforts. On May 12, 2021, the Mexican Federal Attorney for Environmental Protection (the “Authority”) initiated an environmental audit at the TEP thermal generating facility.
With respect to the pumps in the alleged wetlands, AES locked out those pumps to prevent further operation and submitted the CDP to the permitting authority, the City of Redondo Beach (the "City"), with respect to AES' plans to disable or remove the pumps.
With respect to the pumps in the alleged wetlands, AES locked out those pumps to prevent further operation and submitted the CDP to the permitting authority, the City of Redondo Beach (the “City”), with respect to AES’ plans to disable or remove the pumps.
The CCC has asserted that AES Redondo Beach has improperly installed and operated water pumps affecting the alleged wetlands in violation of the California Coastal Act and Redondo Beach Local Coastal Program ("LCP"). Potential outcomes of the CCC determination could include an order requiring AES Redondo Beach to perform a restoration and/or pay fines or penalties.
The CCC has asserted that AES Redondo Beach has improperly installed and operated water pumps affecting the alleged wetlands in violation of the California Coastal Act and Redondo Beach Local Coastal Program (“LCP”). Potential outcomes of the CCC determination could include an order requiring AES Redondo Beach to perform a restoration and/or pay fines or penalties.
The evidentiary hearing took place in November 2021. Closing arguments were heard in May 2022. In November 2022, the arbitration Tribunal issued its decision in the case, rejecting CFE’s claims for damages and granting AES Mérida a net amount of damages on AES Mérida’s counterclaims ("Award").
The evidentiary hearing took place in November 2021. Closing arguments were heard in May 2022. In November 2022, the arbitration Tribunal issued its decision in the case, rejecting CFE’s claims for damages and awarding AES Mérida a net amount of damages on AES Mérida’s counterclaims ("Award").
It is reasonably possible, however, that some matters could be decided unfavorably to the Company and could require the Company to pay damages or make expenditures in amounts that could be material, but cannot be estimated as of December 31, 2023.
It is reasonably possible, however, that some matters could be decided unfavorably to the Company and could require the Company to pay damages or make expenditures in amounts that could be material, but cannot be estimated as of December 31, 2024.
CFE sought to recover approximately $200 million in payments made to AES Mérida under the Contract as well as approximately $480 million in alleged damages for having to acquire power from alternative sources in the Yucatan Peninsula. AES Mérida filed an answer denying liability to CFE and asserted a counterclaim for damages due to CFE’s breach of its obligations.
CFE sought to recover approximately $200 million in payments made to AES Mérida under the Contract, plus approximately $480 million in alleged damages for having to acquire power from alternative sources in the Yucatan Peninsula. AES Mérida filed an answer denying liability to CFE and asserted a counterclaim for damages due to CFE’s breach of its obligations.
The lawsuit purports to be brought on behalf of over 425 Dominican claimants, living and deceased, and appears to seek relief 76 | 2023 Annual Report relating to CCRs that were delivered to the Dominican Republic in 2003 and 2004. The lawsuit generally alleges that the CCRs caused personal injuries and deaths and demands over $600 million in alleged damages.
The lawsuit purports to be brought on behalf of over 425 Dominican claimants, living and deceased, and appears to seek relief relating to CCRs that were delivered to the Dominican Republic in 2003 and 2004. The lawsuit generally alleges that the CCRs caused personal injuries and deaths and demands over $600 million in alleged damages.
The relevant AES companies believe that they have meritorious defenses to the claims asserted against them and will defend themselves vigorously in this proceeding; however, there can be no assurances that they will be successful in their efforts.
Preliminary hearings have taken place. The relevant AES companies believe that they have meritorious defenses to the claims asserted against them and will defend themselves vigorously in this proceeding; however, there can be no assurances that they will be successful in their efforts.
On December 30, 2021, the Compliance Program was approved by the SMA. However an ex officio action was brought by the SMA due to alleged exceedances of generation limits, which would require the Company to reduce SO 2 , NO X and PM emissions in order to achieve the emissions offset established in the Compliance Program.
However, an ex officio action was brought by the SMA due to alleged exceedances of generation limits, which would require the Company to reduce SO 2 , NO X and PM emissions in order to achieve the emissions offset established in the Compliance Program.
The case is now awaiting judgment. The removal and remediation costs are estimated to be approximately R$15 million to R$60 million ($3 million to $12 million), and there could be additional costs which cannot be estimated at this time.
The case is now awaiting judgment. The removal and remediation costs are estimated to be approximately R$15 million to R$60 million ($2 million to $10 million), and there could be additional costs which cannot be estimated at this time.
In June 2016, the Company sold AES Sul to CPFL Energia S.A. and as part of the 74 | 2023 Annual Report sale, AES Guaiba, a holding company of AES Sul, retained the potential liability relating to this matter.
In June 2016, the Company sold AES Sul to CPFL Energia S.A. and as part of the sale, AES Guaiba, a holding company of AES Sul, retained the potential liability relating to this matter.
On May 26, 2020, CCC staff sent AES a NOV directing AES to discontinue any operation of the water pumps in the alleged wetlands and to submit a Coastal Development Permit (“CDP”) application for the removal of the water pumps within the alleged wetlands.
On May 26, 2020, CCC staff sent AES an NOV directing AES to discontinue any operation of the water pumps in the alleged 76 | 2024 Annual Report wetlands and to submit a Coastal Development Permit (“CDP”) application for the removal of the water pumps within the alleged wetlands.
The lawsuit does not identify, or provide any supporting information concerning, the alleged injuries of the claimants individually, nor does the lawsuit provide any 75 | 2023 Annual Report information supporting the demand for damages or explaining how the quantum was derived.
The lawsuit does not identify or provide any supporting information concerning the alleged injuries of the claimants individually. Nor does the lawsuit provide any information supporting the demand for damages or explaining how the quantum was derived.
The AES Defendants believe that they have meritorious defenses to the claims asserted against them and will defend themselves vigorously in this proceeding; however, there can be no assurances that they will be successful in their efforts.
The claimants are attempting to formally serve the appeal on all defendants. The AES Defendants believe that they have meritorious defenses to the claims asserted against them and will defend themselves vigorously in this proceeding; however, there can be no assurances that they will be successful in their efforts.
The resolution imposes a fine of $27,615,140 pesos (approximately USD $1.6 million). On March 3, 2023, the facility filed a nullity judgment to challenge such resolution, which has been admitted by the local judge with an injunction granted against execution of the proposed fine during the course of the underlying proceedings.
On March 3, 2023, the facility filed a nullity judgment to challenge such resolution, which has been admitted by the local judge with an injunction granted against execution of the proposed fine during the course of the underlying proceedings.
The cost of proposed Compliance Program is approximately $10.8 million USD. On April 21, 2023, the SMA notified AES Andes of a resolution alleging an additional “serious” non-compliance of the Ventanas Complex failing to reduce emissions during episodes of poor air quality. On May 24, 2023, AES Andes submitted disclaimers to the SMA in response to this resolution.
On April 21, 2023, the SMA notified AES Andes of a resolution alleging an additional “serious” non-compliance of the Ventanas Complex failing to reduce emissions during episodes of poor air quality. On May 24, 2023, AES Andes submitted disclaimers to the SMA in response to this resolution. On May 10, 2024, the Company was notified of a fine for $180,515.
On January 26, 2023, the SMA notified Alto Maipo SpA of four alleged charges relating to the Alto Maipo facility, all which are categorized by the SMA as “serious.” The alleged charges include untimely completion of intake works and insufficient capture by the provisional works, irrigation water outlet and canal contemplated by an agreement with local communities; non-compliance with the details of the forest management plans and intervention in unauthorized areas; construction of a road in a restricted paleontological area; and unlawful moving of fauna.
The Company believes that it has meritorious defenses to the claims asserted against it and will defend itself vigorously in this proceeding; however, there can be no assurances that it will be successful in its efforts. 78 | 2024 Annual Report On January 26, 2023, the SMA notified Alto Maipo SpA of four alleged charges relating to the Alto Maipo facility, all of which are categorized by the SMA as “serious.” The alleged charges include untimely completion of intake works and insufficient capture by the provisional works, irrigation water outlet and canal contemplated by an agreement with local communities; non-compliance with the details of the forest management plans and intervention in unauthorized areas; construction of a road in a restricted paleontological area; and unlawful moving of fauna.
In March 2020, Mexico’s Comisión Federal de Electricidad (“CFE”) served an arbitration demand upon AES Mérida III. CFE made allegations that AES Mérida III was in breach of its obligations under a power and capacity purchase agreement (“Contract”) between the two parties, which allegations related to CFE’s own failure to provide fuel within the specifications of the Contract.
CFE alleged that AES Mérida was in breach of a power and capacity purchase agreement (“Contract”) between the two parties, even though the allegations relate to CFE’s own failure to provide fuel within the specifications of the Contract.
The alleged charges include exceeding generation limits, failing to reduce emissions during episodes of poor air quality, exceeding limits on discharges to the sea, and exceeding noise limits. AES Andes has submitted a proposed “Compliance Program” to the SMA for the Ventanas Complex. The latest version of this Compliance Program was submitted on May 26, 2021.
The alleged charges include exceeding generation limits, failing to reduce emissions during episodes of poor air quality, exceeding limits on discharges to the sea, and exceeding noise limits.
On May 12, 2021, the Mexican Federal Attorney for Environmental Protection (the “Authority”) initiated an environmental audit at the TEP thermal generating facility. On January 20, 2023 TEP was notified of the resolution issued by the Authority, which alleges breaches of air emission regulations, including the failure to submit reports.
On January 20, 2023, TEP was notified of the resolution issued by the Authority, which alleges breaches of air emission regulations, including the failure to submit reports. The resolution imposes a fine of $27,615,140 pesos (approximately $1.3 million).
If the SMA determines there is an unsatisfactory execution of the compliance program, fines are possible. In June 2020, the Energy Regulatory Commission of Mexico passed resolution RES/894/2020 ("Resolution 894"), which attempts to increase the wheeling tariffs that are paid by TEG and TEP to CFE.
The cost of the proposed Compliance Program is approximately $10.8 million and is in the execution stage. Fines are possible if the SMA determines there is an unsatisfactory execution of the Compliance Program.
The Company believes that it has meritorious defenses to the claims asserted against it and will defend itself vigorously in this proceeding; however, there can be no assurances that it will be successful in its efforts.
On June 3, 2024, the Company appealed this fine to the Environmental Court. The Company believes that it has meritorious defenses and will continue to assert them vigorously in this dispute; however, there can be no assurances that it will be successful. In March 2020, Mexico’s Comisión Federal de Electricidad (“CFE”) served an arbitration demand upon AES Mérida III.
