AES (AES) 10-K risk factor changes: FY2023 vs FY2022

The categories of risk we have identified in Item 1A.—*[Risk [removed: Factors](#i84f31ef528bc41899c5480059e42eda9_58)*] [added: Factors](#i8ea710b913994516904e0694e23e5230_58)*] include risks associated with our operations, governmental regulation and laws, our indebtedness and financial condition.

These risk factors should be read in conjunction with Item 7*.—[Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations](#i84f31ef528bc41899c5480059e42eda9_100)*] [added: Operations](#i8ea710b913994516904e0694e23e5230_100)*] in this Form 10-K and the Consolidated Financial Statements and related notes included elsewhere in this Form 10-K.

| [removed: 59] [added: 55] \| [removed: 2022] [added: 2023] Annual Report | | | | | |

See Item 3.— *[Legal [removed: Proceedings](#i84f31ef528bc41899c5480059e42eda9_67)*] [added: Proceedings](#i8ea710b913994516904e0694e23e5230_67)*] below.

The open market wholesale prices for electricity can be volatile and generally reflect the variable cost of the source generation which could include renewable sources at near zero pricing or [added: thermal sources subject to fluctuating cost of fuels such as coal, natural gas or oil derivative fuels in addition to other factors described below.]

| [removed: 60] [added: 56] \| [removed: 2022] [added: 2023] Annual Report | | | | | |

The wholesale prices offered for electricity have been volatile in the markets in which we operate due to a variety of factors, including the increased penetration of renewable generation [added: and energy storage] resources, low-priced natural [removed: gas and] [added: gas,] demand side [removed: management.][added: management, new regulations and market rules.]

The levelized cost of electricity from new solar and wind generation sources has decreased substantially [removed: in recent years] [added: over the past decade] as solar panel costs and wind turbine costs have declined, while wind and solar capacity factors have increased.

Further, China's Zero COVID strategy contributed to a significant decrease in GDP growth in [removed: 2022.][added: 2022 and its GDP growth in 2023 was below growth rates in the years preceding the pandemic.]

| [removed: 61] [added: 57] \| [removed: 2022] [added: 2023] Annual Report | | | | | |

[added: Furthermore,] through AGIC, AES’ captive insurance company, we take certain insurance risk on our businesses.

Wind, solar, [added: hydrogen,] and energy storage projects are subject to substantial risks.

| [removed: 62] [added: 58] \| [removed: 2022] [added: 2023] Annual Report | | | | | |

[removed: If the final determinations result in additional taxes, tariffs, duties, or other assessments on renewable energy or the equipment necessary to generate or deliver it, such as antidumping and countervailing duty rates,] [added: 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.

For example, our subsidiaries may instruct contractors to begin the construction process or seek to procure equipment without having [removed: financing, a PPA or critical permits in place (or enter into a PPA, procurement agreement or other agreement without agreed financing).]

We also may encounter challenges in integrating and realizing the expected benefits of these acquisitions as well as integration or other one-time costs that are greater [added: than expected.]

| [removed: 63] [added: 59] \| [removed: 2022] [added: 2023] Annual Report | | | | | |

| [removed: 64] [added: 60] \| [removed: 2022] [added: 2023] Annual Report | | | | | |

[removed: Counterparties to these agreements may breach or may be unable to] perform their obligations, due to bankruptcy, insolvency, financial distress or other factors.

We may incur significant expenditures to adapt [removed: to] our businesses to technological changes.

| [removed: 65] [added: 61] \| [removed: 2022] [added: 2023] Annual Report | | | | | |

| [removed: 66] [added: 62] \| [removed: 2022] [added: 2023] Annual Report | | | | | |

[added: In addition,] we are dependent upon hydrological conditions prevailing from time to time in the broad geographic regions in which our hydroelectric generation facilities are located.

| [removed: 67] [added: 63] \| [removed: 2022] [added: 2023] Annual Report | | | | | |

As of December 31, [removed: 2022,] [added: 2023,] Fluence continues to report that a material weakness in its internal control over revenue recognition and related inventory has not yet been remediated.

[removed: 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.

Customer growth and customer usage in our utilities businesses are affected by external factors, including mandated energy efficiency measures, demand side management requirements, and economic and demographic [added: conditions, such as population changes, job and income growth, housing starts, new business formation and the overall level of economic activity.]

| [removed: 68] [added: 64] \| [removed: 2022] [added: 2023] Annual Report | | | | | |

See Item 7.—*[Management's Discussion and Analysis—Critical Accounting Policies and Estimates—Pension and Other Postretirement [removed: Plans](#i84f31ef528bc41899c5480059e42eda9_256)*] [added: Plans](#i8ea710b913994516904e0694e23e5230_262)*] and Note 15—*[Benefit [removed: Plans](#i84f31ef528bc41899c5480059e42eda9_331)*] [added: Plans](#i8ea710b913994516904e0694e23e5230_337)*] included in Item 8.—*[Financial Statements and Supplementary [removed: Data](#i84f31ef528bc41899c5480059e42eda9_265)*.][added: Data](#i8ea710b913994516904e0694e23e5230_271)*.]

| [removed: 69] [added: 65] \| [removed: 2022] [added: 2023] Annual Report | | | | | |

The AES Corporation is a registered electric [added: utility] holding company under the PUHCA 2005 as enacted as part of the EPAct 2005.

Increased [removed: competition] [added: market participation] may have the effect of lowering our operating margins.

Among other steps, FERC has encouraged RTOs and ISOs to develop demand response bidding programs as a mechanism for responding to peak electric [removed: demand.][added: demand and has also encouraged the integration of distributed energy resources.]

These programs may reduce the value of generation [removed: assets.][added: assets, particularly utility-scale projects.]

[removed: Similarly,] FERC is [added: also] encouraging the construction of new transmission [added: infrastructure in accordance with provisions of EPAct 2005.]

| [removed: 70] [added: 66] \| [removed: 2022] [added: 2023] Annual Report | | | | | |

Pursuant to EPAct 2005, the NERC has been certified by FERC as the [removed: ERO] [added: Electric Reliability Organization ("ERO")] to develop mandatory and enforceable electric system reliability standards applicable throughout the U.S. to improve the overall reliability of the electric grid.

See Item [removed: 1.*—[Business—US and Utilities SBU](#i84f31ef528bc41899c5480059e42eda9_28)*.][added: 1.*—[Business—](#i8ea710b913994516904e0694e23e5230_31)[Utilities SBU](#i8ea710b913994516904e0694e23e5230_31)*.]

The EPA has brought suit against and obtained settlements with many companies for allegedly making major [removed: modifications to a coal-fired generating units without proper permit approvals and without installing best available control technology.]

See Item 1.—*[Business—Environmental and Land-Use [removed: Regulations](#i84f31ef528bc41899c5480059e42eda9_43)*.][added: Regulations](#i8ea710b913994516904e0694e23e5230_43)*.]

Changing weather conditions can also directly impact electricity supply, demand, and generations sources, leading to price volatility.

In addition,new tariffs, duties or other assessments could be imposed on the imports of solar cells, modules, batteries or other equipment utilized in our renewable energy 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.

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.

financing, a PPA or critical permits in place (or enter into a PPA, procurement agreement or other agreement without agreed financing).

Counterparties to these agreements may breach or may be unable to

However, we may not cover the entire exposure of our

Additionally, the market rules in the wholesale electric markets in which we operate continue to evolve in response to, among other things, increasing penetration by renewable energy resources and energy storage systems.

For example, some wholesale electric market regions have either implemented or are considering changes to how resource adequacy or capacity attributes are allocated to intermittent generating resources.

These changes could result in lower resource adequacy or capacity attribute revenues for our renewable generating facilities in these regions.

modifications to a coal-fired generating units without proper permit approvals and without installing best available control technology.

On May 23, 2023, the EPA published a proposed rule that would establish CO2 emissions limits for certain new fossil-fuel fired stationary combustion turbines that commence construction or are modified after May 23, 2023.

In 2019, the EPA promulgated the Affordable Clean Energy (ACE) Rule which would have replaced the EPA's 2015 Clean Power Plan Rule ("CPP").

On May 23, 2023, the EPA published a proposed rule that would vacate the ACE Rule, establish emissions guidelines in the form of CO2 emissions limitations for certain existing EGUs and would require states to develop State Plans that establish standards of performance for such EGUs that are at least as stringent as the EPA’s emissions guidelines.

Depending on various EGU-specific factors, the bases of proposed emissions guidelines range from routine methods of operation to carbon capture and sequestration or co-firing low-GHG hydrogen starting in the 2030s.

For further discussion of the regulation of GHG

The theft, damage or improper disclosure of sensitive electronic data collected by us can subject us to penalties for

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.

In that event, we may not be able to borrow money,

In the case of our U.S. renewables projects involving tax equity investors or purchasers of tax credits, we provide customary Parent Company or subsidiary guarantees to the tax equity investors or tax credit purchasers that require the Parent Company or subsidiary to bear the risk of any IRS recapture or disallowance of certain tax benefits they receive in connection with the transaction.

However, as a result of future mix of

thermal sources subject to fluctuating cost of fuels such as coal, natural gas or oil derivative fuels in addition to other factors described below.

Also, in many markets, new PPAs have been awarded for renewable generation at prices significantly lower than those awarded just a few years ago.

The impact of the recent loosening of that strategy is uncertain at this time.

Furthermore,

In addition, the U.S. Department of Commerce’s investigation into the antidumping and countervailing duties circumvention claim on solar cells and panels supplied from Malaysia, Vietnam, Thailand, and Cambodia has reached a preliminary determination that circumvention occurred.

Additionally, Commerce issued a preliminary determination that circumvention would not be deemed to occur for any solar cells and panels imported from the four countries if the wafers were manufactured outside of China or if no more than two out of six specifically

identified components were produced in China.

These preliminary determinations could be modified and final determinations from Commerce are expected in May 2023.

than expected.

In addition,

conditions, such as population changes, job and income growth, housing starts, new business formation and the overall level of economic activity.

Other parts of the EPAct 2005 allow FERC to remove the PURPA purchase/sale obligations from utilities if there are adequate opportunities to sell into competitive markets.

FERC has exercised this power with a rebuttable presumption that utilities located within the control areas of MISO, PJM, ISO New England, Inc., the New York Independent System Operator, Inc., and ERCOT are not required to purchase or sell power from or to QFs above a certain size.

Additionally, FERC has the power to remove the purchase/sale obligations of individual utilities on a case-by-case basis.

While these changes do not affect existing contracts, certain of our QFs that have had sales contracts expire are now facing a more difficult market environment and that is likely to continue for other AES QFs with existing contracts that will expire over time.

infrastructure in accordance with provisions of EPAct 2005.

In 2019, the EPA promulgated the Affordable Clean Energy (ACE) Rule which establishes heat rate improvement measures as the best system of emissions reductions for existing coal-fired electric generating units.

On February 22, 2021, the D.C. Circuit granted EPA's unopposed motion for a partial stay of the issuance of the mandate on vacating the repeal of the CPP.

On March 5, 2021, the D.C. Circuit issued the partial mandate effectuating the vacatur of the ACE Rule.

In effect, the CPP did not take effect while the EPA is addressing the remand of the ACE rule by promulgating a new Section 111(d) rule to regulate greenhouse gases from existing electric generating units.

On October 29, 2021, the U.S. Supreme Court granted petitions to review the decision by the D.C. Circuit to vacate the ACE Rule.

The opinion held that the “generation shifting” approach in the CPP exceeded the authority granted to EPA by Congress under Section 111(d) of the CAA.

The impact of the results of such litigation and potential future greenhouse gas emissions regulations remains uncertain, but it could be material.

customers, respectively, or that the cost and burden associated with any dispute over which party bears such costs would not be burdensome and costly.

We are currently evaluating the applicability and effect of the new law and additional guidance issued in the fourth quarter of 2022.

We will continue to monitor issuance of draft legislation in Bulgaria and other relevant EU Member States.

restrictions in their ability to distribute cash.

obligations.

In [removed: 2022,] [added: 2023,] AES delivered on its strategic and financial objectives.

We completed construction or the acquisition of [removed: 1.9] [added: 3.5] GW of renewables and energy storage, and signed long-term PPAs for an additional [removed: 5.2] [added: 5.6] GW of new renewable energy.

See *Overview of our Strategy* included in Item [removed: 1.—*[Business](#i84f31ef528bc41899c5480059e42eda9_19)*] [added: 1.—*[Business](#i8ea710b913994516904e0694e23e5230_19)*] of this Form 10-K for further information.

Compared with last year, diluted [removed: loss] [added: earnings] per share from continuing operations increased [removed: $0.20,] [added: $1.16,] from [removed: $0.62] [added: a loss of $0.82 in 2022] to [removed: $0.82.][added: earnings of $0.34 in 2023.]

| [removed: 84] [added: 80] \| [removed: 2022] [added: 2023] Annual Report | | | | | |

| Years Ended December 31, | | | [removed: 2022] [added: 2023] | | | | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2020] | | | | | | [removed: % Change 2022 vs. 2021] [added: $ Change] | | | | | | % [removed: Change 2021 vs. 2020] [added: Change] | | |

| Corporate and Other | | | [removed: 119] [added: 138] | | | | | | 116 | | | | | | [removed: 231] | | | | | | [removed: 3] [added: 22] | | [removed: %] | | | | [removed: \-50] [added: 19] | | % |

| Total Revenue | | | [removed: 12,617] [added: 12,668] | | | | | | [removed: 11,141] [added: 12,617] | | | | | | [removed: 9,660] | | | | | | [removed: 13] [added: 51] | | [removed: %] | | | | [removed: 15] [added: —] | | % |

| Eliminations | | | [removed: (70)] [added: (69)] | | | | | | [removed: (45)] [added: (69)] | | | | | | [removed: (53)] | | | | | | [removed: 56] [added: —] | | [removed: %] | | | | [removed: \-15] [added: —] | | % |

| Total Operating Margin | | | [removed: 2,548] [added: 2,504] | | | | | | [removed: 2,711] [added: 2,548] | | | | | | [removed: 2,693] | | | | | | [removed: \-6] [added: (44)] | | [removed: %] | | | | [removed: 1] [added: \-2] | | % |

| General and administrative expenses | | | [removed: (207)] [added: (255)] | | | | | | [removed: (166)] [added: (207)] | | | | | | [removed: (165)] | | | | | | [removed: 25] [added: (48)] | | [removed: %] | | | | [removed: 1] [added: 23] | | % |

| Interest expense | | | [removed: (1,117) | | | | | | (911) | | | | | | (1,038)] [added: 1,319] | | | | | | [removed: 23] [added: 1,117] | | [removed: %] | | | | [removed: \-12] | | [removed: %] |

| Interest income | | | [removed: 389 | | | | | | 298 | | | | | | 268] [added: (551)] | | | | | | [removed: 31] [added: (389)] | | [removed: %] | | | | [removed: 11] | | [removed: %] |

| Loss on extinguishment of debt | | | [removed: (15)] [added: (63)] | | | | | | [removed: (78)] [added: (15)] | | | | | | [removed: (186)] | | | | | | [removed: \-81] [added: (48)] | | [removed: %] | | | | [removed: \-58] [added: NM] | | [removed: %] |

| Other expense | | | [removed: (68)] [added: (99)] | | | | | | [removed: (60)] [added: (68)] | | | | | | [removed: (53)] | | | | | | [removed: 13] [added: (31)] | | [removed: %] | | | | [removed: 13] [added: 46] | | % |

| Other income | | | [removed: 102] [added: 89] | | | | | | [removed: 410] [added: 102] | | | | | | [removed: 75] | | | | | | [removed: \-75] [added: (13)] | | [removed: %] | | | | [removed: NM] [added: \-13] | | [added: %] |