On February 16, 2023, the Alto Maipo project submitted a compliance program to which the SMA provided observations. On June 6, 2023, Alto Maipo responded to the SMA's observations by submitting a revised compliance program, which is currently under consideration by the SMA.
On February 16, 2023, the Alto Maipo project submitted an initial compliance program to the SMA, which has undergone observations by the SMA and interested third parties, and been resubmitted by the project. On December 9, 2024, the SMA rejected the latest version of the Compliance Program. On December 16, Alto Maipo submitted a petition for reconsideration.
Removed
In August 2020, at the request of the relevant AES companies, the case was transferred to a different civil court ("Civil Court"). Preliminary hearings have taken place. The parties are awaiting the Civil Court's ruling on the AES Defendants' motions to dismiss the lawsuit.
Added
In August 2020, at the request of the relevant AES companies, the case was transferred to a different civil court, namely, the Civil Court of La Vega (“CFI”). In May 2024, the CFI dismissed the entire case due to the expiry of the statute of limitations. Later in 2024, the claimants appealed the dismissal to the relevant intermediate appellate court.
Removed
AES Andes plans to vigorously defend itself through the administrative process, but there are no guarantees that it will be successful. Fines are possible if AES Andes is unsuccessful in its defense of the April 2023 resolution and/or if the SMA determines there is an unsatisfactory execution of the Compliance Program approved in connection with the October 2019 sanctioning process.
Added
AES Andes has submitted a proposed “Compliance Program” to the SMA for the Ventanas Complex. 77 | 2024 Annual Report The latest version of this Compliance Program was submitted on May 26, 2021. On December 30, 2021, the Compliance Program was approved by the SMA.
Removed
The Specialized Chamber has not issued a response to the complaint, and therefore on January 12, 2024, TEP filed a request for the Specialized Chamber to rule on the admission of the complaint.
Added
There are ongoing proceedings in the Mexican courts concerning AES Mérida's attempt to enforce the Award and CFE's attempt to challenge the Award. At AES Mérida's request, in November 2024, the court of first instance confirmed the award and ordered its enforcement against CFE. This decision is subject to further review within the Mexican judiciary.
Removed
On February 2, 2024, TEP filed an amparo lawsuit on the basis that no resolution has been issued regarding TEP's May 2023 filing with the Chamber to inform if the Authority had submitted its response to the nullity lawsuit, and if not, to declare that the Authority's right precluded.
Added
Separately, in March 2024, the relevant court of first instance denied CFE’s request to nullify the Award. The March 2024 decision was upheld by the relevant federal District Court and later by the Collegiate Circuit Court.
Removed
On July 25, 2022, AES Puerto Rico, LP (“AES-PR”) received from the EPA an NOV alleging certain violations of the CAA at AES-PR’s coal-fired power facility in Guayama, Puerto Rico.
Added
The Specialized Chamber has not issued a response to the complaint, despite the fact that the Company has taken several legal actions to try to expedite the proceedings.
Removed
The NOV alleges AES-PR exceeded an emission limit and did not continuously operate certain monitoring equipment, conduct certain analyses and testing, maintain complete records, and submit certain reports as required by the EPA’s Mercury and Air Toxics Standards. The NOV further alleges AES-PR did not comply fully with the facility’s Title V operating permit.
Added
In February 2024, at the request of the Company, the Dominican Supreme Court of Justice transferred the case to a different civil court, namely, the Civil Court of La Vega. The claimants' attempt to recuse the presiding judge has been rejected by the relevant Dominican appellate court.
Removed
AES-PR is engaging in discussions with the EPA about the NOV. AES-PR will defend its interests, but we cannot predict the outcome of this matter at this time. However, settlements and litigated outcomes of CAA claims alleged against other coal-fired power plants have required companies to pay civil penalties and undertake remedial measures.
Added
If appeals are unsuccessful, the imposition of fines are possible. In May 2024, the Chilean competition agency (the Fiscalía Nacional Económica or “FNE”) opened an investigation regarding AES Andes’s declarations with respect to coal prices and coal blends used to generate electricity in Chile.
Removed
In April 2022, the Superintendency of the Environment (the "SMA") notified AES Andes of certain alleged breaches associated with the construction of the Mesamávida wind project, initiating a sanctioning process.
Added
The investigation was prompted by a confidential complaint filed in December 2023, which has not been disclosed to AES Andes. In general terms, the investigation seeks to determine whether the facts alleged in the complaint could be considered as an abuse of a dominant position by AES Andes.
Removed
The alleged charges include untimely implementation of road improvement measures and road use schedules and the failure to identify all noise receptors closest to the first construction phases of the project. On June 23, 2022, the SMA addressed the charges to Energía Eólica Mesamávida SpA.
Added
The investigation is at a very early stage; AES Andes is currently responding to the FNE’s information requests. The FNE will independently conduct the investigation and will ultimately decide whether to dismiss the matter or initiate a judicial proceeding on the allegations in the confidential complaint. These types of investigations in Chile commonly last for years.
Removed
On June 28, 2022, Energía Eólica Mesamávida SpA submitted a proposed compliance program, with an estimated cost of $4.3 million, which was subsequently approved by the SMA. On November 9, 2022, opponents to the project submitted before the Third Environmental Court a judicial action challenging the approval of this compliance program.
Added
AES Andes does not believe that it has violated any competition laws. Further, if the FNE ever initiates a judicial proceeding on this matter, AES Andes will defend itself vigorously.
Removed
On March 7, 2023, the Third Environmental Court rejected the third-party judicial action against the Compliance Program. The deadline to appeal the decision has passed and no appeals were submitted. The Company has fulfilled the required actions of the Compliance Program; however, opponents to project have submitted claims before the SMA challenging the fulfillment of the Compliance Program.
Added
Given the early nature of this investigation, we are unable to estimate any potential impact of the investigation or its eventual outcome on our business, financial condition or results of operations. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 79 | 2024 Annual Report PART II
Removed
The increase for the relevant period (July 2020 through March 2024) would have been over $90 million according to current estimates. In October 2022, TEG and TEP initiated a challenge of the constitutionality of the resolution.
Removed
In February 2024, the relevant First Collegiate Court of Mexico ruled in favor of TEG and TEP and determined that they do not need to pay increased wheeling tariffs under Resolution 894.
Removed
If TEG and TEP are ever required to pay increased wheeling tariffs in the future, they will seek to enforce their respective contractual rights to pass-through the tariff increases to their respective offtakers.
Removed
In late June and early July 2023, third-party opponents submitted observations to the compliance program, claiming that the proposal to address the intake works charges is inadequate. Alto Maipo completed its submission of responses to these third-party observations in August 2023, and subsequently, new, additional observations were submitted by opponents to the project.
Removed
In December 2023, Alto Maipo submitted responses to the opponents' latest observations. Review by the SMA is still pending. The costs of any such compliance program are uncertain.
Removed
If a compliance program is not approved by or executed to the satisfaction of the SMA, fines, revocation of the facility’s RCA environmental permit approved by the SMA, or closure are possible outcomes for such alleged serious violations under applicable regulations. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 77 | 2023 Annual Report PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeFINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 114 Consolidated Balance Sheets 119 Consolidated Statements of Operations 120 Consolidated Statements of Comprehensive Income (Loss) 121 Consolidated Statements of Changes in Equity 122 Consolidated Statements of Cash Flows 123 Note 1 - General and Summary of Significant Accounting Policies 125 Note 2 - Inventory 137 Note 3 - Property, Plant and Equipment 137 Note 4 - Asset Retirement Obligation s 138 Note 5 - Fair Value 139 Note 6 - Derivative Instruments and Hedging Activities 145 Note 7 - Financing Receivables 146 Note 8 - Investments in and Advances to Affiliates 147 Note 9 - Goodwill and Other Intangible Assets 149 Note 10 - Regulatory Assets and Liabilities 151 Note 11 - Debt 152 Note 12 - Commitments 156 Note 13 - Contingencies 156 Note 14 - Leases 157 Note 15 - Benefit Plans 159 Note 16 - Redeemable Stock of Subsidiaries 163 Note 17 - Equity 164 Note 18 - Segments and Geographic Information 169 Note 19 - Share-Based Compensation 172 Note 20 - Revenue 173 Note 21 - Other Income and Expense 174 Note 22 - Asset Impairment Expense 175 Note 23 - Income Taxes 178 Note 24 - Held-for-Sale and Dispositions 182 Note 25 - Acquisitions 183 Note 26 - Earnings Per Share 187 Note 27 - Risks and Uncertainties 188 Note 28 - Related Party Transactions 190 Note 29 - Subsequent Events 190
Biggest changeFINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 116 Consolidated Balance Sheets 120 Consolidated Statements of Operations 121 Consolidated Statements of Comprehensive Income (Loss) 122 Consolidated Statements of Changes in Equity 123 Consolidated Statements of Cash Flows 124 Note 1 - General and Summary of Significant Accounting Policies 126 Note 2 - Inventory 138 Note 3 - Property, Plant and Equipment 138 Note 4 - Asset Retirement Obligation s 138 Note 5 - Fair Value 139 Note 6 - Derivative Instruments and Hedging Activities 146 Note 7 - Financing Receivables 147 Note 8 - Allowance for Credit Losses 148 Note 9 - Investments in and Advances to Affiliates 149 Note 10 - Goodwill and Other Intangible Assets 151 Note 1 1 - Regulatory Assets and Liabilities 153 Note 1 2 - Obligations 154 Note 1 3 - Commitments 160 Note 1 4 - Contingencies 160 Note 1 5 - Leases 161 Note 1 6 - Benefit Plans 163 Note 1 7 - Redeemable Stock of Subsidiaries 166 Note 1 8 - Equity 168 Note 19 - Segments and Geographic Information 173 Note 2 0 - Share-Based Compensation 177 Note 2 1 - Revenue 179 Note 2 2 - Other Income and Expense 180 Note 2 3 - Asset Impairment Expense 182 Note 2 4 - Income Taxes 184 Note 2 5 - Held-for-Sale and Dispositions 187 Note 2 6 - Acquisitions 189 Note 2 7 - Earnings Per Share 192 Note 2 8 - Risks and Uncertainties 192 Note 29 - Related Party Transactions 194 Note 3 0 - Restatement (Unaudited) 195 Note 3 1 - Subsequent Events 201
ITEM 4. MINE SAFETY DISCLOSURES 76 PART II 77 ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 77 ITEM 6. [RESERVED] 78 ITEM 7.
ITEM 4. MINE SAFETY DISCLOSURES 78 PART II 79 ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 79 ITEM 6. [RESERVED] 80 ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 79 Executive Summary 79 Review of Consolidated Results of Operations 80 SBU Performance Analysis 86 Key Trends and Uncertainties 92 Capital Resources and Liquidity 97 Critical Accounting Policies and Estimates 106 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 110 ITEM 8.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 81 Executive Summary 81 Review of Consolidated Results of Operations 82 SBU Performance Analysis 87 Key Trends and Uncertainties 94 Capital Resources and Liquidity 99 Critical Accounting Policies and Estimates 109 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 113 ITEM 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Recent Sales of Unregistered Securities None. Purchases of Equity Securities by the Issuer and Affiliated Purchasers Stock Repurchase Program — The Board authorization permits the Parent Company to repurchase stock through a variety of methods, including open market repurchases and/or privately negotiated transactions.
Biggest changePurchases of Equity Securities by the Issuer and Affiliated Purchasers Stock Repurchase Program — The Board authorization permits the Parent Company to repurchase stock through a variety of methods, including open market repurchases, purchases by contract (including, without limitation, accelerated stock repurchase programs or 10b5-1 plans), and/or privately negotiated transactions.
The cumulative repurchases from the commencement of the Stock Repurchase Program in July 2010 through December 31, 2023 totaled 154.3 million shares for a total cost of $1.9 billion, at an average price per share of $12.12 (including a nominal amount of commissions). As of December 31, 2023, $264 million remained available for repurchase under the Stock Repurchase Program.
The cumulative repurchases from the commencement of the Stock Repurchase Program in July 2010 through December 31, 2024 totaled 154.3 million shares for a total cost of $1.9 billion, at an average price per share of $12.12 (including a nominal amount of commissions). As of December 31, 2024, $264 million remained available for repurchase under the Stock Repurchase Program.
The S&P 500 Utilities Index is a published sector index comprising the 30 electric and gas utilities included in the S&P 500. The five year total return chart assumes $100 invested on December 31, 2018 in AES Common Stock, the S&P 500 Index and the S&P 500 Utilities Index.
The S&P 500 Utilities Index is a published sector index comprising the 31 electric and gas utilities included in the S&P 500. The five year total return chart assumes $100 invested on December 31, 2019 in AES Common Stock, the S&P 500 Index and the S&P 500 Utilities Index.
No repurchases were made by The AES Corporation of its common stock in 2023, 2022, and 2021. Market Information Our common stock is traded on the New York Stock Exchange under the symbol "AES." Dividends The Parent Company commenced a quarterly cash dividend in the fourth quarter of 2012.
No repurchases were made by The AES Corporation of its common stock in 2024, 2023, and 2022. Market Information Our common stock is traded on the New York Stock Exchange under the symbol "AES." Dividends The Parent Company commenced a quarterly cash dividend in the fourth quarter of 2012. The Parent Company has increased this dividend annually.
Under the terms of our revolving credit facility, which we entered into with a commercial bank syndicate, we have limitations on our ability to pay cash dividends and/or repurchase stock.
Under the terms of our revolving credit facilities, which we entered into with commercial bank syndicates, we have limitations on our ability to pay cash dividends and/or repurchase stock.
Holders As of February 22, 2024, there were approximately 3,395 record holders of our common stock. 78 | 2023 Annual Report Performance Graph THE AES CORPORATION PEER GROUP INDEX/STOCK PRICE PERFORMANCE Source: Bloomberg We have selected the Standard and Poor's ("S&P") 500 Utilities Index as our peer group index.
Holders As of March 6, 2025, there were approximately 3,301 record holders of our common stock. 80 | 2024 Annual Report Performance Graph THE AES CORPORATION PEER GROUP INDEX/STOCK PRICE PERFORMANCE Source: Bloomberg We have selected the Standard and Poor's ("S&P") 500 Utilities Index as our peer group index.
The Parent Company has increased this dividend annually and the quarterly per-share cash dividends for the last three years are displayed below. Commencing the fourth quarter of 2023 2022 2021 Cash dividend $0.1725 $0.1659 $0.1580 The fourth quarter 2023 cash dividend is to be paid in the first quarter of 2024 .
The quarterly per-share cash dividends for the last three years are displayed below. Commencing the fourth quarter of 2024 2023 2022 Cash dividend $0.17595 $0.1725 $0.1659 The fourth quarter 2024 cash dividend was paid on February 14, 2025 .
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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Recent Sales of Unregistered Securities None.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeFinancing Cash Flows (in millions) See Notes 11— Debt and 17— Equity in Item 8.— Financial Statements and Supplementary Data of this Form 10-K for more information regarding significant debt and equity transactions, respectively. • The $1.2 billion impact from sales to noncontrolling interests is primarily due to proceeds received at AES Clean Energy from the sales of ownership in project companies to tax equity investors, the sale of a 20% interest in AES Dominicana and a 35% interest in Colon, and from an increase in sales under the Chile Renovables renewable partnership with GIP; partially offset by the prior year sale of a 14.9% ownership interest in Southland Energy. • The $729 million impact from recourse debt is primarily due to the issuance of senior notes due in 2028 by the Parent Company. • The $475 million impact from acquisitions of noncontrolling interests is mainly due to the prior year acquisition of an additional 32% ownership interest in AES Andes; partially offset by the final installment payment for the 2021 acquisition of the remaining 49.9% noncontrolling ownership interest in Colon. • The $366 million impact from non-recourse revolving credit facilities is primarily due to an increase in borrowings at our Energy Infrastructure SBU. • The $361 million impact from issuance of preferred shares in subsidiaries is due to the proceeds received from the issuance of preferred shares to GIP, as part of the Chile Renovables renewable partnership, and the issuance of preferred shares to HASI at AES Renewable Holdings for OpCo 1; partially offset by proceeds received in the prior year for issuances of preferred shares at AES Brasil. • The $618 million impact from non-recourse debt transactions is mainly due to lower net borrowings at the Energy Infrastructure SBU and higher net repayments at Corporate; partially offset by higher net borrowings at the Renewables SBU. • The $285 million impact from the Parent Company revolver is primarily due to higher net repayments in the current year. • The $243 million impact from supplier financing arrangements is primarily due to higher net repayments at the Renewables and Energy Infrastructure SBUs. 104 | 2023 Annual Report Parent Company Liquidity The following discussion is included as a useful measure of the liquidity available to The AES Corporation, or the Parent Company, given the non-recourse nature of most of our indebtedness.
Biggest changeFinancing Cash Flows (in millions) See Notes 12— O bligations and 18— Equity in Item 8.— Financial Statements and Supplementary Data of this Form 10-K for more information regarding significant transactions. 106 | 2024 Annual Report • The $691 million impact from sales to noncontrolling interests is primarily due to a $210 million decrease in proceeds received at AES Clean Energy from the sales of ownership in project companies to tax equity investors, the prior year sales of a 20% interest in AES Dominicana for $192 million and a 35% interest in Colon for $140 million, and a $146 million decrease in sales under the Chile Renovables renewables partnerships with GIP. • The $534 million impact from non-recourse revolvers is primarily due to higher net repayments at our Energy Infrastructure and Renewables SBUs. • The $421 million impact from issuance of preferred shares in subsidiaries is due to $275 million of proceeds received in the prior year from the issuance of preferred shares to GIP as part of the Chile Renovables partnership, and the prior year issuance of $143 million of preferred shares to HASI at AES Renewable Holdings for OpCo 1. • The $375 million impact from supplier financing arrangements is primarily due to higher net cash outflows at the Renewables SBU; partially offset by higher net cash inflows at the Energy Infrastructure SBU. • The $904 million impact from non-recourse debt transactions is mainly due to higher net borrowings at the Energy Infrastructure and Utilities SBUs of $236 million and $248 million, respectively, and lower net repayments at AES Hispanola Holdings, BV, and the Renewables SBU of $279 million and $142 million, respectively. • The $350 million impact from recourse debt is primarily due to the issuance of $1.5 billion of subordinated notes and repayments of $200 million at the Parent Company in the current year; partially offset by the issuance of $900 million of senior notes at the Parent Company in the prior year. • The $325 million impact from the Parent Company revolver is primarily due to lower net repayments in the current year.
(7) Amount primarily relates to asset impairments at Warrior Run of $198 million, or $0.28 per share, at New York Wind of $139 million, or $0.20 per share, the Norgener coal-fired plant in Chile of $136 million, or $0.19 per share, at TEG and TEP of $76 million and $58 million, respectively, or $0.19 per share, AES Clean Energy development projects of $114 million, or $0.16 per share, at Mong Duong of $88 million, or $0.12 per share, at Jordan of $21 million, or $0.03 per share, and at the GAF Projects at AES Renewable Holdings of $18 million, or $0.03 per share, and a goodwill impairment at the TEG TEP reporting unit of $12 million, or $0.02 per share.
(7) Amount primarily relates to asset impairments at Warrior Run of $198 million, or $0.28 per share, at New York Wind of $139 million, or $0.20 per share, at the Norgener coal-fired plant in Chile of $136 million, or $0.19 per share, at TEG and TEP of $76 million and $58 million, respectively, or $0.19 per share, AES Clean Energy development projects of $114 million, or $0.16 per share, at Mong Duong of $88 million, or $0.12 per share, at Jordan of $21 million, or $0.03 per share, and at the GAF Projects at AES Renewable Holdings of $18 million, or $0.03 per share, and a goodwill impairment at the TEG TEP reporting unit of $12 million, or $0.02 per share.
Goodwill impairment expense Goodwill impairment expense was $12 million in 2023 due to a $12 million impairment at the TEG TEP reporting unit primarily driven by an increase in the discount rate due to increasing risk of non-renewal of operating permits required after March 31, 2024.
Goodwill impairment expense Goodwill impairment expense was $12 million in 2023 due to impairment at the TEG TEP reporting unit primarily driven by an increase in the discount rate due to increasing risk of non-renewal of operating permits required after March 31, 2024.
Cash Sources and Uses The primary sources of cash for the Company in the year ended December 31, 2023 were debt financings, cash flows from operating activities, sales to noncontrolling interests, purchases under supplier financing arrangements, and sales of short-term investments.
The primary sources of cash for the Company in the year ended December 31, 2023 were debt financings, cash flows from operating activities, sales to noncontrolling interests, purchases under supplier financing arrangements, and sales of short-term investments.
Regulatory AES Maritza PPA Review — DG Comp is conducting a preliminary review of whether AES Maritza’s PPA with NEK is compliant with the European Union's State Aid rules. No formal investigation has been launched by DG Comp to date.