[removed: | Loss] [added: Gain (loss)] on disposal and sale of business interests [removed: | | | (9) | | | | | | (1,683) | | | | | | (95) | | | | | | \-99 | | % | | | | NM | | |]

| Goodwill impairment expense | | | [removed: (777)] [added: (12)] | | | | | | [removed: —] [added: (777)] | | | | | | [removed: —] | | | | | | [removed: NM] [added: 765] | | | | | | [removed: —] [added: \-98] | | % |

| Asset impairment expense | | | [removed: (763)] [added: (1,067)] | | | | | | [removed: (1,575)] [added: (763)] | | | | | | [removed: (864)] | | | | | | [removed: \-52] [added: (304)] | | [removed: %] | | | | [removed: 82] [added: 40] | | % |

[removed: |] Foreign currency transaction [removed: gains (losses) | | | (77) | | | | | | (10) | | | | | | 55 | | | | | | NM | | | | | | NM | | |][added: losses]

| Other non-operating expense | | | [removed: (175)] [added: —] | | | | | | [removed: —] [added: (175)] | | | | | | [removed: (202)] | | | | | | [removed: NM] [added: 175] | | | | | | \-100 | | % |

| Income tax benefit (expense) | | | [removed: (265)] [added: (261)] | | | | | | [removed: 133] [added: (265)] | | | | | | [removed: (216)] | | | | | | [removed: NM] [added: 4] | | | | | | [removed: NM] [added: \-2] | | [added: %] |

| Net equity in losses of affiliates | | | [removed: (71)] [added: (32)] | | | | | | [removed: (24)] [added: (71)] | | | | | | [removed: (123)] | | | | | | [removed: NM] [added: 39] | | | | | | [removed: \-80] [added: \-55] | | % |

| [removed: INCOME (LOSS)] [added: LOSS] FROM CONTINUING OPERATIONS | | | [removed: (505)] [added: (189)] | | | | | | [removed: (955)] [added: (505)] | | | | | | [removed: 149] | | | | | | [removed: \-47] [added: 316] | | [removed: %] | | | | [removed: NM] [added: \-63] | | [added: %] |

| Gain from disposal of discontinued businesses, net of income tax [removed: expense] [added: benefit (expense)] of [added: $7,] $0, [removed: $1,] and [removed: $0,] [added: $-1,] respectively | | | [removed: —] [added: 7] | | | | | | [removed: 4] [added: —] | | | | | | [removed: 3] | | | | | | [removed: \-100] [added: 7] | | [removed: %] | | | | [removed: 33] [added: NM] | | [removed: %] |

| [removed: NET INCOME (LOSS) | | | (505) | | | | | | (951) | | |] [added: Net loss] | | | [removed: 152] [added: $] | [added: (182)] | | | | | [removed: \-47] [added: $] | [added: (505)] | [removed: %] | | | | [removed: NM] | | |

| Less: Net loss (income) attributable to noncontrolling interests and redeemable stock of subsidiaries | | | [removed: (41)] [added: 431] | | | | | | [removed: 542] [added: (41)] | | | | | | [removed: (106)] | | | | | | [removed: NM] [added: 472] | | | | | | NM | | |

| NET INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION | | | $ | [removed: (546)] [added: 249] | | | | | $ | [removed: (409)] [added: (546)] | | | | | [removed: $] | [removed: 46] | | | | | [removed: 33] [added: $] | [added: 795] | [removed: %] | | | | NM | | |

| AMOUNTS ATTRIBUTABLE TO THE AES CORPORATION COMMON STOCKHOLDERS: | | | | | | | | | | | | | | | | | | | | | | | | | | | [added: —] | | [added: %] |

| Income (loss) from continuing operations, net of tax | | | $ | [removed: (546)] [added: 242] | | | | | $ | [removed: (413)] [added: (546)] | | | | | [removed: $] | [removed: 43] | | | | | [removed: 32] [added: $] | [added: 788] | [removed: %] | | | | NM | | |

| Income from discontinued operations, net of tax | | | [removed: —] [added: 7] | | | | | | [removed: 4] [added: —] | | | | | | [removed: 3] | | | | | | [removed: \-100] [added: 7] | | [removed: %] | | | | [removed: 33] [added: NM] | | [removed: %] |

| Net cash provided by operating activities | | | [removed: $ | 2,715 | | | | | $ | 1,902 | | | | | $] [added: 3,034] | [removed: 2,755] | | | | | [removed: 43] [added: 2,715] | | [removed: %] | | | | [removed: \-31] | | [removed: %] |

| [removed: 85] [added: 81] \| [removed: 2022] [added: 2023] Annual Report | | | | | |

Year Ended December 31, [removed: 2022 Compared to Year Ended December 31, 2021][added: 2023]

[removed: ][added: ]

*Consolidated Revenue* *—* Revenue increased [removed: $1.5 billion, or 13%,] [added: $51 million] in [removed: 2022] [added: 2023] compared to [removed: 2021,] [added: 2022,] driven by:

[added: |] Operating Margin [added: | | | | | | $ | (9) | | | | | $ | (7) | | | | | | | | | | | $ | (2) | | | | | \-29 | | % | | | |]

[removed: ][added: ]

*Consolidated Operating Margin* *—* Operating margin decreased [removed: $163] [added: $44] million, or [removed: 6%,] [added: 2%,] in [removed: 2022] [added: 2023] compared to [removed: 2021,] [added: 2022,] driven by:

| [removed: 86] [added: 82] \| [removed: 2022] [added: 2023] Annual Report | | | | | |

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.

Compared with last year, net loss decreased $323 million, from $505 million to $182 million primarily as a result of favorable contributions at the Utilities, New Energy Technologies, and Renewables SBUs, partially offset by lower contributions from LNG transactions versus 2022 at the Energy Infrastructure SBU.

Adjusted EBITDA, a non-GAAP measure, decreased $119 million, from $2,931 million to $2,812 million, mainly driven by favorable LNG transactions in the prior year, lower contract prices, and higher fixed costs at the Energy Infrastructure SBU; partially offset by favorable weather conditions and new businesses at the Renewables SBU, higher contributions at the Utilities SBU due to the deferral of purchased power costs, higher revenues under a PPA termination agreement at the Energy Infrastructure SBU, and lower losses from affiliates at the New Energy Technologies SBU due to improved margins on a new product line.

Adjusted EBITDA with Tax Attributes, a non-GAAP measure, increased $225 million, from $3,198 million to $3,423 million, primarily due to higher realized tax attributes driven by more renewables projects placed in service, as well as impact from the drivers above.

This increase is mainly driven by lower goodwill impairments in the current year, higher contributions from renewables projects placed in service in the current year, the current year gain on sale of shares in Fluence, and higher contributions at the Utilities SBU due to the deferral of purchased power costs; partially offset by lower contributions from LNG transactions versus 2022, and higher unrealized foreign currency losses at the Energy Infrastructure SBU.

Adjusted EPS, a non-GAAP measure, increased $0.09 from $1.67 to $1.76, mainly driven by higher contributions from renewables projects placed in service in the current year, higher contributions at the Utilities SBU, and lower losses of affiliates at the New Energy Technologies SBU; partially offset by lower contributions from the Energy Infrastructure SBU and higher Parent Company interest.

| Renewables SBU | | | $ | 2,339 | | | | | $ | 1,893 | | | | | | | | | | | $ | 446 | | | | | 24 | | % |

| Utilities SBU | | | 3,495 | | | | | | 3,617 | | | | | | | | | | | | (122) | | | | | | \-3 | | % |

| Energy Infrastructure SBU | | | 6,836 | | | | | | 7,204 | | | | | | | | | | | | (368) | | | | | | \-5 | | % |

| New Energy Technologies SBU | | | 76 | | | | | | 3 | | | | | | | | | | | | 73 | | | | | | NM | | |

| Eliminations | | | (216) | | | | | | (216) | | | | | | | | | | | | — | | | | | | — | | % |

| Renewables SBU | | | 492 | | | | | | 528 | | | | | | | | | | | | (36) | | | | | | \-7 | | % |

| Utilities SBU | | | 433 | | | | | | 379 | | | | | | | | | | | | 54 | | | | | | 14 | | % |

| Energy Infrastructure SBU | | | 1,418 | | | | | | 1,535 | | | | | | | | | | | | (117) | | | | | | \-8 | | % |

| New Energy Technologies SBU | | | (9) | | | | | | (7) | | | | | | | | | | | | (2) | | | | | | 29 | | % |

| Corporate and Other | | | 239 | | | | | | 182 | | | | | | | | | | | | 57 | | | | | | 31 | | % |

| Interest expense | | | (1,319) | | | | | | (1,117) | | | | | | | | | | | | (202) | | | | | | 18 | | % |

| Interest income | | | 551 | | | | | | 389 | | | | | | | | | | | | 162 | | | | | | 42 | | % |

| NET LOSS | | | (182) | | | | | | (505) | | | | | | | | | | | | 323 | | | | | | \-64 | | % |

| NET INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION | | | $ | 249 | | | | | $ | (546) | | | | | | | | | | | $ | 795 | | | | | NM | | |

- $446 million at Renewables driven by higher spot sales at higher prices, and new projects placed in service; partially offset by unrealized derivative losses; and

- $73 million at New Energy Technologies mainly driven by the sale of the Fallbrook project in March 2023.

- $368 million at Energy Infrastructure driven by prior year favorable LNG transactions, lower contract energy sales due to lower prices, lower CO2 purchases passed through due to lower production, lower generation, and the impact of the devaluation of the Argentine peso; partially offset by unrealized gains resulting mainly from derivatives as part of our commercial hedging strategy, and higher revenues due to a PPA termination agreement; and

- $122 million at Utilities mainly driven by lower demand due to milder weather in Indiana and Ohio; partially offset by higher TDSIC rider and transmission revenues, and higher demand due to extreme heat in El Salvador.

- $117 million at Energy Infrastructure primarily driven by prior year favorable LNG transactions, lower contract energy sales due to lower prices, lower dispatch driven by lower demand, higher fixed costs, and a prior year one-time revenue recognition driven by a reduction in a project's expected completion costs; partially offset

by unrealized gains resulting mainly from derivatives as part of our commercial hedging strategy, and higher revenues due to a PPA termination agreement; and

- $36 million at Renewables mainly driven by higher fixed costs due to an accelerated growth plan and unrealized derivative losses; partially offset by new projects placed in service, better hydrology, and higher wind availability, resulting in higher renewable energy generation.

- $54 million at Utilities primarily driven by the deferral of purchased power costs in the current year, which were recognized in the prior year, associated with the ESP 4 approval, an increase in transmission and TDSIC rider revenues, higher demand due to extreme heat in El Salvador, and a regulatory settlement in the prior year; partially offset by the impact of milder weather in Indiana and Ohio, and higher fixed costs.

Interest expense increased $202 million, or 18%, to $1.3 billion in 2023, compared to $1.1 billion in 2022, primarily due to new debt issued at the Renewables, Energy Infrastructure, and Utilities SBUs, and a higher weighted average interest rate and debt balance at the Parent Company; partially offset by higher capitalized interest at the Renewables SBU.

Gain on disposal and sale of business interests was $134 million in 2023, primarily due to the gain on sale of shares of Fluence, our equity method investment, compared to a loss of $9 million in 2022.

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.

Asset impairment expense increased $304 million, or 40%, to $1.1 billion in 2023, compared to $763 million in 2022.

This increase was primarily due to a $198 million impairment associated with PJM's approval to retire the Warrior Run coal-fired facility, a $186 million impairment at New York Wind related to a repowering project that will result in decommissioning the existing turbines and reducing their depreciable lives, a $167 million impairment at Mong Duong upon meeting the held-for-sale criteria, $151 million of impairments at AES Clean Energy Development primarily related to the write-off of project development intangibles for projects that were determined to be no longer viable, and a $137 million impairment associated with the commitment to accelerate the retirement of the Norgener coal-fired plant in Chile.

The 2023 effective tax rate was impacted by noncontrolling interest in U.S. tax-equity partnerships and pretax impairments at certain Mexican subsidiaries and at the Mong Duong coal-fired plant in Vietnam.

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.

Net equity in losses of affiliates decreased $39 million, or 55%, to $32 million in 2023, compared to $71 million in 2022.

This decrease was primarily driven by an increase in earnings from Mesa La Paz, primarily due the termination of unrealized derivatives due to a contract amendment, and by a decrease in losses from Fluence, mainly attributable to improved margins on a new product line and reduced shipping constraints and transportation

costs.

This decrease in losses was partially offset by lower earnings from sPower, mainly due to lower earnings from renewables projects that came online.

See Note 8—*[Investments In and Advances to Affiliates](#i8ea710b913994516904e0694e23e5230_316)* included in Item 8.—*[Financial Statements and Supplementary Data](#i8ea710b913994516904e0694e23e5230_271)* of this Form 10-K for further information.

This loss increase reflects the prior year gains on remeasurement of our interest in sPower's development platform and the Fluence capital raise, higher income tax expense, lower contributions from our US and Utilities SBU due to the recognition of previously deferred power purchase costs and impacts of outages, the prior year impact of realized gains on de-designated interest rate swaps at the Parent Company, higher interest expense, and lower capitalized interest at construction projects in Chile; partially offset by the prior year loss on deconsolidation of Alto Maipo, and higher margins from our MCAC SBU due to favorable LNG transactions.

Adjusted EPS, a non-GAAP measure, increased $0.15, from $1.52 to $1.67, mainly driven by higher contributions from our MCAC SBU due to favorable LNG transactions and from our South America SBU due to higher margins and increased ownership in AES Andes, partially offset by lower contributions from our US and Utilities SBU due to the recognition of previously deferred power purchase costs and impacts of outages, the prior year impact of realized gains on de-designated interest rate swaps at the Parent Company, and higher interest expense.

| | | | | | | |

| --- | --- | --- | --- | --- | --- | --- |

| US and Utilities SBU | | | $ | 5,013 | | | | | $ | 4,335 | | | | | $ | 3,918 | | | | | 16 | | % | | | | 11 | | % |

| South America SBU | | | 3,539 | | | | | | 3,541 | | | | | | 3,159 | | | | | | — | | % | | | | 12 | | % |

| MCAC SBU | | | 2,868 | | | | | | 2,157 | | | | | | 1,766 | | | | | | 33 | | % | | | | 22 | | % |

| Eurasia SBU | | | 1,217 | | | | | | 1,123 | | | | | | 828 | | | | | | 8 | | % | | | | 36 | | % |

| Eliminations | | | (139) | | | | | | (131) | | | | | | (242) | | | | | | 6 | | % | | | | \-46 | | % |

| US and Utilities SBU | | | 564 | | | | | | 792 | | | | | | 638 | | | | | | \-29 | | % | | | | 24 | | % |

| South America SBU | | | 823 | | | | | | 1,069 | | | | | | 1,243 | | | | | | \-23 | | % | | | | \-14 | | % |

| MCAC SBU | | | 820 | | | | | | 521 | | | | | | 559 | | | | | | 57 | | % | | | | \-7 | | % |

| Eurasia SBU | | | 236 | | | | | | 216 | | | | | | 186 | | | | | | 9 | | % | | | | 16 | | % |

| Corporate and Other | | | 175 | | | | | | 158 | | | | | | 120 | | | | | | 11 | | % | | | | 32 | | % |

Revenue

*(in millions)*

- $711 million at MCAC driven by favorable LNG transactions in Panama and the Dominican Republic; higher contract sales due to increased demand and higher prices in the Dominican Republic; higher spot sales due to better hydrology in Panama; and higher pass-through fuel costs in Mexico; partially offset by the impact from the sale of Itabo in April 2021;

- $678 million at US and Utilities driven by higher prices at AES Indiana and AES Ohio due to increases in riders to collect fuel and purchased power costs from customers, as well as increased demand and favorable weather; higher sales at AES Clean Energy due to the supply agreement with Google, the prior year acquisition of New York Wind and the commencement of renewable projects; higher spot sales at Southland; and higher pass-through energy prices in El Salvador; partially offset by an increase in unrealized derivative losses at Southland and Southland Energy and a decrease at AES Hawaii due to closure of the plant in August 2022; and

- $94 million at Eurasia mainly driven by higher energy prices and generation in Bulgaria, higher electricity prices at St. Nikola, and recognition of construction revenue at Mong Duong due to a reduction in expected completion costs for ash pond 2; partially offset by unfavorable FX impact.