AES Maritza PPA Review — DG Comp is conducting a preliminary review of whether AES Maritza’s PPA with NEK is compliant with the European Union's State Aid rules. No formal investigation has been launched by DG Comp to date.
For further information regarding credit losses, see Note 1— General and Summary of Significant Accounting Policies included in Item 8.— Financial Statements and Supplementary Data of this Form 10-K.
For further information regarding credit losses, see Note 1— General and Summary of Significant Accounting Policies and Note 8— Allowance for Credit Losses included in Item 8.— Financial Statements and Supplementary Data of this Form 10-K.
We have met our interim needs for shorter-term and working capital financing at the Parent Company level with our revolving credit facility and commercial paper program. See Item 1A.— Risk Factors — The AES Corporation's ability to make payments on its outstanding indebtedness is dependent upon the receipt of funds from our subsidiaries , of this Form 10-K.
We have met our interim needs for shorter-term and working capital financing at the Parent Company level with our revolving credit facilities and commercial paper program. See Item 1A.— Risk Factors — The AES Corporation's ability to make payments on its outstanding indebtedness is dependent upon the receipt of funds from our subsidiaries , of this Form 10-K.
A material subsidiary is defined in the Parent Company's revolving credit agreement as any business that contributed 20% or more of the Parent Company's total cash distributions from businesses for the four most recently completed fiscal quarters. As of December 31, 2023, none of the defaults listed above resulted in a cross-default under the recourse debt of the Parent Company.
A material subsidiary is defined in the Parent Company's revolving credit agreement as any business that contributed 20% or more of the Parent Company's total cash distributions from businesses for the four most recently completed fiscal quarters. As of December 31, 2024, none of the defaults listed above resulted in a cross-default under the recourse debt of the Parent Company.
The Parent Company credit facility and commercial paper program are generally used for short-term cash needs to bridge the timing of distributions from subsidiaries. Cash requirements at the Parent Company level are primarily to fund interest and principal repayments of debt, construction commitments, other equity commitments, acquisitions, taxes, Parent Company overhead and development costs, and dividends on common stock.
The Parent Company credit facilities and commercial paper program are generally used for short-term cash needs to bridge the timing of distributions from subsidiaries. Cash requirements at the Parent Company level are primarily to fund interest and principal repayments of debt, construction commitments, other equity commitments, acquisitions, taxes, Parent Company overhead and development costs, and dividends on common stock.
See Note 22— Asset Impairment Expense included in Item 8.— Financial Statements and Supplementary Data of this Form 10-K for details of the asset impairments. Our effective tax rate reflects the tax effect of significant operations outside the U.S., which are generally taxed at rates different than the U.S. statutory rate.
See Note 23— Asset Impairment Expense included in Item 8.— Financial Statements and Supplementary Data of this Form 10-K for details of the asset impairments. Our effective tax rate reflects the tax effect of significant operations outside the U.S., which are generally taxed at rates different than the U.S. statutory rate.
The Company also benefits from reduced tax rates in certain countries as a result of satisfying specific commitments regarding employment and capital investment. See Note 23— Income Taxes included in Item 8.— Financial Statements and Supplementary Data of this Form 10-K for additional information regarding these reduced rates.
The Company also benefits from reduced tax rates in certain countries as a result of satisfying specific commitments regarding employment and capital investment. See Note 24— Income Taxes included in Item 8.— Financial Statements and Supplementary Data of this Form 10-K for additional information regarding these reduced rates.
New Accounting Pronouncements See Note 1— General and Summary of Significant Accounting Policies included in Item 8.— Financial Statements and Supplementary Data of this Form 10-K for further information about new accounting pronouncements adopted during 2023 and accounting pronouncements issued, but not yet effective.
New Accounting Pronouncements See Note 1— General and Summary of Significant Accounting Policies included in Item 8.— Financial Statements and Supplementary Data of this Form 10-K for further information about new accounting pronouncements adopted during 2024 and accounting pronouncements issued, but not yet effective.
(3) Interest payments are estimated based on final maturity dates of debt securities outstanding at December 31, 2023 and do not reflect anticipated future refinancing, early redemptions or new debt issuances. Variable rate interest obligations are estimated based on rates as of December 31, 2023.
(3) Interest payments are estimated based on final maturity dates of debt securities outstanding at December 31, 2024 and do not reflect anticipated future refinancing, early redemptions or new debt issuances. Variable rate interest obligations are estimated based on rates as of December 31, 2024.
The Company defines Parent Company Liquidity as cash available to the Parent Company, including cash at qualified holding companies, plus available borrowings under our existing credit facility and commercial paper program. The cash held at qualified holding companies represents cash sent to subsidiaries of the Company domiciled outside of the U.S.
The Company defines Parent Company Liquidity as cash available to the Parent Company, including cash at qualified holding companies, plus available borrowings under our existing credit facilities and commercial paper program. The cash held at qualified holding companies represents cash sent to subsidiaries of the Company domiciled outside of the U.S.
The principal sources of liquidity at the Parent Company level are dividends and other distributions from our subsidiaries, including refinancing proceeds; proceeds from debt and equity financings at the Parent Company level, including availability under our revolving credit facility and commercial paper program; and proceeds from asset sales.
The principal sources of liquidity at the Parent Company level are dividends and other distributions from our subsidiaries, including refinancing proceeds; proceeds from debt and equity financings at the Parent Company level, including availability under our revolving credit facilities and commercial paper program; and proceeds from asset sales.
While we do not expect that we will be required to fund any material amounts under these contingent contractual obligations beyond 2023, many of the events which would give rise to such obligations are beyond our control.
While we do not expect that we will be required to fund any material amounts under these contingent contractual obligations beyond 2024, many of the events which would give rise to such obligations are beyond our control.
For example, our revolving credit facility and outstanding debt securities at the Parent Company include events of default for certain bankruptcy-related events involving material subsidiaries. In addition, our revolving credit agreement at the Parent Company includes events of default related to payment defaults and accelerations of outstanding debt of material subsidiaries.
For example, our revolving credit facilities and outstanding debt securities at the Parent Company include events of default for certain bankruptcy-related events involving material subsidiaries. In addition, our revolving credit agreement at the Parent Company includes events of default related to payment defaults and accelerations of outstanding debt of material subsidiaries.
See S BU Performance Analysis—Non-GAAP Measures for definition and Item 1. — Business for the respective ownership interest for key businesses. Operating Margin decreased $2 million, with no material drivers.
See S BU Performance Analysis—Non-GAAP Measures for definition and Item 1. — Business for the respective ownership interest for key businesses. Operating Margin increased $2 million, with no material drivers.
The receivables in Chile pertain primarily to revenues recognized on regulated energy contracts that were impacted by the Stabilization Fund created by the Chilean government. See Note 7— Financing Receivables included in Item 8.— Financial Statements and Supplementary Data of this Form 10-K for further information.
Noncurrent receivables in Chile pertain primarily to revenues recognized on regulated energy contracts that were impacted by the Stabilization Funds created by the Chilean government. See Note 7— Financing Receivables included in Item 8.— Financial Statements and Supplementary Data of this Form 10-K for further information.
These impacts were partially offset by inflationary and foreign currency impacts at certain Argentine businesses, net of valuation allowances, as well as the recognition of U.S. investment tax credits for renewables projects placed in service this year.
These impacts were partially offset by inflationary and foreign currency impacts at certain Argentine businesses, net of valuation allowances, as well as the recognition of U.S. investment tax credits for renewables projects placed in service in 2023.
Pension and Other Postretirement Plans — The Company recognizes a net asset or liability reflecting 110 | 2023 Annual Report the funded status of pension and other postretirement plans with current-year changes in actuarial gains or losses recognized in AOCL, except for those plans at certain of the Company's regulated utilities that can recover portions of their pension and postretirement obligations through future rates.
Pension and Other Postretirement Plans — The Company recognizes a net asset or liability reflecting the funded status of pension and other postretirement plans with current-year changes in actuarial gains or losses recognized in AOCL, except for those plans at certain of the Company's regulated utilities that can recover portions of their pension and postretirement obligations through future rates.
In some cases, where market data is not readily available, management uses comparable market sources and empirical evidence to derive market assumptions to determine a financial instrument's fair value. In certain instances, published pricing may not extend through the remaining term of the contract, and management must make assumptions to extrapolate the curve.
In some cases, where market data is not readily available, management uses comparable market sources and empirical evidence to derive market assumptions to determine a financial instrument's fair value. In certain instances, published pricing may not extend 112 | 2024 Annual Report through the remaining term of the contract, and management must make assumptions to extrapolate the curve.
In addition, changes in the timing of tariff increases or delays in the regulatory determinations under the relevant concessions could affect the cash flows and results of operations of our businesses. Long-Term Receivables As of December 31, 2023, the Company had approximately $193 million of gross accounts receivable classified as Other noncurrent assets .
In addition, changes in the timing of tariff increases or delays in the regulatory determinations under the relevant concessions could affect the cash flows and results of operations of our businesses. Long-Term Receivables As of December 31, 2024, the Company had approximately $102 million of gross accounts receivable classified as Other noncurrent assets .
Various debt instruments at the Parent Company level, including our revolving credit facility and commercial paper program, contain certain restrictive covenants.
Various debt instruments at the Parent Company level, including our revolving credit facilities and commercial paper program, contain certain restrictive covenants.
While this has impacted the U.S. market, AES has managed this issue without significant impact to our projects. Further disruptions may impact our suppliers’ ability or willingness to meet their contractual agreements or to continue to supply cells or panels into the U.S. market on terms that we deem satisfactory.
While this has impacted the U.S. market, AES has managed this issue without significant impact to our projects. Further disruptions may impact our suppliers’ ability or 95 | 2024 Annual Report willingness to meet their contractual agreements or to continue to supply cells or panels into the U.S. market on terms that we deem satisfactory.
The Puerto Rico Oversight, Management, and Economic Stability Act (“PROMESA”) was enacted to create a structure for exercising federal oversight over the fiscal affairs of U.S. territories and created procedures for adjusting debt accumulated by the Puerto Rico government and, potentially, other territories (“Title III”).
The Puerto Rico Oversight, Management, and Economic Stability Act (“PROMESA”) was enacted to create a structure for exercising federal oversight over the fiscal affairs of U.S. territories and created procedures for 98 | 2024 Annual Report adjusting debt accumulated by the Puerto Rico government and, potentially, other territories (“Title III”).
Our worldwide income tax provision requires significant judgment and is based on calculations and assumptions that are 107 | 2023 Annual Report subject to examination by the Internal Revenue Service and other taxing authorities. Certain of the Company's subsidiaries are under examination by relevant taxing authorities for various tax years.
Our worldwide income tax provision requires significant judgment and is based on calculations and assumptions that are subject to examination by the Internal Revenue Service and other taxing authorities. Certain of the Company's subsidiaries are under examination by relevant taxing authorities for various tax years.
Given its large number of businesses and overall complexity, the Company concluded that Adjusted EBITDA is a more transparent measure than Net income that better assists investors in determining which businesses have the greatest impact on the Company’s results.
Given its large number of businesses and overall complexity, the Company concluded that Adjusted 89 | 2024 Annual Report EBITDA is a more transparent measure than Net income that better assists investors in determining which businesses have the greatest impact on the Company’s results.
Accounting for Derivative Instruments and Hedging Activities — We enter into various derivative transactions in order to hedge our exposure to certain market risks. We primarily use derivative instruments to manage our interest rate, commodity, and foreign currency exposures. We do not enter into derivative transactions 109 | 2023 Annual Report for trading purposes.
Accounting for Derivative Instruments and Hedging Activities — We enter into various derivative transactions in order to hedge our exposure to certain market risks. We primarily use derivative instruments to manage our interest rate, commodity, and foreign currency exposures. We do not enter into derivative transactions for trading purposes.
AES Maritza has previously engaged in discussions with the DG Comp case team and the Government of Bulgaria ("GoB") to attempt to reach a negotiated resolution of the DG Comp’s review ("PPA Discussions"). There are no active PPA Discussions at present but those discussions could resume at any time. The PPA continues to remain in place.
AES Maritza has previously engaged in discussions with the DG Comp case team and the 99 | 2024 Annual Report Government of Bulgaria to attempt to reach a negotiated resolution of the DG Comp’s review ("PPA Discussions"). There are no active PPA Discussions at present but those discussions could resume at any time. The PPA continues to remain in place.
Some of our subsidiaries are currently in default with respect to all or a portion of their outstanding indebtedness. The total non-recourse debt classified as current in the accompanying Consolidated Balance Sheets amounts to $3.9 billion.
Some of our subsidiaries are currently in default with respect to all or a portion of their outstanding indebtedness. The total non-recourse debt classified as current in the accompanying Consolidated Balance Sheets amounts to $2.7 billion.
As of December 31, 2023, the total maximum outstanding amount of hedges protecting the company against variable rate exposure was $6.6 billion. These hedges generally provide economic protection through the entire expected life of the projects, regardless of the type of debt issued to finance construction or refinance the projects in the future.
As of December 31, 2024, the total maximum outstanding amount of hedges protecting the company against variable rate exposure was $7.9 billion. These hedges generally provide economic protection through the entire expected life of the projects, regardless of the type of debt issued to finance construction or refinance the projects in the future.
Additional discussion regarding the nature of these financial instruments and valuation techniques can be found in Note 5— Fair Value included in Item 8.— Financial Statements and Supplementary Data of this Form 10-K.
Additional 111 | 2024 Annual Report discussion regarding the nature of these financial instruments and valuation techniques can be found in Note 5— Fair Value included in Item 8.— Financial Statements and Supplementary Data of this Form 10-K.
These letters of 99 | 2023 Annual Report credit operate to guarantee performance relating to certain project development and construction activities and business operations. During the year ended December 31, 2023, the Parent Company paid letter of credit fees ranging from 1% to 3% per annum on the outstanding amounts.
These letters of credit operate to guarantee performance relating to certain project development and construction activities and business operations. During the year ended December 31, 2024, the Parent Company paid letter of credit fees ranging from 1% to 3% per annum on the outstanding amounts.
As of December 31, 2023, the Company had approximately $1.1 billion of loans receivable related to the Mong Duong facility in Vietnam, which was constructed under a BOT contract. This loan receivable represents contract consideration related to the construction of the facility, which was substantially completed in 2015, and will be collected over the 25-year term of the plant's PPA.
As of December 31, 2024, the Company had approximately $963 million of loans receivable related to the Mong Duong facility in Vietnam, which was constructed under a BOT contract. This loan receivable represents contract consideration related to the construction of the facility, which was substantially completed in 2015, and will be collected over the 25-year term of the plant's PPA.
It may also increase the costs of some of our development 95 | 2023 Annual Report projects that could negatively impact their competitiveness. Our utility businesses do allow for recovering of operations and maintenance costs through the regulatory process, which may have timing impacts on recovery.
It may also increase the costs of some of our development projects that could negatively impact their competitiveness. Our utility businesses allow for recovering of operations and maintenance costs through the regulatory process, which may have timing impacts on recovery.
In addition, these amounts do not include: (1) regulatory liabilities (See Note 10— Regulatory Assets and Liabilities ), (2) contingencies (See Note 13— Contingencies ), (3) pension and other postretirement employee benefit liabilities (see Note 15— Benefit Plans ), (4) derivatives and incentive compensation (See Note 6— Derivative Instruments and Hedging Activities ) or (5) any taxes (See Note 23— Income Taxes ) except for uncertain tax obligations, as the Company is not able to reasonably estimate the timing of future payments.
In addition, these amounts do not include: (1) regulatory liabilities (See Note 11— Regulatory Assets and Liabilities ), (2) contingencies (See Note 14— Contingencies ), (3) pension and other postretirement employee benefit liabilities (see Note 16— Benefit Plans ), (4) derivatives and incentive compensation (See Note 6— Derivative Instruments and Hedging Activities ) or (5) any taxes (See Note 24— Income Taxes ) except for uncertain tax obligations, as the Company is not able to reasonably estimate the timing of future payments.
Global Tax — The macroeconomic and political environments in the U.S. and in some countries where our subsidiaries conduct business have changed during 2022 and 2023. This could result in significant impacts to future tax law. In the U.S., the IRA includes a 15% corporate alternative minimum tax based on adjusted financial statement income.
Global Tax — The macroeconomic and political environments in the U.S. and in some countries where our subsidiaries conduct business have changed in recent years. This could result in significant impacts to future tax law. In the U.S., the IRA includes a 15% corporate alternative minimum tax (CAMT) based on adjusted financial statement income.
These amounts exclude finance lease liabilities which are included in the finance lease category. (2) Excludes any businesses classified as held-for-sale. See Note 24— Held-for-Sa l e and Dispositions in Item 8.— Financial Statements and Supplementary Data of this Form 10-K for additional information related to held-for-sale businesses.
These amounts exclude finance lease liabilities which are included in the finance lease obligations category. (2) Excludes any businesses classified as held-for-sale. See Note 25— Held-for-Sale and Dispositions in Item 8.— Financial Statements and Supplementary Data of this Form 10-K for additional information related to held-for-sale businesses.
As of December 31, 2023, we were in compliance with these covenants at the Parent Company level. 105 | 2023 Annual Report Non-Recourse Debt While the lenders under our non-recourse debt financings generally do not have direct recourse to the Parent Company, defaults thereunder can still have important consequences for our results of operations and liquidity, including, without limitation: • reducing our cash flows as the subsidiary will typically be prohibited from distributing cash to the Parent Company during the time period of any default; • triggering our obligation to make payments under any financial guarantee, letter of credit or other credit support we have provided to or on behalf of such subsidiary; • causing us to record a loss in the event the lender forecloses on the assets; and • triggering defaults in our outstanding debt at the Parent Company.
Non-Recourse Debt While the lenders under our non-recourse debt financings generally do not have direct recourse to the Parent Company, defaults thereunder can still have important consequences for our results of operations and liquidity, including, without limitation: • reducing our cash flows as the subsidiary will typically be prohibited from distributing cash to the Parent Company during the time period of any default; • triggering our obligation to make payments under any financial guarantee, letter of credit or other credit support we have provided to or on behalf of such subsidiary; • causing us to record a loss in the event the lender forecloses on the assets; and • triggering defaults in our outstanding debt at the Parent Company.
These noncurrent receivables mostly consist of accounts receivable in the U.S. and Chile that, pursuant to amended agreements or government resolutions, have collection periods that extend beyond December 31, 2024, or one year from the latest balance sheet date. Noncurrent receivables in the U.S. pertain to the Warrior Run PPA termination agreement and the sale of the Redondo Beach land.
These noncurrent receivables mostly consist of accounts receivable in the U.S. and Chile that, pursuant to amended agreements or government resolutions, have collection periods that extend beyond December 31, 2025, or one year from the latest balance sheet date. Noncurrent receivables in the U.S. pertain to the sale of the Redondo Beach land.
EBITDA, Adjusted EBITDA and Adjusted EBITDA with Tax Attributes We define EBITDA as earnings before interest income and expense, taxes, depreciation, and amortization.
EBITDA, Adjusted EBITDA and Adjusted EBITDA with Tax Attributes We define EBITDA as earnings before interest income and expense, taxes, depreciation, amortization, and accretion of AROs.
Operational Sensitivity to Dry Hydrological Conditions — Our hydroelectric generation facilities are sensitive to changes in the weather, particularly the level of water inflows into generation facilities. In the past, dry hydrological conditions in Panama, Brazil, Colombia and Chile have presented challenges for our businesses in these markets.
Operational Sensitivity to Dry Hydrological Conditions — Our hydroelectric generation facilities are sensitive to changes in the weather, particularly the level of water inflows into generation facilities. Dry hydrological conditions in Panama, Colombia, and Chile can present challenges for our businesses in these markets.
All other defaults are not payment defaults but are instead technical defaults triggered by failure to comply with covenants or other requirements contained in the non-recourse debt documents.
AES Puerto Rico is in payment default. All other defaults are not payment defaults but are instead technical defaults triggered by failure to comply with covenants or other requirements contained in the non-recourse debt documents.
We continue to monitor our operations and address challenges as they arise. For the risk factors related to our business, see Item 1.— Business and Item 1A.— Risk Factors of this Form 10-K. Operational Trade Restrictions and Supply Chain — On March 29, 2022, the U.S.
We continue to monitor our operations and address challenges as they arise. For the risk factors related to our business, see Item 1.— Business and Item 1A.— Risk Factors of this Form 10-K. Operational Trade Restrictions and Supply Chain — In recent years, the U.S.
See Note 8— Investments in and Advances to Affiliates included in Item 8.— Financial Statements and Supplementary Data of this Form 10-K for further information.
See Note 9— Investments in and Advances to Affiliates and Note 25— Held-for-Sale and Dispositions included in Item 8.— Financial Statements and Supplementary Data of this Form 10-K for further information.
After recognizing these impairment expenses, the carrying value of our investments in long-lived assets and current assets held-for-sale that were assessed for impairment following a triggering event in 2023 totaled $1.3 billion at December 31, 2023.
After recognizing these impairment expenses, the carrying value of our investments in long-lived assets and current assets held-for-sale that were assessed for impairment following a triggering event in 2024 totaled $124 million at December 31, 2024.