*•*$246 million at South America primarily driven by revenue recognized at Angamos in the prior year for the early termination of contracts with Minera Escondida and Minera Spence; an increase in regulatory receivable credit loss allowances in Argentina; higher energy purchases and higher fixed costs at AES Brasil; and unfavorable FX impact; partially offset by higher generation, lower depreciation of coal assets, and lower spot purchases in Chile; higher contract sales at AES Brasil due to better hydrology; higher energy prices in Colombia; and higher availability at TermoAndes; and

- $228 million at US and Utilities mainly driven by an increase in unrealized derivative losses at Southland Energy; recognition of previously deferred purchased power costs at AES Ohio and a charge resulting from a regulatory settlement at AES Indiana; the impact from outages and closure of the plant at AES Hawaii; lower availability and higher maintenance costs at AES Puerto Rico due to forced outages and a higher heat rate; and an increase in costs associated with growing the business at AES Clean Energy; partially offset by higher retail margin at AES Indiana due to higher volumes from favorable weather; and higher sales at AES Clean Energy due to the supply agreement with Google, the prior year acquisition of New York Wind, and the commencement of renewables projects.

- $299 million at MCAC primarily driven by an increase in Panama and the Dominican Republic due to favorable LNG transactions; higher contract sales due to higher prices and favorable hydrology in Panama and increased demand and higher prices in the Dominican Republic; partially offset by the impact from the sale of Itabo in April 2021; and

*•*$20 million at Eurasia mainly driven by recognition of construction revenue at Mong Duong due to a reduction in expected completion costs for ash pond 2; and by higher electricity prices at St. Nikola in Bulgaria; partially offset by unfavorable FX impact and higher maintenance costs.

Year Ended December 31, 2021 Compared to Year Ended December 31, 2020

*Consolidated Revenue* *—* Revenue increased $1.5 billion, or 15%, in 2021 compared to 2020, driven by:

- $417 million at US and Utilities driven by higher sales at Southland Energy primarily due to the CCGT units operating under active PPAs during the full 2021 period; higher demand in El Salvador due to the economic recovery from the COVID-19 impact; higher fuel revenues and higher demand from favorable weather at AES Indiana; increases in capacity sales and in realized gains resulting from the commercial hedging strategy at Southland; and higher sales at AES Clean Energy due to the supply agreement with Google; partially offset by decreased capacity at DPL due to its exit from the generation business;

- $391 million at MCAC driven by higher contract sales, fuel prices, and LNG sales, driven by the Eastern Pipeline COD in 2020, in the Dominican Republic; higher pass-through fuel prices in Mexico; and higher energy prices and contract sales due to increased demand in Panama; partially offset by the impact from the sale of Itabo in April 2021;

- $382 million at South America primarily driven by the revenue recognized at Angamos for the early termination of contracts with Minera Escondida and Minera Spence; higher generation and prices (Resolution 440/2021) in Argentina; higher availability, from higher reservoir levels, in Colombia; and higher

volume and generation at AES Brasil, partially due to the acquisition of Ventus and Cubico I; partially offset by unfavorable FX impact and by the prior period recovery of previously expensed payments from customers in Chile; and

- $295 million at Eurasia mainly driven by higher energy prices and generation in Bulgaria and higher generation in Vietnam.

*Consolidated Operating Margin* *—* Operating margin increased $18 million, or 1%, in 2021 compared to 2020, driven by:

*•*$154 million at US and Utilities primarily from higher sales at Southland Energy due to the CCGT units operating under active PPAs during the full 2021 period; increases in capacity sales and in realized gains resulting from the commercial hedging strategy at Southland; and higher demand in El Salvador due to the economic recovery from the COVID-19 impact; partially offset by increased costs associated with growing and accelerating the development pipeline at AES Clean Energy and by higher maintenance expenses at AES Indiana;

*•*$30 million at Eurasia mainly driven by higher energy prices and generation in Bulgaria and improved operational performance in Vietnam.

- $174 million at South America primarily due to unfavorable FX impact; higher energy purchases due to drier hydrology and a prior period GSF settlement at Tietê; and higher spot prices on energy prices and prior period recovery of previously expensed payments from customers in Chile; partially offset by revenue recognized at Angamos for the early termination of contracts with Minera Escondida and Minera Spence; higher generation and prices (Resolution 440/2021) in Argentina; lower fixed costs in Chile; and higher availability from higher reservoir levels in Colombia; and

- $38 million at MCAC mainly driven by the impact from the sale of Itabo in April 2021; decreased capacity and higher fixed costs in the Dominican Republic; decreased availability and higher fixed costs in Mexico; and higher fuel costs, drier hydrology, and the disconnection of the Estrella del Mar I power barge in the prior year in Panama; partially offset by higher LNG sales in the Dominican Republic driven by the Eastern Pipeline COD in 2020 and higher demand and positive impact from new renewables businesses in Panama.

General and administrative expenses increased $1 million, or 1%, to $166 million in 2021 compared to $165 million in 2020, with no material drivers.

Interest expense increased $206 million, or 23%, to $1.1 billion in 2022, compared to $911 million in 2021, primarily due to the prior year impact of realized gains on de-designated interest rate swaps, lower capitalized interest at construction projects in Chile, and increased borrowings in South America and at the Parent Company.

Interest expense decreased $127 million, or 12%, to $911 million in 2021, compared to $1 billion in 2020, primarily due to realized gains on de-designated interest rate swaps, lower interest rates related to refinancing at the Parent Company, and lower monetary correction due to the GSF settlement in March 2021.

Interest income increased $30 million, or 11%, to $298 million in 2021, compared to $268 million in 2020 primarily due to the arbitration proceeding in Chile, the commencement of a sales-type lease at the Alamitos Energy Center in January 2021, and higher CAMMESA interest rates on receivables in Argentina, partially offset by a lower loan receivable balance in Vietnam.

Loss on extinguishment of debt decreased $108 million, or 58% to $78 million in 2021, compared to $186 million in 2020.

Our businesses are exposed [removed: to] [added: to,] and proactively manage market risk.

Our primary market risk exposure is to the price of commodities, particularly electricity, [removed: oil,] natural gas, coal, and environmental credits.

In addition, our businesses are exposed to lower electricity prices due to increased competition, including from renewable sources such as wind and solar, [removed: as a result] [added: because] of lower costs of entry and lower variable costs.

For further information regarding market risk, see Item 1A.—*[Risk [removed: Factors](#i84f31ef528bc41899c5480059e42eda9_58)*,] [added: Factors](#i8ea710b913994516904e0694e23e5230_58)*,] *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 [removed: 2022] [added: 2023] Form 10-K.

Although we prefer to hedge our exposure to the impact of market fluctuations in the price of [removed: electricity, fuels, and environmental credits,] [added: commodities,] some of our generation businesses operate under short-term sales, have contracted electricity obligations greater than [removed: supply] [added: supply,] or operate under contract sales that leave an unhedged exposure on some of our capacity or through imperfect fuel pass-throughs.

We employ risk management strategies to hedge our financial performance against [removed: the effects of fluctuations in energy commodity prices.][added: these effects.]

[removed: For] [added: As of December 31,] 2023, we project pre-tax earnings exposure on a 10% [removed: (uncorrelated) move] [added: increase] in commodity prices to be [removed: approximately] [added: less than] a [removed: $5] [added: $30] million gain for power, [removed: a $10] [added: less than $15] million loss for [removed: oil,] [added: gas,] and [removed: a $5] [added: less than $10] million loss for [removed: coal and natural gas.][added: coal.]

In the [removed: US and Utilities] [added: Energy Infrastructure] SBU, the generation businesses are largely [removed: contracted] [added: contracted,] but may have residual risk to the extent contracts are not perfectly indexed to the business drivers.

[removed: In the South America SBU, our] [added: The AES Andes] business in Chile owns assets in the central and northern regions of the country and has a portfolio of contract sales in both.

[removed: The] [added: A] significant portion of our PPAs [added: through 2024] include mechanisms of indexation that adjust the price of energy based on fluctuations in the price of coal, with [removed: the specific indices and timing varying] [added: an index defined] by [removed: contract, in order to mitigate changes in] the [removed: price of fuel.][added: National Energy Commission based on the physical coal imports for the energy system.]

[removed: Additionally, in] [added: In] Brazil, the [added: majority of the] hydroelectric [added: and other renewable] generating facility [removed: is] [added: volumes are] covered by contract sales.

[added: Our Renewables businesses in] Panama [removed: is] [added: are] highly contracted under financial and load-following PPA type structures, exposing the business to hydrology-based variance.

In the Dominican Republic, we own natural gas plants contracted under a portfolio of contract sales, and both contract and spot prices may move with commodity [removed: prices.][added: prices through 2024.]

[removed: Additionally, the contract] [added: Contract] levels do not always match our generation availability [added: or needs,] and our assets may be sellers of spot prices in excess of contract levels [removed: or a net buyer in the spot market to satisfy contract obligations.]

[removed: In the Eurasia SBU, our] [added: Our] assets operating in Vietnam and Bulgaria have minimal exposure to commodity price risk as [removed: it has] [added: they have] no or minor merchant exposure and fuel is subject to a pass-through mechanism.

These subsidiaries and affiliates [removed: have attempted] [added: attempt] to limit potential foreign exchange exposure by entering into revenue contracts that adjust to changes in foreign exchange rates.

Due to variation of timing and amount between cash distributions and earnings exposure, the hedge impact may not fully cover the earnings exposure on [added: a realized basis, which could result in greater volatility in earnings.]

[removed: As] [added: Additionally, as] of December 31, [removed: 2022,] [added: 2023,] assuming a 10% USD appreciation, cash distributions attributable to foreign subsidiaries [removed: exposed to movement] in the [added: Brazilian real, Colombian peso, and Euro, individually, may be exposed to] exchange rate [added: movement] of [removed: the Brazilian real are projected to be impacted by] less than a [removed: $10 million gain, a less than] $5 million [removed: gain for the Colombian peso and a less than $5 million loss for the Euro.][added: gain.]

These numbers have been produced by applying a one-time 10% USD appreciation to forecasted exposed cash distributions for [removed: 2023] [added: 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 [removed: gains/losses.][added: gains or losses.]

We are exposed to risk resulting from changes in interest rates [removed: as a result] [added: primarily because] of our [added: current and expected future] issuance of [removed: variable and fixed-rate debt, as well as interest rate swap, cap, floor,] [added: debt] and [removed: option agreements.][added: borrowing.]

[removed: 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.

As of December 31, [removed: 2022,] [added: 2023,] the [removed: portfolio's] [added: portfolio’s] pre-tax earnings exposure [removed: for 2023] 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 [removed: $55] [added: $35] million on interest expense for the debt denominated in these currencies.

These amounts [added: represent 2024 full year exposure and] do not take into account the historical correlation between these interest rates.

Market risk is the potential loss that may result from market changes associated with AES power generation or with existing or forecasted financial or commodity transactions.

AES is also exposed to fluctuations in interest rates and foreign currency exchange rates associated primarily with outstanding and expected future issuances and borrowing, and from investments in foreign subsidiaries and affiliates.

We enter into various transactions, including derivatives, in order to hedge our exposure to these market risks.

| 111 \| 2023 Annual Report | | | | | |

The sensitivities are calculated using industry-standard valuation techniques to revalue all transactions (physical and financial commodity transactions) in the portfolio for a change in the underlying prices the transactions are exposed to and excludes correlation effects, including those due to renewable resource availability.

The models reference market prices of commodities across future periods and associated volatility of these market prices.

Prices and volatilities are predominantly based on observable market prices.

In California, our Southland once-through cooling generation units (“Legacy Assets”) in Long Beach and Huntington Beach have been extended to operate through 2026 under capacity contracts with the State as part of the Strategic Reserve program.

Our facility in Redondo Beach has been retired effective January 1, 2024.

Our ability to operate the Long Beach facility at full capacity through 2025 was approved under Tentative Time Schedule Order coverage in November 2023.

Approval to operate Long Beach through 2026 will be subject to review with State Agencies.

Our Southland combined cycle gas turbine (Southland Energy) units benefit from higher power and lower gas prices, depending on the contracted or hedge position.

This mechanism mitigates exposures to changes in the price of fuel.

The increasing share of renewable energy in Chile's power market may reduce reliance on thermal units and impact power price volatility, which could impact our cost to serve certain unregulated PPAs.

Our thermal asset in Panama has PPAs with distribution companies which matches the term of the LNG supply agreement of such thermal assets.

New entrants into the Panama thermal generation market could impact the dispatch of existing generation, requiring purchases in the spot market to satisfy the PPA obligations.

| 112 \| 2023 Annual Report | | | | | |

or a net buyer in the spot market to satisfy contract obligations, which could impact existing fuel supply commitments.

In the Renewables SBU, our businesses have commodity exposure on unhedged volumes and resource volatility and benefit from higher power prices, where generation exceeds contracted levels.

AES has unhedged forward-looking earnings foreign exchange deterioration risk from the Argentine peso that could be material.

In

| 113 \| 2023 Annual Report | | | | | |

| | | | | | | |

| --- | --- | --- | --- | --- | --- | --- |

| 114 \| 2023 Annual Report | | | | | |

We are also exposed to interest rate fluctuations due to our issuance of debt and related financial instruments.

The portion of our sales and purchases that are not subject to such agreements or contracted businesses where indexation is not perfectly matched to business drivers will be exposed to commodity price risk.

When hedging the output of our generation assets, we utilize contract sales that lock in the spread per MWh between variable costs and the price at which the electricity can be sold.

AES businesses will see changes in variable margin performance as global commodity prices shift.

Our estimates exclude correlation of oil with coal or natural gas.

For example, a decline in oil or natural gas prices can be accompanied by a decline in coal price if commodity prices are correlated.

In aggregate, the Company's downside exposure occurs with lower power, lower oil, higher natural gas, and higher coal prices.

| 122 \| 2022 Annual Report | | | | | |

Commodity prices affect our businesses differently depending on the local market characteristics and risk management strategies.

Spot power prices, contract indexation provisions, and generation costs can be directly or indirectly affected by movements in the price of natural gas, oil, and coal.

Operational flexibility changes the shape of our sensitivities.

For instance, certain power plants may limit downside exposure by reducing dispatch in low market environments.

At Southland, our existing once-through cooling generation units (“Legacy Assets”) are permitted to operate through the end of 2023.

These assets have contracts in capacity and have seen incremental value in energy revenues.

For the portion of our contracts not indexed to the price of coal, we have implemented a hedging strategy based on international coal financial instruments for up to 3 years.

In the MCAC SBU, our businesses have commodity exposure on unhedged volumes.

| 123 \| 2022 Annual Report | | | | | |

a realized basis, which could result in greater volatility in earnings.

The largest foreign exchange risks for 2023 stem from the following currencies: Brazilian real and Euro.

| 124 \| 2022 Annual Report | | | | | |

Additional items that may have an impact on our businesses are discussed in Item 1A.—*[Risk [removed: Factors](#i84f31ef528bc41899c5480059e42eda9_58)*] [added: Factors](#i8ea710b913994516904e0694e23e5230_58)*] and Item 3.—*[Legal [removed: Proceedings](#i84f31ef528bc41899c5480059e42eda9_67)*.][added: Proceedings](#i8ea710b913994516904e0694e23e5230_67)*.]

| 5 \| [removed: 2022] [added: 2023] Annual Report | | | | | |

[removed: ][added: ]

AES [removed: is] [added: remains] an industry leader in developing and operating the [added: innovative] solutions that [removed: will] enable the transition to zero and low-carbon sources of [removed: energy and achievement of the Paris Agreement's goal of net-zero emissions by 2050.][added: energy.]

[removed: Today we] [added: We continue to] see an enormous [removed: business] opportunity from the once-in-a-lifetime transformation of the electricity sector driven by decarbonization, electrification, and digitalization.

The focus of our strategy [removed: continues] [added: is] to [removed: be on partnering] [added: partner] with large [removed: companies] [added: corporations] that are [removed: looking to transition] [added: transitioning] to carbon-free sources of electricity.

In [removed: 2022,] [added: 2023,] we signed long-term contracts for [removed: 5.2] [added: 5.6] GW of [removed: renewable power,] [added: renewables,] bringing our backlog of projects — those with signed contracts, but which are not yet in operation — to [removed: 12.2] [added: 12.3] GW.

[removed: Our unique capabilities in developing tailored energy solutions, enabled us to partner] [added: We are partnering] with Air Products to [removed: announce our plans to] develop, build, own, and operate the largest green hydrogen production facility [removed: to date] in the United States.

| 6 \| [removed: 2022] [added: 2023] Annual Report | | | | | |

With our utilities, we are working with a broad range of stakeholders to transition to lower carbon forms of [removed: energy while promoting a Just Transition for the workers and communities who may be negatively impacted by the closure of fossil fuel facilities.][added: energy.]

We are also developing and incubating new technologies that add value today and will drive our business in [removed: the future.]

[removed: 2022] [added: 2023] Strategic Highlights

*•*We signed [removed: 5,153 MW] [added: 5.6 GW] of renewables and energy storage under long-term [removed: PPAs, including 2,553 MW of solar, wind and energy storage in the United States.][added: PPAs.]

- Our backlog, which includes projects with signed contracts, but which are not yet operational, is now [removed: 12,179 MW,] [added: 12.3 GW,] consisting of:

[removed: ◦5,453 MW] [added: ◦5.1 GW] under construction; and

[removed: ◦6,726 MW] [added: ◦7.2 GW] with signed PPAs, but that are not yet under construction.

We currently own and/or operate a generation portfolio of [removed: 32,326] [added: 34,596] MW, including generation from our integrated utility, AES Indiana.

Our generation fleet is diversified by [added: technologies and] fuel type.

*Contract Sales* — Most of our generation businesses sell electricity under medium- or long-term contracts [added: in either regulated or competitive markets] ("contract sales") or under short-term agreements in competitive markets ("short-term sales").

| 7 \| [removed: 2022] [added: 2023] Annual Report | | | | | |

[added: These] contracts also help us to fund a significant portion of the total capital cost of the project through long-term non-recourse project-level financing.

Contracts that do not have significant fuel cost or do not contain a capacity payment are structured based on long-term [removed: spot] prices [removed: with some] [added: and may also include] negotiated pass-through costs, allowing us to recover expected fixed and variable costs as well as provide a return on investment.

[removed: These] [added: Many of these] contracts are intended to reduce exposure to the volatility of fuel and electricity prices by linking the business's revenues and costs.

Thus, these contracts, or other related commercial arrangements, significantly mitigate our exposure to changes in [removed: power] [added: electricity] and, as applicable, fuel prices, currency fluctuations and changes in interest rates.

In addition, these contracts generally provide [added: or account] for a recovery of our fixed operating expenses and a return on our investment, as long as we operate the plant to the [removed: reliability] [added: reliability, availability,] and efficiency standards required in the [removed: contract.][added: contract or otherwise.]

*Short-Term Sales* — Our [removed: other] generation businesses [added: also] sell power and ancillary services under short-term contracts with average terms of less than two years, including spot sales, directly in the short-term market or at regulated prices.

In short-term [added: sales and in certain contract] sales, our plants must be reliable and flexible to capture peak market prices and to maximize market-based revenues.

For further information regarding commodity price risk please see Item 7A.—*[Quantitative and Qualitative Disclosures about Market [removed: Risk](#i84f31ef528bc41899c5480059e42eda9_262)*] [added: Risk](#i8ea710b913994516904e0694e23e5230_268)*] in this Form 10-K.

[removed: 46%] [added: 53%] of the capacity of our generation plants are [removed: fueled by] renewables, including hydro, solar, wind, energy storage, biomass and landfill gas, which do not have significant fuel costs.

| 8 \| [removed: 2022] [added: 2023] Annual Report | | | | | |

[removed: 32%] [added: 27%] of the capacity of our generation plants are fueled by natural gas.

[removed: 20%] [added: 18%] of the capacity of our generation fleet is coal-fired.

At our non-U.S. generation plants, and at our plant in Puerto Rico, we source coal from a mix of [removed: sources from the international market and in the local jurisdictions.]

2% of the capacity of our generation fleet utilizes pet [removed: coke, diesel] [added: coke] or oil for fuel.

*Fixed-Cost Management* — In our businesses with long-term contracts, the majority of the fixed O&M costs are recovered through the capacity [removed: payment.][added: payment or were otherwise factored in as a component of the long-term contract price.]

*Competition* — For our businesses with medium- or long-term contracts, there is limited [added: market] competition [added: impacting prices] during the term of the contract.

Our utility businesses consist of AES Indiana and AES Ohio in the [removed: U.S.] [added: U.S.,] and four utilities in El Salvador.

AES' six utility businesses distribute power to 2.6 million customers and AES' two utilities in the U.S. also include generation capacity totaling [removed: 3,495] [added: 3,500] MW.

AES Indiana, our fully integrated [added: regulated] utility, and AES Ohio, our transmission and distribution regulated utility, [added: each] operate as the sole distributors of electricity within their respective jurisdictions.

[removed: At our] [added: Our] distribution business in El [removed: Salvador, we face] [added: Salvador faces] limited competition due to significant barriers to enter the market.

One example of our successful execution is our collaboration with large technology companies.

Specifically, demand from data centers in the U.S. is expected to nearly double in the next three years.

Our well-established relationships with these customers, combined with our proven track record of delivering our projects, positions us well to take advantage of this opportunity.

As a result, we have been consistently rated by Bloomberg New Energy Finance as one of the top two largest sellers globally of renewable power to corporate customers, with a focus on large technology/data center providers.

We are a leader in developing green hydrogen.

We are also participating in two green hydrogen hubs in the United States, which were awarded up to $2.4 billion of grant funding from the U.S. Department of Energy.

the future.

- We completed the construction of 3.5 GW.

- AES Indiana reached a unanimous settlement agreement for its first rate case since 2018, and expects to receive approval from the IURC by the middle of 2024.

- AES Ohio received approval from the PUCO for its Electric Security Plan (ESP4), providing the regulatory foundation necessary to enable future investments.

- We exited or announced the sale or closure of 2.1 GW of coal generation in Vietnam, the U.S., and Chile.

- We signed agreements for three-year extensions of 1.4 GW of gas generation at the Southland legacy units in Southern California.

These extensions will help meet the State of California's grid reliability needs while supporting its decarbonization goals.

- Awarded up to $2.4 billion of grant funding by the U.S. Department of Energy for two green hydrogen hubs with AES participation.

- We secured $1.1 billion in asset sale proceeds, to accelerate our portfolio transformation, outpacing our target of $400 to $600 million.

In some U.S. markets, the capacity payment is only for the resource adequacy or reliability benefits from the generating facility, allowing us to separately monetize the electricity produced by the facility through either contract sales or short-term sales.

sources from the international market and in the local jurisdictions.

We are organized into four technology-oriented SBUs: Renewables (solar, wind, energy storage, and hydro generation facilities); Utilities (AES Indiana, AES Ohio, and AES El Salvador regulated utilities and their generation facilities); Energy Infrastructure (natural gas, LNG, coal, pet coke, diesel, and oil generation facilities, and our businesses in Chile); and New Energy Technologies (green hydrogen initiatives and investments in Fluence, Uplight, and 5B) — which are led by our SBU Presidents.

Our New Energy Technologies SBU includes investments in new and innovative technologies to support leading-edge greener energy solutions.

Our New Energy Technologies SBU generated losses for the year ended December 31, 2023.

Renewables

Our Renewables SBU is the highest growth segment for AES, adding 4.9 GW to our contracted backlog during 2023, including 1.2 GW with large technology companies.

Specifically, demand from data centers in the U.S. is expected to nearly double in the next three years as generative artificial intelligence use-cases expand.

Our well-established relationships with these customers, combined with our proven track record of delivering our projects, positions us well to take advantage of this opportunity.

The Renewables SBU has generation facilities in ten countries — the United States, Brazil, Argentina, Colombia, Mexico, Panama, Bulgaria, the Dominican Republic, Jordan, and the Netherlands.

*Generation* — Total operating installed capacity of the Renewables SBU is 16,211 MW.

| Cajuina 1 | | | | | | Brazil | | | | | | Wind | | | | | | 314 | | | | | | 36%-47% | | | | | | 2023 | | | | | | 2035-2043 | | | | | | Various | | |

| Cavalier (4) | | | | | | US-VA | | | | | | Solar | | | | | | 116 | | | | | | 75 | | % | | | | 2023 | | | | | | 2043 | | | | | | Dominion Energy | | |

| Delta (4) | | | | | | US-MS | | | | | | Wind | | | | | | 104 | | | | | | 75 | | % | | | | 2023 | | | | | | 2043 | | | | | | Amazon | | |

| 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 | | |

| McFarland B (4) | | | | | | US-AZ | | | | | | Solar | | | | | | 60 | | | | | | 75 | | % | | | | 2023 | | | | | | 2043 | | | | | | Amazon | | |

| Estrella | | | | | | US-CA | | | | | | Solar | | | | | | 56 | | | | | | 50 | | % | | | | 2023 | | | | | | 2038 | | | | | | Southern California Edison | | |

| Platteview (4) | | | | | | US-NE | | | | | | Solar | | | | | | 81 | | | | | | 75 | | % | | | | 2023 | | | | | | 2043 | | | | | | Omaha Public Power District | | |

| Westwing 1 (4) | | | | | | US-AZ | | | | | | Energy Storage | | | | | | 77 | | | | | | 75 | | % | | | | 2023 | | | | | | 2043 | | | | | | APS | | |

| OpCo D (2) | | | | | | US-Various | | | | | | Solar | | | | | | 38 | | | | | | 75 | | % | | | | 2022-2023 | | | | | | 2042-2043 | | | | | | Various | | |

| Kuihelni (4) | | | | | | US-HI | | | | | | Solar | | | | | | 14.5 | | | | | | 100 | | % | | | | 2023 | | | | | | 2048 | | | | | | HECO | | |

| | | | | | | | | | Energy Storage | | | | | | 14.5 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | Energy Storage | | | | | | 12.5 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | 16,211 | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | |

| --- | --- | --- | --- | --- | --- | --- |

There is a substantial need for more renewable energy as well as an opportunity for innovation to develop new products and solutions that help customers accomplish their individual decarbonization goals.

As an indication of our success, in 2022 we were recognized by BNEF as the #1 global clean energy developer for corporations.

Central to our renewables growth strategy is a focus on customer collaboration and co-creation, which helps us develop unique solutions tailored to a specific customer's needs.

This approach not only contributes to customer satisfaction and repeat business, but it also allows AES to work with key customers on a bilateral basis rather than just through participation in bid processes.

This approach has led to the co-creation of several first-of-its-kind industry innovations, including agreements to supply 24/7 carbon-free energy for global data center companies.

We are also working with some of the world's largest mining companies in their transition to renewable energy in South America, essentially reducing the emissions of major supply chains.

One way in which we are serving the

mining industry is through our Green Blend offering, in which we work to integrate renewable energy with thermal power during select hours of the day, reducing overall thermal generation and lowering emissions.

Our renewable growth strategy includes taking steps to ensure and enable growth in future years.

We massively expanded our pipeline of development projects, which grew from 55 GW in January 2022 to 64 GW as of the end of 2022, both through acquisitions and increased investment in development activities, such as securing land or advancing permitting and interconnection processes.

For our projects in late-stage development, we worked to secure supplier arrangements to avoid any potential delays in relation to industry shortages, aided by our scale, supplier relationships, and advanced planning measures.

A substantial portion of our expected capital expenditures through 2025 will be related to the development of renewable projects.

- We completed the construction or acquisition of operating projects totaling 1,943 MW in the United States, Brazil, the Dominican Republic, Chile and Colombia, primarily wind, solar and energy storage.

- We announced a partnership with Air Products to develop, build, own and operate the largest green hydrogen production facility to date in the United States.

◦Includes approximately 1.4 GW of wind and solar generation, along with electrolyzer capacity capable of producing over 200 metric tons per day (MT/D) of green hydrogen.

- The Company expects to announce certain internal management changes which will result in modifications to its financial reporting segments.

These

customer are usually adjusted through a summary regulatory process or an existing formula-based mechanism.

We are organized into four market-oriented SBUs: US and Utilities (United States, Puerto Rico and El Salvador); South America (Chile, Colombia, Argentina and Brazil); MCAC (Mexico, Central America and the Caribbean); and Eurasia (Europe and Asia) — which are led by our SBU Presidents.

| | | | | | |

| --- | --- | --- | --- | --- | --- |

US and Utilities SBU

Our US and Utilities SBU has 47 generation facilities, two utilities in the United States, and four utilities in El Salvador.

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| El Salvador Subtotal | | | | | | | | | | | | | | | | | | 123 | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Southland—Redondo Beach | | | | | | US-CA | | | | | | Gas | | | | | | 876 | | | | | | 100 | | % | | | | 1998 | | | | | | 2023 | | | | | | Various | | |

| West Line (sPower (1)) | | | | | | US-AZ | | | | | | Solar | | | | | | 100 | | | | | | 50 | | % | | | | 2022 | | | | | | | | | | | | | | |

| Michigan Consumers (2) (3) | | | | | | US-MI | | | | | | Solar | | | | | | 36 | | | | | | 75 | | % | | | | 2022 | | | | | | | | | | | | | | |

| United States Subtotal | | | | | | | | | | | | | | | | | | 9,490 | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | 9,613 | | | | | | | | | | | | | | | | | | | | | | | | | | |

_____________________________

| | | | | | | | | | | | | 2,603,000 | | | | | | 33,302 | | | | | | | | | | | | | | | | | | | | | | | | | | |

In December 2021, AES Indiana completed the acquisition of the 195 MW Hardy Hills solar project, which is expected to commence operations in 2024.

| Cement City (1) | | | | | | US-MI | | | | | | Solar | | | | | | 20 | | | | | | 75 | | % | | | | 1H 2023 | | |

| Big Island Waikoloa (2) | | | | | | US-HI | | | | | | Solar | | | | | | 5 | | | | | | 100 | | % | | | | 1H 2023 | | |

| AES Clean Energy Development | | | | | | US-Various | | | | | | Solar | | | | | | 32 | | | | | | 75 | | % | | | | 1H-2H 2023 | | |

| Estrella (sPower) | | | | | | US-CA | | | | | | Solar | | | | | | 56 | | | | | | 50 | | % | | | | 2H 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, [removed: 2022.][added: 2023.]

| [removed: 76] [added: 74] \| [removed: 2022] [added: 2023] Annual Report | | | | | |

[added: GRIDCO appeared to be seeking approximately $189 million in damages, plus] undisclosed penalties and interest, but a detailed alleged damage analysis was not filed by GRIDCO.

The removal and remediation costs are estimated to be approximately R$15 million to R$60 million ($3 million to [removed: $11] [added: $12] million), and there could be additional costs which cannot be estimated at this time.

[removed: 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.

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 [removed: Program.][added: Program ("LCP").]

On May 26, 2020, CCC staff sent AES a NOV directing AES to [added: 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.

[added: With respect to the pumps in the alleged wetlands,] AES [removed: has] [added: locked out those pumps to prevent further operation and] submitted the CDP to the permitting authority, the City of Redondo Beach [removed: (“the City”),] [added: (the "City"),] with respect to [removed: AES’] [added: AES'] plans to disable or remove the pumps.

The NOV also directed AES to submit technical analysis regarding additional water pumps located within onsite electrical vaults [removed: and] [added: and, if necessary,] a CDP application for their continued operation.

On October 14, 2020, the City deemed the CDP application to be complete and indicated a public hearing will be [removed: required, at which time AES must present additional information and analysis on the pumps within the alleged wetlands and the onsite electrical vaults.][added: required.]