In certain cases, the currency is matched through the use of derivative instruments. The majority of our non-recourse debt is funded by international commercial banks, with debt capacity supplemented by multilaterals and local regional banks. Given our long-term debt obligations, the Company is subject to interest rate risk on debt balances that accrue interest at variable rates.
The majority of our non-recourse debt is funded by international commercial banks, with debt capacity supplemented by multilaterals and local regional banks. Given our long-term debt obligations, the Company is subject to interest rate risk on debt balances that accrue interest at variable rates.
Some counterparties may be unwilling to accept our general unsecured commitments to provide credit support. Accordingly, with respect to both new and existing commitments, the Parent Company may be required to provide some other form of assurance, such as a letter of credit, to backstop or replace our credit support.
Accordingly, with respect to both new and existing commitments, the Parent Company may be required to provide some other form of assurance, such as a letter of credit, to backstop or replace our credit support. The Parent Company may not be able to provide adequate assurances to such counterparties.
Department of Commerce (“Commerce”) announced the initiation of an investigation into whether imports into the U.S. of solar cells and panels imported from Cambodia, Malaysia, Thailand, and Vietnam (“Southeast Asia”) are circumventing antidumping and countervailing duty (“AD/CVD”) orders on solar cells and panels from China.
Department of Commerce (“Commerce”) has initiated investigations into whether imports into the U.S. of solar cells and panels from Cambodia, Malaysia, Thailand, and Vietnam (“Southeast Asia”) are circumventing antidumping and countervailing duty (“AD/CVD”) orders on solar cells and panels from China.
The Parent Company may not be able to provide adequate assurances to such counterparties. To the extent we are required and able to provide letters of credit or other collateral to such counterparties, this will reduce the amount of credit available to us to meet our other liquidity needs.
To the extent we are required and able to provide letters of credit or other collateral to such counterparties, this will reduce the amount of credit available to us to meet our other liquidity needs.
Additionally, the Uyghur Forced Labor Prevention Act (“UFLPA”) seeks to block the import of products made with forced labor in certain areas of China and may lead to certain suppliers being blocked from importing solar cells 93 | 2023 Annual Report and panels to the U.S .
Additionally, the Uyghur Forced Labor Prevention Act (“UFLPA”) seeks to block the import of products made with forced labor in certain areas of China, at any point in the supply chain, and may lead to certain suppliers being blocked from importing solar cells and panels to the U.S.
The impact of any additional adverse Commerce determinations or other tariff disputes or litigation, the impact of the UFLPA, potential future disruptions to the solar panel supply chain and their effect on AES’ U.S. solar project development and construction activities remain uncertain.
The impact of new tariffs, including reciprocal tariffs, or Commerce investigations, the impact of any additional adverse Commerce determinations or other tariff disputes or litigation, the impact of the UFLPA, potential future disruptions to the renewable energy supply chain and their effect on AES’ U.S. renewable energy project development and construction activities remain uncertain.
Capital Resources and Liquidity Overview As of December 31, 2023, the Company had unrestricted cash and cash equivalents of $1.4 billion, of which $33 million was held at the Parent Company and qualified holding companies. The Company had $395 million in short-term investments, held primarily at subsidiaries, and restricted cash and debt service reserves of $564 million.
Capital Resources and Liquidity Overview As of December 31, 2024, the Company had unrestricted cash and cash equivalents of $1.5 billion, of which $265 million was held at the Parent Company and qualified holding companies. The Company had $79 million in short-term investments, held primarily at subsidiaries, and restricted cash and debt service reserves of $515 million.
Even if rainfall and water inflows return to or exceed historical averages, in some cases high market prices and low generation could persist until reservoir levels are fully recovered. Further, investments made in thermal, wind, and solar power generation may benefit from uncontracted spot sales at higher market prices.
Even if rainfall and water inflows return to historical averages, in some cases market prices and generation above or below the average could persist until reservoir levels are fully recovered. Further, investments made in thermal, wind, and solar power generation may benefit from uncontracted spot sales at higher market prices. Impacts may be material to our results of operations.
Parent Company Liquidity is reconciled to its most directly comparable GAAP financial measure, Cash and cash equivalents , at the periods indicated as follows (in millions): December 31, 2023 December 31, 2022 Consolidated cash and cash equivalents $ 1,426 $ 1,374 Less: Cash and cash equivalents at subsidiaries (1,393) (1,350) Parent Company and qualified holding companies' cash and cash equivalents 33 24 Commitments under the Parent Company credit facility 1,500 1,500 Less: Letters of credit under the credit facility (124) (34) Less: Borrowings under the credit facility — (325) Borrowings available under the Parent Company credit facility 1,376 1,141 Total Parent Company Liquidity $ 1,409 $ 1,165 The Parent Company paid dividends of $0.66 per outstanding share to its common stockholders during the year ended December 31, 2023.
Parent Company Liquidity is reconciled to its most directly comparable GAAP financial measure, Cash and cash equivalents , at the periods indicated as follows (in millions): December 31, 2024 December 31, 2023 Consolidated cash and cash equivalents $ 1,524 $ 1,426 Less: Cash and cash equivalents at subsidiaries (1,259) (1,393) Parent Company and qualified holding companies' cash and cash equivalents 265 33 Commitments under the Parent Company credit facilities 1,800 1,500 Less: Letters of credit under the credit facilities (18) (124) Borrowings available under the Parent Company credit facilities 1,782 1,376 Total Parent Company Liquidity $ 2,047 $ 1,409 The Parent Company paid dividends of $0.69 per outstanding share to its common stockholders during the year ended December 31, 2024.
Impairments Long-lived Assets and Current Assets Held-for-Sale — During the year ended December 31, 2023, the Company recognized asset impairment expense of $1.1 billion. See Note 8— Investments and Advances to Affiliates and Note 22— Asset Impairment Expense included in Item 8.— Financial Statements and Supplementary Data of this Form 10-K for further information.
Impairments and Realizability Long-lived Assets and Current Assets Held-for-Sale — During the year ended December 31, 2024, the Company recognized asset impairment expense of $374 million. See Note 23— Asset Impairment Expense included in Item 8.— Financial Statements and Supplementary Data of this Form 10-K for further information.
The Company also had non-recourse and recourse aggregate principal amounts of debt outstanding of $22.1 billion and $4.5 billion, respectively. Of the $3.9 billion of our current non-recourse debt, $3.6 billion was presented as such because it is due in the next twelve months and $325 million relates to debt considered in default.
The Company also had non-recourse and recourse aggregate principal amounts of debt outstanding of $22.7 billion 100 | 2024 Annual Report and $5.7 billion, respectively. Of the $2.7 billion of our current non-recourse debt, $2.5 billion was presented as such because it is due in the next twelve months and $186 million relates to debt considered in default.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS For discussion of the Company's year ended December 31, 2022 compared to the year ended December 31, 2021, refer to Item 7. —Management's Discussion and Analysis of Financial Condition and Results of Operations in Exhibit 99.1 of the Form 8-K filed with the SEC on May 8, 2023.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS For discussion of the Company's year ended December 31, 2023 compared to the year ended December 31, 2022, refer to Item 7. —Management's Discussion and Analysis of Financial Condition and Results of Operations in our 2023 Form 10-K filed with the SEC on February 26, 2024.
Factors in this determination include the variability due to unrealized gains or losses related to derivative transactions or equity securities remeasurement, unrealized foreign currency gains or losses, losses due to impairments, strategic decisions to dispose of or acquire business interests or retire debt, and the non-recurring nature of the impact of the early contract terminations at Angamos, which affect results in a given period or periods.
Factors in this determination include the variability due to unrealized gains or losses pertaining to derivative transactions, equity securities, or financial assets and liabilities remeasurement, unrealized foreign currency gains or losses, losses due to impairments, and strategic decisions to dispose of or acquire business interests or retire debt, which affect results in a given period or periods.
Factors in this determination include the variability due to unrealized gains or losses related to derivative transactions or equity securities remeasurement, unrealized foreign currency gains or losses, losses due to impairments, strategic decisions to dispose of or acquire business interests or retire debt, and the non-recurring nature of the impact of the early contract terminations at Angamos, which affect results in a given period or periods.
Factors in this determination include the variability due to unrealized gains or losses pertaining to derivative transactions, equity securities, or financial assets and liabilities remeasurement, unrealized foreign currency gains or losses, losses due to impairments, and strategic decisions to dispose of or acquire business interests or retire debt, which affect results in a given period or periods.
Renewable Energy Tax Credits — The Inflation Reduction Act (the “IRA”) was signed into law in the United States. The IRA includes provisions that are expected to benefit the U.S. clean energy industry, including increases, extensions, direct transfers and/or new tax credits for onshore and offshore wind, solar, storage and hydrogen projects.
The IRA includes provisions that are expected to benefit the U.S. clean energy industry, including increases, extensions, direct transfers and/or new tax credits for onshore and offshore wind, solar, storage and hydrogen projects.
We expect that the extension of the current solar investment tax credits ("ITCs"), as well as higher credits available for projects that satisfy wage and apprenticeship requirements, will increase demand for our renewables products.
The extension of the solar investment tax credits ("ITCs") and production tax credits (“PTCs”), as well as higher credits available for projects that satisfy wage and apprenticeship requirements has increased demand for our renewables products.
In 2023, we realized $611 million of earnings from Tax Attributes, comprised of $593 million from the Renewables SBU and $18 million from the Utilities SBU. In 2024, we expect an increase in Tax Attributes earned by our U.S. renewables business in line with the growth in that business.
In 2024, we realized $1,313 million of earnings from Tax Attributes, comprised of $1,293 million from the Renewables SBU and $20 million from the Utilities SBU. In 2025, we expect an increase in Tax Attributes earned throughout the year by our U.S. renewables business in line with the growth in that business.
As of December 31, 2023, Mong Duong met the held-for-sale criteria and the loan receivable balance, net of CECL reserve, was classified in held-for-sale assets. Of the loan receivable balance, $108 million was classified as Current held-for-sale assets , and $962 million was classified as Noncurrent held-for-sale assets .
As of December 31, 2024, Mong Duong met the held-for-sale criteria and the loan receivable balance, net of CECL reserve of $23 million, was classified in held-for-sale assets. Of the loan receivable balance, $121 million was classified in Current held-for-sale assets , and $842 million was classified in Noncurrent held-for-sale assets on the Consolidated Balance Sheets.
As of December 31, 2023, the Parent Company had provided outstanding financial and performance-related guarantees or other credit support commitments to or for the benefit of our businesses, which were limited by the terms of the agreements, of approximately $4 billion in aggregate (excluding those collateralized by letters of credit and other obligations discussed below).