The settlement agreement, in the form of a proposed judicial consent decree, was approved and entered by the U.S. District Court for the Southern District of Indiana on March 23, 2021, and includes, among other items, the following requirements: annual caps on NOx and SO2 emissions and more stringent emissions limits than AES Indiana's current Title V air permit; payment of civil penalties totaling $1.5 million; a $5 million environmental mitigation project consisting of the construction and operation of a new, non-emitting source of generation at the site; expenditure of $0.3 million on a state-only environmentally beneficial project to preserve [added: local, ecologically-significant lands; and retirement of Units 1 and 2 prior to July 1, 2023.]

| [removed: 77] [added: 75] \| [removed: 2022] [added: 2023] Annual Report | | | | | |

The [removed: relevant] AES [removed: companies] [added: 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 lawsuit does not identify, or provide any supporting information concerning, the alleged injuries of the claimants individually, nor does the lawsuit provide any [removed: information supporting the demand for damages or explaining how the quantum was derived.]

In August 2020, at the request of the relevant AES companies, the case was transferred to a different civil [removed: court.][added: court ("Civil Court").]

Preliminary hearings have taken [removed: place and are ongoing.][added: place.]

[removed: Fines are possible if] [added: If] the SMA determines there is an unsatisfactory execution of the [removed: Compliance Program.][added: compliance program, fines are possible.]

The cost of proposed Compliance Program is approximately $10.8 [removed: million.][added: million USD.]

CFE [removed: makes] [added: made] allegations that AES Mérida III [removed: is] [added: 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 [removed: seeks] [added: 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 [added: power from alternative sources in the Yucatan Peninsula.]

| [removed: 78] [added: 76] \| [removed: 2022] [added: 2023] Annual Report | | | | | |

AES Mérida [removed: has] filed an answer denying liability to CFE and [removed: asserting] [added: asserted] a counterclaim for damages due to CFE’s breach of its obligations.

[removed: After additional briefing, the] [added: The] evidentiary hearing took place in November 2021.

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 [removed: counterclaims.][added: counterclaims ("Award").]

AES Mérida believes that it has meritorious [removed: defenses and] claims and [added: 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 [removed: Termoelectrica del Golfo (“TEG”) and Termoelectrica del Peñoles (“TEP”)] [added: TEP] thermal generating [removed: facilities.][added: facility.]

On [removed: July 15, 2022, TEG] [added: January 20, 2023 TEP] was notified of the resolution issued by the Authority, which alleges breaches of air emission regulations, including [added: the] failure to submit reports.

The resolution imposes a fine of [removed: $8,467,360] [added: $27,615,140] pesos (approximately USD [removed: $400,000).][added: $1.6 million).]

The lawsuit purports to be brought on behalf of over 425 Dominican claimants, living and deceased, and appears to seek relief [removed: relating to CCRs that were delivered to the Dominican Republic in 2003 and 2004.]

If a compliance program is not [removed: agreed] [added: approved by] or executed to the satisfaction of the [removed: SMA ,] [added: 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.

Pursuant to SEC amendments Item 103 of SEC Regulation S-K, AES’ policy is to disclose environmental legal proceedings to which a governmental authority is a party if such proceedings are reasonably expected to result in monetary sanctions of greater than or equal to $1 million.

In June 2016, the Company sold AES Sul to CPFL Energia S.A. and as part of the

With respect to the vault pumps, AES provided the CCC with the requested analysis, and the CCC has not required further action.

AES submitted all required information and waited for the City to continue processing the application.

In December 2023, the City indicated it would continue processing the CDP application.

AES will vigorously defend its interests with regard to the NOV, but we cannot predict the outcome of the matter at this time.

However, settlements and litigated outcomes of Coastal Act and LCP claims alleged against other companies have required them to pay significant civil penalties and undertake remedial measures.

Subsequently, the claimants withdrew the lawsuit with respect to AES Puerto Rico.

The lawsuit remains pending against the other AES defendants (“AES Defendants”) and the unaffiliated defendants.

information supporting the demand for damages or explaining how the quantum was derived.

The parties are awaiting the Civil Court's ruling on the AES Defendants' motions to dismiss the lawsuit.

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.

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.

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.

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.

However, the local tax authority rejected receiving the bond that is required to guarantee the injunction, and as a result, on September 18, 2023 TEP filed a complaint seeking to compel the tax authority to accept the bond and recognize the validity of the injunction.

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.

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.

relating to CCRs that were delivered to the Dominican Republic in 2003 and 2004.

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.

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 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.

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.

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.

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.

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.

In December 2023, Alto Maipo submitted responses to the opponents' latest observations.

Review by the SMA is still pending.

GRIDCO appeared to be seeking approximately $189 million in damages, plus

| | | | | | | |

| --- | --- | --- | --- | --- | --- | --- |

AES has responded to the CCC, providing the requested analysis and seeking further discussion with the agency regarding the CDP.

local, ecologically-significant lands; and retirement of Units 1 and 2 prior to July 1, 2023.

If AES Indiana does not meet the retirement obligation, it must install a Selective Non-Catalytic Reduction System ("SNCR") on Unit 4.

In October 2017, the Maritime Prosecution Office from Valparaíso issued a ruling alleging responsibility by AES Andes for the presence of coal waste on Ventanas beach, and proposed a fine before the Maritime Governor, of approximately $395,000.

AES Andes submitted its statement of defense, denying the allegations.

In May 2021, AES Andes was notified of an amended Opinion of the Maritime Prosecution Office which extends the alleged liability to a third party and reduces the proposed fine to AES Andes to approximately $372,000.

On August 18, the Maritime Governor issued a resolution affirming the proposed fine, and on September 8, AES Andes filed an administrative action with the Maritime Governor requesting reconsideration of the fine.

On December 28, 2021 the resolution rejecting the reinstatement appeal was notified and on January 17, 2022 AES Andes filed an appeal against that ruling.

In April 2022, Puerto Ventanas requested that the Maritime Authority join this proceeding with a parallel proceeding; however, the request was rejected.

In May 2022, the General Director of the Maritime Territory and Merchant Marine of the Chilean Navy rejected AES Andes’ appeal and imposed a fine of $341,363.

AES Andes will continue with administrative appeals.

AES Andes believes that it has meritorious defenses to the allegations; however, there are no assurances it will be successful.

power from alternative sources in the Yucatan Peninsula.

The parties submitted their respective initial briefs and supporting evidence in December 2020.

It is unclear whether CFE will comply with the decision or will attempt to challenge it.

The facility filed a nullity judgment to challenge the resolution, and on September 8, 2022, a provisional injunction was granted by the Tribunal, subject to TEG’s presentation of a warranty, which could include a corporate guaranty or bail.

The provisional injunction temporarily suspends the obligation to pay the fine while the Tribunal considers a definitive injunction, and potentially, a sentence dismissing the fine.

On December 2, 2022, TEG presented a bail as guarantee for the injunction, which was rejected by the local tax authority.

TEG challenged the tax authority's denial through an amparo claim on January 10, 2023.

No resolution for TEP’s audit has been issued, and on September 9, 2022, TEP filed an amparo claim challenging the inaction of the Authority on the environmental audit.

The amparo claim was admitted on October 17, 2022.

If the third-party appeal is successful or if the SMA determines there is an unsatisfactory execution of this compliance program, fines are possible.

AES Andes believes that it has meritorious defenses to the third-party challenge and will defend itself vigorously in these proceedings; however, there can be no assurances that it will be successful in its efforts.

In September 2022, the SMA initiated sanctioning proceedings against the Cochrane Power Station on four alleged charges, including one instance of noncompliance categorized as “serious” with the Environmental Qualification Resolution (RCA).

The allegations included structural and monitoring deficiencies, as well as an unauthorized underwater outfall discharging from the facility.

On December 12, 2022, AES Andes submitted a

| 79 \| 2022 Annual Report | | | | | |

proposed compliance program to the SMA, with an estimated cost of approximately $340,000, which is currently under review.

Fines are possible if the SMA does not approve the compliance program or if the SMA determines that the compliance program was not executed to its satisfaction.

The Alto Maipo project intends to submit a compliance program for consideration by the SMA.

For the Fiscal Year Ended December 31, [removed: 2022][added: 2023]

[removed: ][added: ]

The aggregate market value of the voting and non-voting common equity held by non-affiliates on June 30, [removed: 2022,] [added: 2023,] the last business day of the Registrant's most recently completed second fiscal quarter (based on the closing sale price of [removed: $21.01] [added: $20.73] of the Registrant's Common Stock, as reported by the New York Stock Exchange on such date) was approximately [removed: $14.03] [added: $13.88] billion.

The number of shares outstanding of Registrant's Common Stock, par value $0.01 per share, on February [removed: 27, 2023] [added: 22, 2024] was [removed: 668,824,617.][added: 710,287,083.]

Portions of Registrant's Proxy Statement for its [removed: 2023] [added: 2024] annual meeting of stockholders are incorporated by reference in Parts II and III

The AES Corporation Fiscal Year [removed: 2022] [added: 2023] Form 10-K

| [Glossary of [removed: Terms](#i84f31ef528bc41899c5480059e42eda9_7)] [added: Terms](#i8ea710b913994516904e0694e23e5230_7)] | | | [removed: [1](#i84f31ef528bc41899c5480059e42eda9_10)] [added: [1](#i8ea710b913994516904e0694e23e5230_10)] | | |

| [ITEM 1. [removed: BUSINESS](#i84f31ef528bc41899c5480059e42eda9_19)] [added: BUSINESS](#i8ea710b913994516904e0694e23e5230_19)] | | | [removed: [4](#i84f31ef528bc41899c5480059e42eda9_19)] [added: [4](#i8ea710b913994516904e0694e23e5230_19)] | | |

| [ITEM 1A. RISK [removed: FACTORS](#i84f31ef528bc41899c5480059e42eda9_58)] [added: FACTORS](#i8ea710b913994516904e0694e23e5230_58)] | | | [removed: [58](#i84f31ef528bc41899c5480059e42eda9_58)] [added: [54](#i8ea710b913994516904e0694e23e5230_58)] | | |

| [ITEM 1B. UNRESOLVED STAFF [removed: COMMENTS](#i84f31ef528bc41899c5480059e42eda9_61)] [added: COMMENTS](#i8ea710b913994516904e0694e23e5230_61)] | | | [removed: [75](#i84f31ef528bc41899c5480059e42eda9_61)] [added: [71](#i8ea710b913994516904e0694e23e5230_61)] | | |

| [ITEM 2. [removed: PROPERTIES](#i84f31ef528bc41899c5480059e42eda9_64)] [added: PROPERTIES](#i8ea710b913994516904e0694e23e5230_64)] | | | [removed: [75](#i84f31ef528bc41899c5480059e42eda9_64)] [added: [73](#i8ea710b913994516904e0694e23e5230_64)] | | |

| [ITEM 3. LEGAL [removed: PROCEEDINGS](#i84f31ef528bc41899c5480059e42eda9_67)] [added: PROCEEDINGS](#i8ea710b913994516904e0694e23e5230_67)] | | | [removed: [75](#i84f31ef528bc41899c5480059e42eda9_67)] [added: [73](#i8ea710b913994516904e0694e23e5230_67)] | | |

| [ITEM 4. MINE SAFETY [removed: DISCLOSURES](#i84f31ef528bc41899c5480059e42eda9_70)] [added: DISCLOSURES](#i8ea710b913994516904e0694e23e5230_70)] | | | [removed: [79](#i84f31ef528bc41899c5480059e42eda9_70)] [added: [76](#i8ea710b913994516904e0694e23e5230_70)] | | |

| [ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY [removed: SECURITIES](#i84f31ef528bc41899c5480059e42eda9_76)] [added: SECURITIES](#i8ea710b913994516904e0694e23e5230_76)] | | | [removed: [80](#i84f31ef528bc41899c5480059e42eda9_76)] [added: [77](#i8ea710b913994516904e0694e23e5230_76)] | | |

| [ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF [removed: OPERATIONS](#i84f31ef528bc41899c5480059e42eda9_100)] [added: OPERATIONS](#i8ea710b913994516904e0694e23e5230_100)] | | | [removed: [83](#i84f31ef528bc41899c5480059e42eda9_100)] [added: [79](#i8ea710b913994516904e0694e23e5230_100)] | | |

| [Executive [removed: Summary](#i84f31ef528bc41899c5480059e42eda9_103)] [added: Summary](#i8ea710b913994516904e0694e23e5230_103)] | | | [removed: [83](#i84f31ef528bc41899c5480059e42eda9_103)] [added: [79](#i8ea710b913994516904e0694e23e5230_103)] | | |

| [Review of Consolidated Results of [removed: Operations](#i84f31ef528bc41899c5480059e42eda9_106)] [added: Operations](#i8ea710b913994516904e0694e23e5230_106)] | | | [removed: [84](#i84f31ef528bc41899c5480059e42eda9_106)] [added: [80](#i8ea710b913994516904e0694e23e5230_106)] | | |

| [SBU Performance [removed: Analysis](#i84f31ef528bc41899c5480059e42eda9_160)] [added: Analysis](#i8ea710b913994516904e0694e23e5230_160)] | | | [removed: [93](#i84f31ef528bc41899c5480059e42eda9_160)] [added: [86](#i8ea710b913994516904e0694e23e5230_160)] | | |

| [Key Trends and [removed: Uncertainties](#i84f31ef528bc41899c5480059e42eda9_175)] [added: Uncertainties](#i8ea710b913994516904e0694e23e5230_175)] | | | [removed: [101](#i84f31ef528bc41899c5480059e42eda9_175)] [added: [92](#i8ea710b913994516904e0694e23e5230_175)] | | |

| [Capital Resources and [removed: Liquidity](#i84f31ef528bc41899c5480059e42eda9_226)] [added: Liquidity](#i8ea710b913994516904e0694e23e5230_232)] | | | [removed: [105](#i84f31ef528bc41899c5480059e42eda9_226)] [added: [97](#i8ea710b913994516904e0694e23e5230_232)] | | |

| [Critical Accounting Policies and [removed: Estimates](#i84f31ef528bc41899c5480059e42eda9_256)] [added: Estimates](#i8ea710b913994516904e0694e23e5230_262)] | | | [removed: [117](#i84f31ef528bc41899c5480059e42eda9_256)] [added: [106](#i8ea710b913994516904e0694e23e5230_262)] | | |

| [ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET [removed: RISK](#i84f31ef528bc41899c5480059e42eda9_262)] [added: RISK](#i8ea710b913994516904e0694e23e5230_268)] | | | [removed: [121](#i84f31ef528bc41899c5480059e42eda9_262)] [added: [110](#i8ea710b913994516904e0694e23e5230_268)] | | |

| [ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY [removed: DATA](#i84f31ef528bc41899c5480059e42eda9_265)] [added: DATA](#i8ea710b913994516904e0694e23e5230_271)] | | | [removed: [124](#i84f31ef528bc41899c5480059e42eda9_265)] [added: [114](#i8ea710b913994516904e0694e23e5230_271)] | | |

| [Consolidated Statements of Comprehensive Income [removed: (Loss)](#i84f31ef528bc41899c5480059e42eda9_277)] [added: (Loss)](#i8ea710b913994516904e0694e23e5230_283)] | | | [removed: [130](#i84f31ef528bc41899c5480059e42eda9_277)] [added: [121](#i8ea710b913994516904e0694e23e5230_283)] | | |

| [Consolidated Statements of Changes in [removed: Equity](#i84f31ef528bc41899c5480059e42eda9_280)] [added: Equity](#i8ea710b913994516904e0694e23e5230_286)] | | | [removed: [131](#i84f31ef528bc41899c5480059e42eda9_280)] [added: [122](#i8ea710b913994516904e0694e23e5230_286)] | | |

| [Consolidated Statements of Cash [removed: Flows](#i84f31ef528bc41899c5480059e42eda9_283)] [added: Flows](#i8ea710b913994516904e0694e23e5230_289)] | | | [removed: [132](#i84f31ef528bc41899c5480059e42eda9_283)] [added: [123](#i8ea710b913994516904e0694e23e5230_289)] | | |

| [Note 1 - General and Summary of Significant Accounting [removed: Policies](#i84f31ef528bc41899c5480059e42eda9_289)] [added: Policies](#i8ea710b913994516904e0694e23e5230_295)] | | | [removed: [133](#i84f31ef528bc41899c5480059e42eda9_289)] [added: [125](#i8ea710b913994516904e0694e23e5230_295)] | | |

| [Note 3 - Property, Plant and [removed: Equipment](#i84f31ef528bc41899c5480059e42eda9_295)] [added: Equipment](#i8ea710b913994516904e0694e23e5230_301)] | | | [removed: [145](#i84f31ef528bc41899c5480059e42eda9_295)] [added: [137](#i8ea710b913994516904e0694e23e5230_301)] | | |

| [Note 4 - Asset Retirement [removed: Obligation](#i84f31ef528bc41899c5480059e42eda9_298)s] [added: Obligation](#i8ea710b913994516904e0694e23e5230_304)s] | | | [removed: [146](#i84f31ef528bc41899c5480059e42eda9_298)] [added: [138](#i8ea710b913994516904e0694e23e5230_304)] | | |

| [Note 6 - Derivative Instruments and Hedging [removed: Activities](#i84f31ef528bc41899c5480059e42eda9_304)] [added: Activities](#i8ea710b913994516904e0694e23e5230_310)] | | | [removed: [152](#i84f31ef528bc41899c5480059e42eda9_304)] [added: [145](#i8ea710b913994516904e0694e23e5230_310)] | | |

| [Note 8 - Investments in and Advances to [removed: Affiliates](#i84f31ef528bc41899c5480059e42eda9_310)] [added: Affiliates](#i8ea710b913994516904e0694e23e5230_316)] | | | [removed: [154](#i84f31ef528bc41899c5480059e42eda9_310)] [added: [147](#i8ea710b913994516904e0694e23e5230_316)] | | |

| [Note 9 - Goodwill and Other Intangible [removed: Assets](#i84f31ef528bc41899c5480059e42eda9_313)] [added: Assets](#i8ea710b913994516904e0694e23e5230_319)] | | | [removed: [156](#i84f31ef528bc41899c5480059e42eda9_313)] [added: [149](#i8ea710b913994516904e0694e23e5230_319)] | | |

| [Note 10 - Regulatory Assets and [removed: Liabilities](#i84f31ef528bc41899c5480059e42eda9_316)] [added: Liabilities](#i8ea710b913994516904e0694e23e5230_322)] | | | [removed: [158](#i84f31ef528bc41899c5480059e42eda9_316)] [added: [151](#i8ea710b913994516904e0694e23e5230_322)] | | |

| [Note 16 - Redeemable Stock of [removed: Subsidiaries](#i84f31ef528bc41899c5480059e42eda9_334)] [added: Subsidiaries](#i8ea710b913994516904e0694e23e5230_340)] | | | [removed: [171](#i84f31ef528bc41899c5480059e42eda9_334)] [added: [163](#i8ea710b913994516904e0694e23e5230_340)] | | |

| [Note 18 - Segments and Geographic [removed: Information](#i84f31ef528bc41899c5480059e42eda9_340)] [added: Information](#i8ea710b913994516904e0694e23e5230_346)] | | | [removed: [177](#i84f31ef528bc41899c5480059e42eda9_340)] [added: [169](#i8ea710b913994516904e0694e23e5230_346)] | | |

| [Note 19 - Share-Based [removed: Compensation](#i84f31ef528bc41899c5480059e42eda9_343)] [added: Compensation](#i8ea710b913994516904e0694e23e5230_349)] | | | [removed: [179](#i84f31ef528bc41899c5480059e42eda9_343)] [added: [172](#i8ea710b913994516904e0694e23e5230_349)] | | |

| [Note 21 - Other Income and [removed: Expense](#i84f31ef528bc41899c5480059e42eda9_349)] [added: Expense](#i8ea710b913994516904e0694e23e5230_355)] | | | [removed: [182](#i84f31ef528bc41899c5480059e42eda9_349)] [added: [174](#i8ea710b913994516904e0694e23e5230_355)] | | |

| [Note 22 - Asset Impairment [removed: Expense](#i84f31ef528bc41899c5480059e42eda9_352)] [added: Expense](#i8ea710b913994516904e0694e23e5230_358)] | | | [removed: [183](#i84f31ef528bc41899c5480059e42eda9_352)] [added: [175](#i8ea710b913994516904e0694e23e5230_358)] | | |

| [Note 24 - Held-for-Sale and [removed: Dispositions](#i84f31ef528bc41899c5480059e42eda9_361)] [added: Dispositions](#i8ea710b913994516904e0694e23e5230_367)] | | | [removed: [189](#i84f31ef528bc41899c5480059e42eda9_361)] [added: [182](#i8ea710b913994516904e0694e23e5230_367)] | | |

| [Note 26 - Earnings Per [removed: Share](#i84f31ef528bc41899c5480059e42eda9_367)] [added: Share](#i8ea710b913994516904e0694e23e5230_373)] | | | [removed: [193](#i84f31ef528bc41899c5480059e42eda9_367)] [added: [187](#i8ea710b913994516904e0694e23e5230_373)] | | |

| [PART I](#i8ea710b913994516904e0694e23e5230_13) | | | [3](#i8ea710b913994516904e0694e23e5230_13) | | |

| [I](#i8ea710b913994516904e0694e23e5230_1099511631612)[TEM 1C. CYBERSECURITY](#i8ea710b913994516904e0694e23e5230_1099511631612) | | | [71](#i8ea710b913994516904e0694e23e5230_1099511631612) | | |

| [PART II](#i8ea710b913994516904e0694e23e5230_73) | | | [77](#i8ea710b913994516904e0694e23e5230_73) | | |

| [ITEM 6.](#i8ea710b913994516904e0694e23e5230_1099511631594) \[RESERVED\] | | | [78](#i8ea710b913994516904e0694e23e5230_1099511631594) | | |

| [Consolidated Balance Sheets](#i8ea710b913994516904e0694e23e5230_277) | | | [119](#i8ea710b913994516904e0694e23e5230_277) | | |

| [Consolidated Statements of Operations](#i8ea710b913994516904e0694e23e5230_280) | | | [120](#i8ea710b913994516904e0694e23e5230_280) | | |

| [Note 2 - Inventory](#i8ea710b913994516904e0694e23e5230_298) | | | [137](#i8ea710b913994516904e0694e23e5230_298) | | |

| [Note 5 - Fair Value](#i8ea710b913994516904e0694e23e5230_307) | | | [139](#i8ea710b913994516904e0694e23e5230_307) | | |

| [Note 7 - Financing Receivables](#i8ea710b913994516904e0694e23e5230_313) | | | [146](#i8ea710b913994516904e0694e23e5230_313) | | |

| [Note 11 - Debt](#i8ea710b913994516904e0694e23e5230_325) | | | [152](#i8ea710b913994516904e0694e23e5230_325) | | |

| [Note 12 - Commitments](#i8ea710b913994516904e0694e23e5230_328) | | | [156](#i8ea710b913994516904e0694e23e5230_328) | | |

| [Note 13 - Contingencies](#i8ea710b913994516904e0694e23e5230_331) | | | [156](#i8ea710b913994516904e0694e23e5230_331) | | |

| [Note 14 - Leases](#i8ea710b913994516904e0694e23e5230_334) | | | [157](#i8ea710b913994516904e0694e23e5230_334) | | |

| [Note 15 - Benefit Plans](#i8ea710b913994516904e0694e23e5230_337) | | | [159](#i8ea710b913994516904e0694e23e5230_337) | | |

| [Note 17 - Equity](#i8ea710b913994516904e0694e23e5230_343) | | | [164](#i8ea710b913994516904e0694e23e5230_343) | | |

| [Note 20 - Revenue](#i8ea710b913994516904e0694e23e5230_352) | | | [173](#i8ea710b913994516904e0694e23e5230_352) | | |

| [Note 23 - Income Taxes](#i8ea710b913994516904e0694e23e5230_361) | | | [178](#i8ea710b913994516904e0694e23e5230_361) | | |

| [Note 25 - Acquisitions](#i8ea710b913994516904e0694e23e5230_370) | | | [183](#i8ea710b913994516904e0694e23e5230_370) | | |

| [Note](#i8ea710b913994516904e0694e23e5230_385) [29](#i8ea710b913994516904e0694e23e5230_385) [- Subsequent Events](#i8ea710b913994516904e0694e23e5230_385) | | | [190](#i8ea710b913994516904e0694e23e5230_385) | | |

| [PART III](#i8ea710b913994516904e0694e23e5230_400) | | | [194](#i8ea710b913994516904e0694e23e5230_400) | | |

| [SIGNATURES](#i8ea710b913994516904e0694e23e5230_424) | | | [198](#i8ea710b913994516904e0694e23e5230_424) | | |

| Adjusted EBITDA | | | Adjusted earnings before interest income and expense, taxes, depreciation and amortization, a non-GAAP measure of operating performance | | |

| Adjusted EBITDA with Tax Attributes | | | Adjusted earnings before interest income and expense, taxes, depreciation and amortization, adding back the pre-tax effect of Production Tax Credits, Investment Tax Credits and depreciation tax expense allocated to tax equity investors, a non-GAAP measure | | |

| CPI | | | U.S. Consumer Price Index | | |

| DOJ | | | U.S. Department of Justice | | |

| EBITDA | | | Earnings before interest income and expense, taxes, depreciation and amortization, a non-GAAP measure of operating performance | | |

| PM | | | Particulate Matter | | |

| | | | | | |

| | | | | | |

| Corporate Units | | | AESC | | | New York Stock Exchange | | |

| [PART I](#i84f31ef528bc41899c5480059e42eda9_13) | | | [3](#i84f31ef528bc41899c5480059e42eda9_13) | | |

| [PART II](#i84f31ef528bc41899c5480059e42eda9_73) | | | [80](#i84f31ef528bc41899c5480059e42eda9_73) | | |

| [ITEM 6. SELECTED FINANCIAL DATA](#i84f31ef528bc41899c5480059e42eda9_97) | | | [81](#i84f31ef528bc41899c5480059e42eda9_97) | | |

| [Consolidated Balance Sheets](#i84f31ef528bc41899c5480059e42eda9_271) | | | [128](#i84f31ef528bc41899c5480059e42eda9_271) | | |

| [Consolidated Statements of Operations](#i84f31ef528bc41899c5480059e42eda9_274) | | | [129](#i84f31ef528bc41899c5480059e42eda9_274) | | |

| [Note 2 - Inventory](#i84f31ef528bc41899c5480059e42eda9_292) | | | [145](#i84f31ef528bc41899c5480059e42eda9_292) | | |

| [Note 5 - Fair Value](#i84f31ef528bc41899c5480059e42eda9_301) | | | [147](#i84f31ef528bc41899c5480059e42eda9_301) | | |

| [Note 7 - Financing Receivables](#i84f31ef528bc41899c5480059e42eda9_307) | | | [153](#i84f31ef528bc41899c5480059e42eda9_307) | | |

| [Note 11 - Debt](#i84f31ef528bc41899c5480059e42eda9_319) | | | [159](#i84f31ef528bc41899c5480059e42eda9_319) | | |

| [Note 12 - Commitments](#i84f31ef528bc41899c5480059e42eda9_322) | | | [164](#i84f31ef528bc41899c5480059e42eda9_322) | | |

| [Note 13 - Contingencies](#i84f31ef528bc41899c5480059e42eda9_325) | | | [164](#i84f31ef528bc41899c5480059e42eda9_325) | | |

| [Note 14 - Leases](#i84f31ef528bc41899c5480059e42eda9_328) | | | [165](#i84f31ef528bc41899c5480059e42eda9_328) | | |

| [Note 15 - Benefit Plans](#i84f31ef528bc41899c5480059e42eda9_331) | | | [167](#i84f31ef528bc41899c5480059e42eda9_331) | | |

| [Note 17 - Equity](#i84f31ef528bc41899c5480059e42eda9_337) | | | [172](#i84f31ef528bc41899c5480059e42eda9_337) | | |

| [Note 20 - Revenue](#i84f31ef528bc41899c5480059e42eda9_346) | | | [181](#i84f31ef528bc41899c5480059e42eda9_346) | | |

| [Note 23 - Income Taxes](#i84f31ef528bc41899c5480059e42eda9_355) | | | [185](#i84f31ef528bc41899c5480059e42eda9_355) | | |

| [Note 25 - Acquisitions](#i84f31ef528bc41899c5480059e42eda9_364) | | | [190](#i84f31ef528bc41899c5480059e42eda9_364) | | |

| [Note 29 - Selected Quarterly Financial Data (Unaudited)](#i84f31ef528bc41899c5480059e42eda9_376) | | | [197](#i84f31ef528bc41899c5480059e42eda9_376) | | |

| [Note 30 - Subsequent Events](#i84f31ef528bc41899c5480059e42eda9_379) | | | [198](#i84f31ef528bc41899c5480059e42eda9_379) | | |

| [PART III](#i84f31ef528bc41899c5480059e42eda9_394) | | | [202](#i84f31ef528bc41899c5480059e42eda9_394) | | |

| [SIGNATURES](#i84f31ef528bc41899c5480059e42eda9_418) | | | [207](#i84f31ef528bc41899c5480059e42eda9_418) | | |

| FX | | | Foreign Exchange | | |

| OPGC | | | Odisha Power Generation Corporation, Ltd. | | |

We recognize the importance of maintaining the safety and security of our people, systems, and data and have a holistic process, supported by our management and Board of Directors, for overseeing and managing cybersecurity and related risks.

AES’ Chief Information Security Officer (“CISO”) reports to our General Counsel and is the head of the Company’s cybersecurity team.

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.

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.

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.

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.

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.

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.

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.

Depending on the nature and severity of an incident, this protocol provides for escalating notification to our CEO and the Board (including the Chair of the Board and the Chair of the Financial Audit Committee).

We regularly practice our incident response through executive tabletop exercises.

Our policies, standards, processes, and practices for assessing, identifying, and managing material risks from cybersecurity threats are integrated into our overall risk management program and are informed by frameworks established by the National Institute of Standards and Technology (“NIST”) and other applicable industry standards.

Our cybersecurity program addresses threats in a prioritized manner and, in particular, focuses on the following key areas:

- gap analysis to identify programmatic opportunities for improvement that can be incorporated into the cyber strategy;

- policies and standards that are annually reviewed and communicated;

- exceptions management and internal audits that support cybersecurity requirements through assessing control implementation risks; and

- monitoring and regular reporting of cyber resilience and posture at operational and strategic levels.

We engage assessors, consultants, auditors, or other third parties in connection with any such processes, including:

- external vulnerability assessments, including penetration tests;

- internal audit reviews;

- threat intelligence;

- incident management;

- audits of NERC-Critical Infrastructure Protection regulated environments by the NERC Registered Regional Entity; and

- program development support, as needed.

Our risk management program for third-party service providers includes risk-based assessments of their interactions with AES data and systems.

We implement monitoring and response processes for key third-party service providers.

We provide awareness training to our employees to help identify, avoid, and mitigate cybersecurity threats.

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.

| | | | | | | |

With a few exceptions, our facilities, which are described in Item [removed: 1*—[Business](#i84f31ef528bc41899c5480059e42eda9_19)*] [added: 1*—[Business](#i8ea710b913994516904e0694e23e5230_19)*] of this Form 10-K, are subject to mortgages or other liens or encumbrances as part of the project's related finance facility.

| [removed: 80] [added: 77] \| [removed: 2022] [added: 2023] Annual Report | | | | | |

The cumulative repurchases from the commencement of the Stock Repurchase Program in July 2010 through December 31, [removed: 2022] [added: 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, [removed: 2022,] [added: 2023,] $264 million remained available for repurchase under the Stock Repurchase Program.