As of December 31, 2024, the Parent Company had provided outstanding financial and performance-related guarantees or other credit support commitments to or for the benefit of our businesses, which were limited by the terms of the agreements, of approximately $3.0 billion in aggregate (excluding those collateralized by letters of credit and other obligations discussed below). 101 | 2024 Annual Report Some counterparties may be unwilling to accept our general unsecured commitments to provide credit support.
We define Adjusted EBITDA as EBITDA adjusted for the impact of NCI and interest, taxes, depreciation, and amortization of our equity affiliates, adding back interest income recognized under service concession arrangements, and excluding gains or losses of both consolidated entities and entities accounted for under the equity method due to (a) unrealized gains or losses related to derivative transactions and equity securities; (b) unrealized foreign currency gains or losses; (c) gains, losses, benefits and costs associated with dispositions and acquisitions of business interests, including early plant closures, and gains and losses recognized at commencement of sales-type leases; (d) losses due to impairments; (e) gains, losses and costs due to the early retirement of debt; and (f) net gains at Angamos, one of our businesses in the Energy Infrastructure SBU, associated with the early contract terminations with Minera Escondida and Minera Spence.
We define Adjusted EBITDA as EBITDA adjusted for the impact of NCI and interest, taxes, depreciation, amortization, and accretion of AROs of our equity affiliates, adding back interest income recognized under service concession arrangements, and excluding gains or losses of both consolidated entities and entities accounted for under the equity method due to (a) unrealized gains or losses pertaining to derivative transactions, equity securities, and financial assets and liabilities measured using the fair value option; (b) unrealized foreign currency gains or losses; (c) gains, losses, benefits, and costs associated with dispositions and acquisitions of business interests, including early plant closures, and gains and losses recognized at commencement of sales-type leases; (d) losses due to impairments; and (e) gains, losses, and costs due to the early retirement of debt or troubled debt restructuring.
As of December 31, 2023, the maximum undiscounted potential exposure to guarantees issued by our subsidiaries was $2.8 billion, including $1.8 billion of customary payment guarantees under EPC contracts and other agreements, and $1 billion of tax equity financing related guarantees. In addition, as of December 31, 2023, our subsidiaries had $359 million of letters of credit outstanding.
As of December 31, 2024, the maximum undiscounted potential exposure to guarantees and letters of credit issued by our subsidiaries was $5.3 billion, including $2.2 billion of customary payment guarantees under EPC contracts and other agreements, $1.4 billion of letters of credit outstanding, $1.2 billion of surety bonds and other guarantees issued by insurance companies, and $388 million of tax equity financing related guarantees.
Factors in this determination include the variability due to unrealized gains or losses related to derivative transactions or equity securities 87 | 2023 Annual Report remeasurement, unrealized foreign currency gains or losses, losses due to impairments, strategic decisions to dispose of or acquire business interests or retire debt, the non-recurring nature of the impact of the early contract terminations at Angamos, and the variability of allocations of earnings to tax equity investors, which affect results in a given period or periods.
Factors in this determination include the variability due to unrealized gains or losses pertaining to derivative transactions, equity securities, or financial assets and liabilities remeasurement, unrealized foreign currency gains or losses, losses due to impairments, strategic decisions to dispose of or acquire business interests or retire debt, and the variability of allocations of earnings to tax equity investors, which affect results in a given period or periods.
The IRA also allows us to directly transfer investment tax credits to unrelated tax credit buyers. We account for the transfer proceeds as tax benefit throughout the year the renewables project is placed in service.
For projects utilizing the production tax credit, this value is recognized over 10 years as the facility produces energy. The IRA also allows us to directly transfer investment tax credits to unrelated tax credit buyers. We account for the transfer proceeds as tax benefit throughout the year the renewables project is placed in service.
However, there can be no assurance that this matter will be resolved favorably; if it is not, there could be a material adverse effect on the Company’s financial condition, results of operation, and cash flows.
However, there can be no assurance that this matter will be resolved favorably; if it is not, there could be a material adverse effect on the Company’s financial condition, results of operation, and cash flows. As of December 31, 2024, the carrying value of our long-lived assets at Maritza is $309 million.
We will continue to monitor the issuance of draft legislation in other non-EU countries where the Company operates that are considering Pillar 2 amendments. The impact to the Company remains unknown but may be material. Inflation — In the markets in which we operate, there have been higher rates of inflation recently.
We will continue to monitor the issuance of draft legislation in other non-EU countries where the Company operates that are considering Pillar 2 amendments and new interpretive guidance. The impact to the Company during 2024 is not material. 97 | 2024 Annual Report Inflation — In the markets in which we operate, there have been higher rates of inflation recently.
As of December 31, 2023, we had $235 million in letters of credit under bilateral agreements, $188 million in letters of credit outstanding provided under our unsecured credit facilities, and $124 million in letters of credit outstanding provided under our revolving credit facility.
As of December 31, 2024, we had $378 million in letters of credit under bilateral agreements, $129 million in letters of credit outstanding provided under our unsecured credit facilities, and $18 million in letters of credit outstanding provided under our revolving credit facilities.
The tax attributes are related to the Renewables and Utilities SBUs. 88 | 2023 Annual Report Adjusted PTC We define Adjusted PTC as pre-tax income from continuing operations attributable to The AES Corporation excluding gains or losses of the consolidated entity due to (a) unrealized gains or losses related to derivative transactions and equity securities; (b) unrealized foreign currency gains or losses; (c) gains, losses, benefits and costs associated with dispositions and acquisitions of business interests, including early plant closures, and gains and losses recognized at commencement of sales-type leases; (d) losses due to impairments; (e) gains, losses and costs due to the early retirement of debt; and (f) net gains at Angamos, one of our businesses in the Energy Infrastructure SBU, associated with the early contract terminations with Minera Escondida and Minera Spence.
The tax attributes are related to the Renewables and Utilities SBUs. 90 | 2024 Annual Report Adjusted PTC We define Adjusted PTC as pre-tax income from continuing operations attributable to The AES Corporation excluding gains or losses of the consolidated entity due to (a) unrealized gains or losses pertaining to derivative transactions, equity securities, and financial assets and liabilities measured using the fair value option; (b) unrealized foreign currency gains or losses; (c) gains, losses, benefits, and costs associated with dispositions and acquisitions of business interests, including early plant closures, and gains and losses recognized at commencement of sales-type leases; (d) losses due to impairments; and (e) gains, losses and costs due to the early retirement of debt or troubled debt restructuring.
Adjusted EBITDA decreased $305 million, primarily due to the drivers above adjusted for NCI, unrealized derivative gains, and depreciation, as well as higher realized foreign currency losses and lower insurance recovery. 92 | 2023 Annual Report New Energy Technologies SBU The following table summarizes Operating Margin and Adjusted EBITDA (in millions) for the periods indicated: For the Years Ended December 31, 2023 2022 $ Change % Change Operating Margin $ (9) $ (7) $ (2) -29 % Adjusted EBITDA (1) (62) (116) 54 47 % _____________________________ (1) A non-GAAP financial measure.
Adjusted EBITDA decreased $174 million, primarily due to the drivers above, adjusted for NCI and unrealized derivatives, and lower realized foreign currency losses. 94 | 2024 Annual Report New Energy Technologies SBU The following table summarizes Operating Margin and Adjusted EBITDA (in millions) for the periods indicated: For the Years Ended December 31, 2024 2023 $ Change % Change Operating Margin $ (7) $ (9) $ 2 22 % Adjusted EBITDA (1) (38) (62) 24 39 % _____________________________ (1) A non-GAAP financial measure.
Reconciliation of Adjusted PTC (in millions) Years Ended December 31, 2023 2022 Income (loss) from continuing operations, net of tax, attributable to The AES Corporation $ 242 $ (546) Income tax expense attributable to The AES Corporation 206 210 Pre-tax contribution 448 (336) Unrealized derivative and equity securities losses 41 128 Unrealized foreign currency losses 301 42 Disposition/acquisition losses (gains) (79) 40 Impairment losses 877 1,658 Loss on extinguishment of debt 70 35 Total Adjusted PTC $ 1,658 $ 1,567 89 | 2023 Annual Report Adjusted EPS We define Adjusted EPS as diluted earnings per share from continuing operations excluding gains or losses of both consolidated entities and entities accounted for under the equity method due to (a) unrealized gains or losses related to derivative transactions and equity securities; (b) unrealized foreign currency gains or losses; (c) gains, losses, benefits and costs associated with dispositions and acquisitions of business interests, including early plant closures, the tax impact from the repatriation of sales proceeds, and gains and losses recognized at commencement of sales-type leases; (d) losses due to impairments; (e) gains, losses and costs due to the early retirement of debt; and (f) net gains at Angamos, one of our businesses in the Energy Infrastructure SBU, associated with the early contract terminations with Minera Escondida and Minera Spence.
Years Ended December 31, Reconciliation of Adjusted PTC (in millions) 2024 2023 Income from continuing operations, net of tax, attributable to The AES Corporation $ 1,686 $ 242 Income tax expense (benefit) attributable to The AES Corporation (19) 206 Pre-tax contribution 1,667 448 Unrealized derivative and equity securities losses (gains) (94) 41 Unrealized foreign currency losses 16 301 Disposition/acquisition gains (320) (79) Impairment losses 280 877 Loss on extinguishment of debt 65 70 Total Adjusted PTC $ 1,614 $ 1,658 91 | 2024 Annual Report Adjusted EPS We define Adjusted EPS as diluted earnings per share from continuing operations excluding gains or losses of both consolidated entities and entities accounted for under the equity method due to (a) unrealized gains or losses pertaining to derivative transactions, equity securities, and financial assets and liabilities measured using the fair value option; (b) unrealized foreign currency gains or losses; (c) gains, losses, benefits and costs associated with dispositions and acquisitions of business interests, including early plant closures, the tax impact from the repatriation of sales proceeds, and gains and losses recognized at commencement of sales-type leases; (d) losses due to impairments; and (e) gains, losses and costs due to the early retirement of debt or troubled debt restructuring.
(2) Includes losses of $28 million and $20 million on foreign currency derivative contracts for the years ended December 31, 2023 and 2022, respectively. 84 | 2023 Annual Report The Company recognized net foreign currency transaction losses of $359 million in 2023, primarily driven by the depreciation of the Argentine peso, unrealized losses related to an intercompany loan denominated in the Colombian peso, and realized and unrealized foreign currency derivative losses in South America due to the depreciating Colombian peso.
The Company recognized net foreign currency transaction losses of $359 million in 2023, primarily driven by the depreciation of the Argentine peso, unrealized losses related to an intercompany loan denominated in the Colombian peso, and realized and unrealized foreign currency derivative losses in South America due to the depreciating Colombian peso.
Adjusted EBITDA with Tax Attributes increased $366 million, primarily due to higher realized tax attributes driven by more projects being placed in service, as well as impact from the increase in Adjusted EBITDA.
Adjusted EBITDA with Tax Attributes increased $600 million, primarily due to higher realized tax attributes driven by more projects being placed in service, partially offset by the decrease in Adjusted EBITDA.
Consolidated Cash Flows The following table reflects the changes in operating, investing, and financing cash flows for the comparative twelve month periods (in millions): December 31, Cash flows provided by (used in): 2023 2022 $ Change Operating activities $ 3,034 $ 2,715 $ 319 Investing activities (8,188) (5,836) (2,352) Financing activities 5,405 3,758 1,647 101 | 2023 Annual Report Operating Activities Fiscal Year 2023 versus 2022 Net cash provided by operating activities increased $319 million for the year ended December 31, 2023, compared to December 31, 2022.
Consolidated Cash Flows The following table reflects the changes in operating, investing, and financing cash flows for the comparative twelve month periods (in millions): 103 | 2024 Annual Report December 31, Cash flows provided by (used in): 2024 2023 $ Change Operating activities $ 2,752 $ 3,034 $ (282) Investing activities (7,700) (8,188) 488 Financing activities 4,963 5,405 (442) Operating Activities Fiscal Year 2024 versus 2023 Net cash provided by operating activities decreased $282 million for the year ended December 31, 2024, compared to December 31, 2023.
Low rainfall and water inflows have caused reservoir levels to be below historical levels, reduced generation output, and increased prices for electricity. If our hydroelectric generation facilities cannot generate sufficient energy to meet contractual arrangements, we may need to purchase energy to fulfill our obligations, which could have a material adverse impact on our results of operations.
Low inflows can result in low reservoir levels, reduced generation output, and subsequently possible increased prices for electricity. If our hydroelectric generation facilities cannot generate sufficient energy to meet contractual arrangements, we may need to purchase energy to fulfill our obligations, which could have an adverse impact on AES.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeIn 113 | 2023 Annual Report certain cases, particularly for non-recourse financing, we execute interest rate swap, cap, and floor agreements to effectively fix or limit the interest rate exposure on the underlying financing. Most of our interest rate risk is related to non-recourse financings at our businesses.
Biggest changeMost of our interest rate risk is related to non-recourse financings at our businesses.
For further information regarding market risk, see Item 1A.— Risk Factors , Fluctuations in currency exchange rates may impact our financial results and position ; Wholesale power prices may experience significant volatility in our markets which could impact our operations and opportunities for future growth; We may not be adequately hedged against our exposure to changes in commodity prices or interest rates; and Certain of our businesses are sensitive to variations in weather and hydrology of this 2023 Form 10-K.
For further information regarding market risk, see Item 1A.— Risk Factors , Fluctuations in currency exchange rates may impact our financial results and position ; Wholesale power prices may experience significant volatility in our markets which could impact our operations and opportunities for future growth; We may not be adequately hedged against our exposure to changes in commodity prices or interest rates; and Certain of our businesses are sensitive to variations in weather and hydrology of this 2024 Form 10-K.
These numbers have been produced by applying a one-time 10% USD appreciation to forecasted exposed cash distributions for 2024 coming from the respective subsidiaries exposed to the currencies listed above, net of the impact of outstanding hedges and holding all other variables constant. The numbers presented above are net of any transactional gains or losses.
These numbers have been produced by applying a one-time 10% USD appreciation to forecasted exposed cash distributions for 2025 coming from the respective subsidiaries exposed to the currencies listed above, net of the impact of outstanding hedges and holding all other variables constant. The numbers presented above are net of any transactional gains or losses.
Due to variation of timing and amount between cash distributions and earnings exposure, the hedge impact may not fully cover the earnings exposure on a realized basis, which could result in greater volatility in earnings. AES has unhedged forward-looking earnings foreign exchange deterioration risk from the Argentine peso that could be material.
Due to variation of timing and amount between cash distributions and earnings exposure, the hedge impact may not fully cover the earnings exposure on a realized basis, which could result in greater volatility in earnings. AES has unhedged forward-looking earnings which are exposed to foreign exchange deterioration risk from the Argentine peso that could be material.
A significant portion of our PPAs through 2024 include mechanisms of indexation that adjust the price of energy based on fluctuations in the price of coal, with an index defined by the National Energy Commission based on the physical coal imports for the energy system. This mechanism mitigates exposures to changes in the price of fuel.
A significant portion of our PPAs through 2025 include mechanisms of indexation that adjust the price of energy based on fluctuations in the price of coal, with an index defined by the National Energy Commission based on the physical coal imports for the energy system. This mechanism mitigates exposures to changes in the price of fuel.
We have varying degrees of exposure to changes in the exchange rate between the USD and the following currencies: Argentine peso, Brazilian real, Chilean peso, Colombian peso, Dominican peso, Euro, and Mexican peso. Our exposure to certain of these currencies may be material.
We have varying degrees of exposure to changes in the exchange rate between the USD and the following currencies: Argentine peso, Chilean peso, Colombian peso, Dominican peso, Euro, and Mexican peso. Our exposure to certain of these currencies may be material.
Exposures are not perfectly linear or symmetric. The sensitivities are affected by a number of local or indirect market factors. Examples of these factors include hydrology, local energy market supply/demand balances, regional fuel supply issues, regional competition, bidding strategies, and regulatory interventions such as price caps. Volume variation also affects our commodity exposure.
Exposures are not perfectly linear or symmetric. The sensitivities are affected by a number of local or indirect market factors. Examples of these factors include hydrology, local energy market supply/demand balances, regional fuel supply issues, regional 114 | 2024 Annual Report competition, bidding strategies, and regulatory interventions such as price caps. Volume variation also affects our commodity exposure.
Contract levels do not always match our generation availability or needs, and our assets may be sellers of spot prices in excess of contract levels 112 | 2023 Annual Report or a net buyer in the spot market to satisfy contract obligations, which could impact existing fuel supply commitments.
Contract levels do not always match our generation availability or needs, and our assets may be sellers of spot prices in excess of contract levels or a net buyer in the spot market to satisfy contract obligations, which could impact existing fuel supply commitments.
We enter into various transactions, including derivatives, in order to hedge our exposure to these market risks. 111 | 2023 Annual Report The disclosures presented in this Item 7A are based upon a number of assumptions; actual effects may differ.
We enter into various transactions, including derivatives, in order to hedge our exposure to these market risks. The disclosures presented in this Item 7A are based upon a number of assumptions; actual effects may differ.
As of December 31, 2023, the portfolio’s pre-tax earnings exposure to a one-time 100-basis-point increase in interest rates for our Argentine peso, Brazilian real, Chilean peso, Colombian peso, Euro, and USD denominated debt would be less than $35 million on interest expense for the debt denominated in these currencies.
As of December 31, 2024, the portfolio’s pre-tax earnings exposure to a one-time 100-basis-point increase in interest rates for our Argentine peso, Chilean peso, Colombian peso, Euro, and USD denominated debt would be less than $15 million on interest expense for the debt denominated in these currencies.
Additionally, certain of our foreign subsidiaries and affiliates have entered into monetary obligations in USD or currencies other than their own functional currencies. Certain of our foreign subsidiaries calculate and pay taxes in currencies other than their own functional currency.
Additionally, certain of our foreign subsidiaries and affiliates have entered into monetary obligations in USD or currencies other than their own functional currencies. Certain of our foreign subsidiaries calculate and pay 115 | 2024 Annual Report taxes in currencies other than their own functional currency.
As of December 31, 2023, we project pre-tax earnings exposure on a 10% increase in commodity prices to be less than a $30 million gain for power, less than $15 million loss for gas, and less than $10 million loss for coal.
As of December 31, 2024, we project pre-tax earnings exposure on a 10% increase in commodity prices to be less than a $5 million gain for power, less than a $5 million gain for gas, and less than a $5 million loss for coal.
These amounts represent 2024 full year exposure and do not take into account the historical correlation between these interest rates. 114 | 2023 Annual Report
These amounts represent 2025 full year exposure and do not take into account the historical correlation between these interest rates. 116 | 2024 Annual Report
Additionally, as of December 31, 2023, assuming a 10% USD appreciation, cash distributions attributable to foreign subsidiaries in the Brazilian real, Colombian peso, and Euro, individually, may be exposed to exchange rate movement of less than a $5 million gain.
Additionally, as of December 31, 2024, assuming a 10% USD appreciation, cash distributions attributable to foreign subsidiaries in the Colombian peso, Euro, and Argentine peso individually, may be exposed to exchange rate movement of less than a $5 million loss.
Our Renewables businesses in Panama are highly contracted under financial and load-following PPA type structures, exposing the business to hydrology-based variance. To the extent hydrological inflows are greater than or less than the contract volumes, the business will be sensitive to changes in spot power prices which may be driven by oil and natural gas prices in some time periods.
To the extent hydrological inflows are greater than or less than the contract volumes, the business will be sensitive to changes in spot power prices which may be driven by oil and natural gas prices in some time periods.
Depending on whether a plant’s capacity payments or revenue stream is fixed or varies with inflation, we partially hedge against interest rate fluctuations by arranging fixed-rate or variable-rate financing.
Depending on whether a plant’s capacity payments or revenue stream is fixed or varies with inflation, we partially hedge against interest rate fluctuations by arranging fixed-rate or variable-rate financing. In certain cases, particularly for non-recourse financing, we execute interest rate swap, cap, and floor agreements to effectively fix or limit the interest rate exposure on the underlying financing.
In Colombia, we operate under a shorter-term sales strategy with spot market exposure for uncontracted volumes. Because we own hydroelectric assets there, contracts are not indexed to fuel. In Brazil, the majority of the hydroelectric and other renewable generating facility volumes are covered by contract sales.
In Colombia, we operate under a shorter-term sales strategy with spot market exposure for uncontracted volumes. Because we own hydroelectric assets there, contracts are not indexed to fuel. Our Renewables businesses in Panama are highly contracted under financial and load-following PPA type structures, exposing the business to hydrology-based variance.
Removed
Under normal hydrological volatility, spot price risk is mitigated through a regulated sharing mechanism across all hydroelectric generators in the country. Under drier conditions, the sharing mechanism may not be sufficient to cover the business' contract position, and therefore it may have to purchase power at spot prices driven by the cost of thermal generation.

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