No repurchases were made by The AES Corporation of its common stock in [added: 2023,] 2022, [removed: 2021,] and [removed: 2020.][added: 2021.]

| Commencing the fourth quarter of | | | | | | [removed: 2022] [added: 2023] | | | | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2020] [added: 2021] | | |

| Cash dividend | | | | | | [removed: $0.1659] [added: $0.1725] | | | | | | [removed: $0.1580] [added: $0.1659] | | | | | | [removed: $0.1505] [added: $0.1580] | | |

The fourth quarter [removed: 2022] [added: 2023] cash dividend is to be paid in the first quarter of [removed: 2023.][added: 2024.]

See the information contained under Item 12.—*[Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters—Securities Authorized for Issuance under Equity Compensation [removed: Plans](#i84f31ef528bc41899c5480059e42eda9_403)*] [added: Plans](#i8ea710b913994516904e0694e23e5230_409)*] of this Form 10-K.

As of February [removed: 27, 2023,] [added: 22, 2024,] there were approximately [removed: 3,508] [added: 3,395] record holders of our common stock.

| [removed: 81] [added: 78] \| [removed: 2022] [added: 2023] Annual Report | | | | | |

[removed: ][added: ]

The S&P 500 Utilities Index is a published sector index comprising the [removed: 28] [added: 30] electric and gas utilities included in the S&P 500.

The five year total return chart assumes $100 invested on December 31, [removed: 2016] [added: 2018] in AES Common Stock, the S&P 500 Index and the S&P 500 Utilities Index.

| [removed: 82] [added: 79] \| [removed: 2022] [added: 2023] Annual Report | | | | | |

The following table presents our selected financial data as of the dates and for the periods indicated.

This data should be read together with Item 7.—*[Management's Discussion and Analysis of Financial Condition and Results of Operations](#i84f31ef528bc41899c5480059e42eda9_100)* and the Consolidated Financial Statements and the notes thereto included in Item 8.—*[Financial Statements and Supplementary Data](#i84f31ef528bc41899c5480059e42eda9_265)* of this Form 10-K.

The selected financial data for each of the years in the five year period ended December 31, 2022 have been derived from our audited Consolidated Financial Statements.

Prior period amounts have been restated to reflect discontinued operations in all periods presented.

Our historical results are not necessarily indicative of our future results.

Acquisitions, disposals, reclassifications, and changes in accounting principles affect the comparability of information included in the tables below.

Please refer to the Notes to the Consolidated Financial Statements included in Item 8.—*[Financial Statements and Supplementary Data](#i84f31ef528bc41899c5480059e42eda9_265)* of this Form 10-K for further explanation of the effect of such activities.

Please also refer to Item 1A.—*[Risk Factors](#i84f31ef528bc41899c5480059e42eda9_58)* of this Form 10-K and Note 27—*[Risks and Uncertainties](#i84f31ef528bc41899c5480059e42eda9_370)* to the Consolidated Financial Statements included in Item 8.—*[Financial Statements and Supplementary Data](#i84f31ef528bc41899c5480059e42eda9_265)* of this Form 10-K for certain risks and uncertainties that may cause the data reflected herein not to be indicative of our future financial condition or results of operations.

| | | | | | | |

| --- | --- | --- | --- | --- | --- | --- |

Selected Financial Data

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | 2022 | | | | | | 2021 | | | | | | 2020 | | | | | | 2019 | | | | | | 2018 | | |

| Statement of Operations Data for the Years Ended December 31: | | | (in millions, except per share amounts) | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Revenue | | | $ | 12,617 | | | | | $ | 11,141 | | | | | $ | 9,660 | | | | | $ | 10,189 | | | | | $ | 10,736 | |

| Income (loss) from continuing operations (1) | | | (505) | | | | | | (955) | | | | | | 149 | | | | | | 477 | | | | | | 1,349 | | |

| Income (loss) from continuing operations attributable to The AES Corporation, net of tax | | | (546) | | | | | | (413) | | | | | | 43 | | | | | | 302 | | | | | | 985 | | |

| Income from discontinued operations attributable to The AES Corporation, net of tax (2) | | | — | | | | | | 4 | | | | | | 3 | | | | | | 1 | | | | | | 218 | | |

| Net income (loss) attributable to The AES Corporation | | | $ | (546) | | | | | $ | (409) | | | | | $ | 46 | | | | | $ | 303 | | | | | $ | 1,203 | |

| Per Common Share Data | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Basic earnings (loss) per share: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Income (loss) from continuing operations attributable to The AES Corporation common stockholders, net of tax | | | $ | (0.82) | | | | | $ | (0.62) | | | | | $ | 0.06 | | | | | $ | 0.46 | | | | | $ | 1.49 | |

| Income from discontinued operations attributable to The AES Corporation common stockholders, net of tax | | | — | | | | | | 0.01 | | | | | | 0.01 | | | | | | — | | | | | | 0.33 | | |

| Net income (loss) attributable to The AES Corporation common stockholders | | | $ | (0.82) | | | | | $ | (0.61) | | | | | $ | 0.07 | | | | | $ | 0.46 | | | | | $ | 1.82 | |

| Diluted earnings (loss) per share: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Income (loss) from continuing operations attributable to The AES Corporation common stockholders, net of tax | | | $ | (0.82) | | | | | $ | (0.62) | | | | | $ | 0.06 | | | | | $ | 0.45 | | | | | $ | 1.48 | |

| Net income (loss) attributable to The AES Corporation common stockholders | | | $ | (0.82) | | | | | $ | (0.61) | | | | | $ | 0.07 | | | | | $ | 0.45 | | | | | $ | 1.81 | |

| Dividends Declared Per Common Share | | | $ | 0.64 | | | | | $ | 0.61 | | | | | $ | 0.58 | | | | | $ | 0.55 | | | | | $ | 0.53 | |

| Cash Flow Data for the Years Ended December 31: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Net cash provided by operating activities | | | $ | 2,715 | | | | | $ | 1,902 | | | | | $ | 2,755 | | | | | $ | 2,466 | | | | | $ | 2,343 | |

| Net cash used in investing activities | | | (5,836) | | | | | | (3,051) | | | | | | (2,295) | | | | | | (2,721) | | | | | | (505) | | |

| Net cash provided by (used in) financing activities | | | 3,758 | | | | | | 797 | | | | | | (78) | | | | | | (86) | | | | | | (1,643) | | |

| Total increase (decrease) in cash, cash equivalents and restricted cash | | | 603 | | | | | | (343) | | | | | | 255 | | | | | | (431) | | | | | | 215 | | |

| Cash, cash equivalents and restricted cash, ending | | | 2,087 | | | | | | 1,484 | | | | | | 1,827 | | | | | | 1,572 | | | | | | 2,003 | | |

| Balance Sheet Data at December 31: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Total assets | | | $ | 38,363 | | | | | $ | 32,963 | | | | | $ | 34,603 | | | | | $ | 33,648 | | | | | $ | 32,521 | |

| Non-recourse debt (noncurrent) | | | 17,846 | | | | | | 13,603 | | | | | | 15,005 | | | | | | 14,914 | | | | | | 13,986 | | |

| Recourse debt (noncurrent) | | | 3,894 | | | | | | 3,729 | | | | | | 3,446 | | | | | | 3,391 | | | | | | 3,650 | | |

| Redeemable stock of subsidiaries | | | 1,321 | | | | | | 1,257 | | | | | | 872 | | | | | | 888 | | | | | | 879 | | |

We have audited the accompanying consolidated balance sheets of The AES Corporation (the Company) as of December 31, [removed: 2022] [added: 2023,] and [removed: 2021,] [added: 2022,] the related consolidated statements of operations, comprehensive income (loss), changes in equity and cash flows for each of the three years in the period ended December 31, [removed: 2022,] [added: 2023,] and the related notes and the financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, [removed: 2022] [added: 2023] and [removed: 2021,] [added: 2022,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2022,] [added: 2023,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the [removed: Company’s] [added: Company's] internal control over financial reporting as of December 31, [removed: 2022,] [added: 2023,] based on criteria established in Internal [removed: Control *—* Integrated] [added: Control—Integrated] Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 [removed: framework)] [added: framework),] and our report dated [removed: March 1, 2023,] [added: February 26, 2024] expressed an unqualified opinion thereon.

| [removed: *How We Addressed the Matter in Our Audit*] | | | | | | [removed: We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company's goodwill impairment review and testing process for the AES Andes and AES El Salvador reporting units. For example, we tested controls over management’s review of the valuation models, the significant assumptions described above, and the completeness and accuracy of the data used in the valuations.] To test the [removed: estimated fair value] [added: impairment analyses] for the [removed: AES Andes] [added: Norgener, TEG, TEP,] and [removed: AES El Salvador reporting units, we performed] [added: Warrior Run asset groups, our] audit procedures [removed: that] included, among others, assessing the [removed: methodologies used to develop the estimated fair values,] [added: appropriateness of valuation methodologies,] testing the significant assumptions discussed above, and [removed: evaluating] [added: testing] the completeness and accuracy of the underlying data used by the Company in its analyses. We compared the significant assumptions used by management to current industry and economic [removed: trends. We assessed the] [added: trends as well as] historical [removed: accuracy of management’s estimates and] [added: results. We] performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the [removed: reporting units] [added: asset groups] that would result from changes in the assumptions. We also involved valuation specialists to assist in our evaluation of the overall [removed: methodologies] [added: valuation methodology] and the discount rates used in the fair value [removed: estimate.] [added: estimates, as necessary.] | | | [added: | | | | | |]

| *Description of the Matter* | | | | | | At December 31, [removed: 2022,] [added: 2023,] the Company's net property, plant and equipment was [removed: $23,039] [added: $29,958] million. As discussed in Note 1 to the consolidated financial statements, when circumstances indicate that the carrying amount of long-lived assets in a held-for-use asset group may not be recoverable, the Company evaluates the assets for potential impairment. Events or changes in circumstances that may necessitate a recoverability evaluation include, but are not limited to, adverse changes in the regulatory environment, unfavorable changes in power prices or fuel costs, increased competition due to additional capacity in the grid, technological advancements, declining trends in demand, or an expectation it is more likely than not that the asset will be disposed of before the end of its previously estimated useful life. If the carrying amount of the assets exceeds the undiscounted cash flows, an impairment is recognized for the amount by which the carrying amount of the asset group exceeds its fair value. [removed: The Company’s useful life estimates are continually evaluated for appropriateness as changes in the relevant factors arise, including when a long-lived asset group is tested for recoverability.] As discussed in Note 22 to the consolidated financial statements, the Company recognized a total asset impairment expense of [removed: $661] [added: $471] million related to the [removed: Maritza] [added: Norgener, TEG, TEP,] and [added: Warrior Run asset groups, consisting of coal and pet coke generation plants included in] the [removed: TEG TEP] [added: Energy Infrastructure SBU reportable segment in 2023. Auditing the Company's identification of impairment indicators was complex and highly judgmental because of the many geographic, regulatory, and economic environments in which the Company operates. Also, due to the wide variety of events or changes in circumstances that may indicate that an] asset [added: group is not recoverable, auditing the Company’s identification of impairment indicators involved a high degree of subjectivity, particularly given the Company’s decarbonization initiatives and shift towards clean energy platforms. In addition, auditing the Company’s impairment analyses for Norgener, TEG, TEP, and Warrior Run asset] groups [removed: in 2022.] [added: was complex due to the judgmental nature of the significant assumptions used to determine the fair value of the asset groups (e.g., the Company’s projections of revenue growth, discount rates, and consideration of the industry outlook and market conditions).] | | | [added: | | | | | |]

| *How We Addressed the Matter in Our Audit* | | | | | | We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s controls over the identification of impairment [removed: indicators, re-evaluation of estimated useful lives,] [added: indicators] and the [removed: valuation] [added: fair value analysis] of the [removed: Maritza] [added: Norgener, TEG, TEP,] and [removed: TEG TEP long-lived] [added: Warrior Run] asset [removed: impairments.] [added: groups.] For example, we tested management’s monitoring controls over the evaluation of events or changes in circumstances that would require an asset to be tested for recoverability. We also tested management’s review controls of the valuation models used in the impairment analyses, the significant assumptions used to develop the estimates, and the completeness and accuracy of the data used in the valuations. To test the Company's identification of impairment [removed: indicators and re-evaluation of useful lives,] [added: indicators,] our audit procedures included, among others, making inquiries of management, including personnel in operations, to understand changes in the businesses and management’s strategic plans, and evaluate whether management has considered any identified changes in their analysis. We evaluated the results of earnings and the projected cash flows for significant coal generation assets and assessed whether there has been a deterioration in earnings or projected losses that would represent an impairment indicator. We also evaluated conditions and trends in the industry for the underlying economies, including any sale or disposition activities, and evaluated any adverse changes in the regulatory environment or the geographic areas to test the completeness and accuracy of the company's evaluation of potential impairment indicators. We [added: also] evaluated the Company’s useful life estimates, in particular for [removed: its significant] [added: the] coal [added: and pet coke-fired] generation [removed: assets,] [added: assets with impairment indicators,] considering the existing Power Purchase Agreements (PPAs) and the market for the use of these assets subsequent to the expiration of existing PPAs, based on the regulatory and market conditions. [removed: To test the impairment analyses for the Maritza and TEG TEP asset groups, our audit procedures included, among others, assessing the appropriateness of valuation methodologies, testing the significant assumptions discussed above, and testing the completeness and accuracy of the underlying data used by the Company in its analyses. We compared the significant assumptions used by management to current industry and economic trends as well as historical results. We performed sensitivity analyses of certain significant assumptions to evaluate the changes in the fair value of the asset groups that would result from changes in the assumptions. We also involved valuation specialists to assist in our evaluation of the overall valuation methodology and the discount rates used in the fair value estimates.] | | | [added: | | | | | |]

December 31, [removed: 2022] [added: 2023] and [removed: 2021][added: 2022]

| | | | [added: 2023 | | | | | |] 2022 | | | | | | 2021 | | |

| Cash and cash equivalents | | | $ | [removed: 1,374] [added: 1,426] | | | | | $ | [removed: 943] [added: 1,374] | |

| Restricted cash | | | [removed: 536] [added: 370] | | | | | | [removed: 304] [added: 536] | | |

| Short-term investments | | | [removed: 730] [added: 395] | | | | | | [removed: 232] [added: 730] | | |

| Accounts receivable, net of allowance [removed: for doubtful accounts] of [removed: $5] [added: $15] and $5, respectively | | | [removed: 1,799] [added: 1,420] | | | | | | [removed: 1,418] [added: 1,799] | | |

| Inventory | | | [removed: 1,055] [added: 712] | | | | | | [removed: 604] [added: 1,055] | | |

| Prepaid expenses | | | [removed: 98] [added: 177] | | | | | | [removed: 142] [added: 98] | | |

| Other current assets, net of [removed: CECL] allowance of [removed: $2] [added: $14] and [removed: $0,] [added: $2,] respectively | | | [removed: 1,533] [added: 1,387] | | | | | | [removed: 897] [added: 1,533] | | |

| Current held-for-sale assets | | | [removed: 518] [added: 762] | | | | | | [removed: 816] [added: 518] | | |

| Total current assets | | | [removed: 7,643] [added: 6,649] | | | | | | [removed: 5,356] [added: 7,643] | | |

| Land | | | [removed: 470] [added: 522] | | | | | | [removed: 426] [added: 470] | | |

| Electric generation, distribution assets and other | | | [removed: 26,599] [added: 30,190] | | | | | | [removed: 25,552] [added: 26,599] | | |

| Accumulated depreciation | | | [removed: (8,651)] [added: (8,602)] | | | | | | [removed: (8,486)] [added: (8,651)] | | |

| Construction in progress | | | [removed: 4,621] [added: 7,848] | | | | | | [removed: 2,414] [added: 4,621] | | |

| Property, plant and equipment, net | | | [removed: 23,039] [added: 29,958] | | | | | | [removed: 19,906] [added: 23,039] | | |

| Investments in and advances to affiliates | | | [added: 941 | | | | | |] 952 | | | | | | 1,080 | | |

| Debt service reserves and other deposits | | | [added: 194 | | | | | |] 177 | | | | | | 237 | | |

| Goodwill | | | [added: 348 | | | | | |] 362 | | | | | | 1,177 | | |

| Other intangible assets, net of accumulated amortization of [removed: $434] [added: $498] and [removed: $385,] [added: $434,] respectively | | | [removed: 1,841] [added: 2,243] | | | | | | [removed: 1,450] [added: 1,841] | | |

| Deferred income taxes | | | [added: 396 | | | | | |] 319 | | | | | | 409 | | |

| Other noncurrent assets, net of allowance of [removed: $51] [added: $9] and [removed: $23,] [added: $77,] respectively | | | [removed: 2,979] [added: 3,259] | | | | | | [removed: 2,188] [added: 4,030] | | |

| Noncurrent held-for-sale assets | | | [added: 811 | | | | | |] — | | | | | | 1,160 | | |

| Total other assets | | | [removed: 7,681] [added: 8,192] | | | | | | [removed: 7,701] [added: 7,681] | | |

| [removed: TOTAL ASSETS] [added: Total Assets] | | | $ | [added: 44,799 | | | | | $ |] 38,363 | | | | | $ | 32,963 | |

| Accounts payable | | | $ | [removed: 1,730] [added: 2,199] | | | | | $ | [removed: 1,153] [added: 1,730] | |

| Accrued interest | | | [removed: 249] [added: 315] | | | | | | [removed: 182] [added: 249] | | |

| Accrued non-income taxes | | | [removed: 249] [added: 278] | | | | | | [removed: 266] [added: 249] | | |

| Accrued and other liabilities | | | [removed: 2,151] [added: 1,334] | | | | | | [removed: 1,205] [added: 1,489] | | |

| Non-recourse debt, including [removed: $416] [added: $1,080] and [removed: $302,] [added: $416,] respectively, related to variable interest entities | | | [removed: 1,758] [added: 3,932] | | | | | | [removed: 1,367] [added: 1,758] | | |

| Current held-for-sale liabilities | | | [removed: 354] [added: 499] | | | | | | [removed: 559] [added: 354] | | |

| Total current liabilities | | | [removed: 6,491] [added: 9,731] | | | | | | [removed: 4,732] [added: 6,491] | | |

| Recourse debt | | | [removed: 3,894] [added: 4,264] | | | | | | [removed: 3,729] [added: 3,894] | | |

| Non-recourse debt, including [removed: $2,295] [added: $1,715] and [removed: $2,223,] [added: $2,295,] respectively, related to variable interest entities | | | [removed: 17,846] [added: 18,482] | | | | | | [removed: 13,603] [added: 17,846] | | |

| 115 \| 2023 Annual Report | | | | | |

| 116 \| 2023 Annual Report | | | | | |

| | | | | | | Long-lived Asset Impairments of Coal and Pet Coke-fired Generation Assets | | | | | | | | |

| 117 \| 2023 Annual Report | | | | | |

| | | | | | | Accounting for the Bellefield and Rexford Renewable Acquisitions | | | | | | | | |

| *Description of the Matter* | | | | | | During 2023, the Company completed its acquisitions of the Bellefield solar and battery energy storage system (BESS) projects and the Rexford solar and BESS project for consideration of $358 million and $253 million, respectively, as disclosed in Note 25 to the consolidated financial statements. These transactions were accounted for as acquisitions of variable interest entities that did not meet the definition of a business. Auditing the Company's accounting for its significant renewables acquisitions was complex due to the significant judgment made by management to determine the fair values of significant assets acquired, including project development intangible assets and construction in progress assets. The significant assumptions used included the discount rates and revenue pricing curves used in the Company’s forecasted cash flows to determine the fair value of the acquired assets. In particular, the fair value estimate was sensitive to these significant assumptions, which are affected by expectations about future market conditions. | | | | | | | | |

| *How We Addressed the Matter in Our Audit* | | | | | | We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s controls over the accounting for these acquisitions. For example, we tested controls over the recognition and measurement of the consideration transferred and valuation of assets acquired, including management’s review of the valuation models, the significant assumptions used to develop the estimates, and the completeness and accuracy of the data used in the valuations. To test the estimated fair value of the project development intangible assets and construction in progress, we performed audit procedures that included, among others, evaluating the Company's selection of the valuation methodology, evaluating the methods and significant assumptions used, and evaluating the completeness and accuracy of the underlying data supporting the significant assumptions and estimates. For example, we compared the significant assumptions used by management to third-party industry and market data and to the Company’s budgets and forecasts. We also involved our internal valuation specialists to assist in our evaluation of the reasonableness of the Company’s valuation methodology, forecasted revenue assumptions, and the discount rates used in the valuations. | | | | | | | | |

| | | | | | | Allocation of Earnings to Noncontrolling Interests in Tax Equity Partnerships | | | | | | | | |

| *Description of the Matter* | | | | | | A significant number of renewable projects at AES Clean Energy have been financed with tax equity structures, where the tax equity investors receive a portion of the economic attributes of the facilities, including tax attributes, that vary over the life of the projects. When the allocation of earnings and losses, cash distributions, and tax benefits are not based on fixed ownership percentages, the Company uses the hypothetical liquidation at book value (HLBV) method to calculate the earnings attributable to noncontrolling interest for consolidated partnerships, when it is a reasonable approximation of the profit-sharing arrangement. As discussed in Note 17 to the consolidated financial statements, AES Clean Energy Development and AES Renewable Holdings sold noncontrolling interest to tax equity investors resulting in an increase of $1,163 million to noncontrolling interest in 2023. | | | | | | | | |

| 118 \| 2023 Annual Report | | | | | |

| | | | | | | Auditing the allocation of earnings to noncontrolling interest holders for tax equity partnerships was complex due to the evaluation of whether a newly established HLBV model used to allocate earnings appropriately reflects the unique substantive profit-sharing terms and features within each arrangement. A greater extent of audit effort and specialized skill and knowledge was required to evaluate compliance with the contractual provisions in each partnership agreement as well as the appropriateness of the investors’ capital account balances used in the HLBV models. | | | | | | | | |

| *How We Addressed the Matter in Our Audit* | | | | | | We obtained an understanding, evaluated the design and tested the operating effectiveness of the controls over the Company’s process for developing the HLBV model for new tax equity arrangements. For example, we tested management’s review of substantive profit-sharing terms and features to evaluate whether they are properly reflected in the HLBV model for new arrangements. To test the allocation of earnings to noncontrolling interest holders for new significant tax equity partnerships, we read the related partnership agreements to understand the substantive profit-sharing provisions. We evaluated the HLBV models for consistency with the contractual provisions in the related partnership agreements and tested the capital contributions made by the tax equity investors. We involved tax subject matter professionals to assist in evaluating the calculation of the investors’ capital accounts used in the HLBV models, including the proceeds attributable to the tax equity investor due to the recognition of investment tax credits and other adjustments as required by the U.S. Internal Revenue Code. Additionally, we tested the allocation of earnings by recalculating the hypothetical liquidation in the HLBV models based on the liquidation provisions of the related partnership agreements. | | | | | | | | |

| Debt service reserves and other deposits | | | 194 | | | | | | 177 | | |

| Goodwill | | | 348 | | | | | | 362 | | |

| Noncurrent held-for-sale assets | | | 811 | | | | | | — | | |

| TOTAL ASSETS | | | $ | 44,799 | | | | | $ | 38,363 | |

| Supplier financing arrangements | | | 974 | | | | | | 662 | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Balance at December 31, 2023 | | | 1.0 | | | | | | $ | 838 | | | | | 819.1 | | | | | | $ | 8 | | | | | 149.4 | | | | | | $ | (1,813) | | | | | $ | 6,355 | | | | | $ | (1,386) | | | | | $ | (1,514) | | | | | $ | 3,497 | |

(1) Excludes redeemable stock of subsidiaries.

See Note 16—*[Redeemable](#i8ea710b913994516904e0694e23e5230_340) [Stock of Subsidiaries](#i8ea710b913994516904e0694e23e5230_340).*

| Loss (gain) on realized/unrealized derivatives | | | 143 | | | | | | 127 | | | | | | (1) | | |

| Loss on realized/unrealized foreign currency | | | 331 | | | | | | 58 | | | | | | 23 | | |

| Other | | | 149 | | | | | | 123 | | | | | | 202 | | |

Consolidated Statements of Cash Flows *(continued)*

| | | | (in millions) | | | | | | | | | | | | | | |

| Initial recognition of contingent consideration for acquisitions (see Note 25) | | | 239 | | | | | | 24 | | | | | | 9 | | |

| Noncash recognition of new operating and financing leases (see Note 14) | | | 225 | | | | | | 134 | | | | | | 56 | | |

| Noncash contributions from noncontrolling interests | | | 60 | | | | | | — | | | | | | — | | |

| Noncash contributions to equity affiliates from transfers of tax credits | | | 52 | | | | | | — | | | | | | — | | |

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Company's operations and financial results.

| Cash and cash equivalents | | | $ | 1,426 | | | | | $ | 1,374 | |

| Restricted cash | | | 370 | | | | | | 536 | | |

| Debt service reserves and other deposits | | | 194 | | | | | | 177 | | |

SUPPLIER FINANCE PROGRAMS *—* With some purchases, the Company enters into supplier financing arrangements with the goal of securing improved payment terms.

| 125 \| 2022 Annual Report | | | | | |

| 126 \| 2022 Annual Report | | | | | |

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| | | | | | | Goodwill Impairment Test for AES Andes and AES El Salvador Reporting Units | | |

| *Description of the Matter* | | | | | | At December 31, 2022, the Company’s goodwill balance was $362 million. As discussed in Note 1 to the consolidated financial statements, the Company’s goodwill is tested for impairment at least annually. If goodwill is determined to be impaired, an impairment loss is measured at the amount by which the reporting unit’s carrying amount exceeds its fair value, not to exceed the carrying amount of goodwill. The Company performed a quantitative impairment test for the AES Andes and AES El Salvador reporting units and utilized the income approach to determine the estimated fair value of these reporting units. As discussed in Note 9 to the consolidated financial statements, the estimated fair value was less than the carrying amount for both of these reporting units and as a result the Company recognized impairment expense of $777 million during the fourth quarter of 2022. Auditing the Company’s annual goodwill impairment tests for the AES Andes and AES El Salvador reporting units required judgment to evaluate the effects of macroeconomic and industry conditions and involved a high degree of subjectivity due to the significant estimation required to determine the fair value of these reporting units. In particular, the fair value estimates of the reporting units involve the use of significant unobservable inputs and are sensitive to changes in significant assumptions, such as the interest rates and country risk premiums, which are inputs used to determine the discount rates. | | |

| | | | | | | Long-lived Asset Impairments and Re-evaluation of Useful Lives | | |

| 127 \| 2022 Annual Report | | | | | |

| | | | | | | Auditing the Company's identification of impairment indicators and re-evaluation of useful lives was complex and highly judgmental because of the many geographic, regulatory, and economic environments in which the Company operates. Also, due to the wide variety of events or changes in circumstances that may indicate that an asset group is not recoverable or that may result in a change in useful life, auditing the Company’s identification of impairment indicators and re-evaluation of useful lives involved a high degree of subjectivity, particularly given the Company’s decarbonization initiatives and shift towards clean energy platforms. In addition, auditing the Company’s valuation of long-lived assets used in the Maritza and TEG TEP impairment analyses involved significant judgment due to the significant unobservable inputs used in the estimation of the asset groups’ fair value. In particular, the significant assumptions for the income approach used to determine the fair value of the asset groups included the Company’s projections of revenue growth and discount rates, which are forward-looking assumptions and could be affected by future industry, market, and economic conditions. | | |

March 1, 2023

| | | | | | | | | | | | |

| Loan receivable, net of allowance of $26 | | | 1,051 | | | | | | — | | |

| Balance at December 31, 2019 | | | — | | | | | | $ | — | | | | | 817.8 | | | | | | $ | 8 | | | | | 153.9 | | | | | | $ | (1,867) | | | | | $ | 7,776 | | | | | $ | (692) | | | | | $ | (2,229) | | | | | $ | 2,233 | |

| Cumulative effect of a change in accounting principle (1) | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (34) | | | | | | — | | | | | | (16) | | |

For further information, see Note 1—*[G](#i84f31ef528bc41899c5480059e42eda9_289)[e](#i84f31ef528bc41899c5480059e42eda9_289)[n](#i84f31ef528bc41899c5480059e42eda9_289)[e](#i84f31ef528bc41899c5480059e42eda9_289)[r](#i84f31ef528bc41899c5480059e42eda9_289)[a](#i84f31ef528bc41899c5480059e42eda9_289)[l](#i84f31ef528bc41899c5480059e42eda9_289) [](#i84f31ef528bc41899c5480059e42eda9_289)[a](#i84f31ef528bc41899c5480059e42eda9_289)[n](#i84f31ef528bc41899c5480059e42eda9_289)[d](#i84f31ef528bc41899c5480059e42eda9_289) [](#i84f31ef528bc41899c5480059e42eda9_289)[S](#i84f31ef528bc41899c5480059e42eda9_289)[u](#i84f31ef528bc41899c5480059e42eda9_289)[m](#i84f31ef528bc41899c5480059e42eda9_289)[m](#i84f31ef528bc41899c5480059e42eda9_289)[a](#i84f31ef528bc41899c5480059e42eda9_289)[r](#i84f31ef528bc41899c5480059e42eda9_289)[y](#i84f31ef528bc41899c5480059e42eda9_289) [](#i84f31ef528bc41899c5480059e42eda9_289)[o](#i84f31ef528bc41899c5480059e42eda9_289)[f](#i84f31ef528bc41899c5480059e42eda9_289) [](#i84f31ef528bc41899c5480059e42eda9_289)[S](#i84f31ef528bc41899c5480059e42eda9_289)[i](#i84f31ef528bc41899c5480059e42eda9_289)[g](#i84f31ef528bc41899c5480059e42eda9_289)[n](#i84f31ef528bc41899c5480059e42eda9_289)[i](#i84f31ef528bc41899c5480059e42eda9_289)[f](#i84f31ef528bc41899c5480059e42eda9_289)[i](#i84f31ef528bc41899c5480059e42eda9_289)[c](#i84f31ef528bc41899c5480059e42eda9_289)[a](#i84f31ef528bc41899c5480059e42eda9_289)[n](#i84f31ef528bc41899c5480059e42eda9_289)[t](#i84f31ef528bc41899c5480059e42eda9_289) [](#i84f31ef528bc41899c5480059e42eda9_289)[A](#i84f31ef528bc41899c5480059e42eda9_289)[ccounting Policies](#i84f31ef528bc41899c5480059e42eda9_289)*.

| Reversals of contingencies | | | (1) | | | | | | (10) | | | | | | (186) | | |

| Loss of affiliates, net of dividends | | | 111 | | | | | | 36 | | | | | | 128 | | |

| Other | | | 183 | | | | | | 120 | | | | | | 54 | | |

Losses on expected sales of business interests are limited to the impairment of long-lived assets as of the date of execution of the sales agreement, which are recognized in *Asset impairment expense* in the Consolidated Statements of Operations.

This loss is limited to the carrying value of long-lived assets until the completion of the sale, at which point, any additional loss is recognized.

Other accrued liabilities includes $662 million related to supplier financing arrangements, of which $296 million has a Parent Company guarantee; interest incurred for these arrangements is recorded on the Consolidated Statements of Operations within *Interest expense* or, if eligible for capitalization, to *Property, plant and equipment, net* on the Consolidated Balance Sheets.

the fiscal period.

transferred.

The Company determines discount rates based on its existing credit rates of its unsecured borrowings, which are then adjusted for the appropriate lease term and currency.

Generally, these agreements do not meet the definition of a derivative, often due to the inability to be net settled.

On a quarterly basis, we evaluate the markets for commodities to be delivered under these agreements to determine if facts and circumstances have changed such that the agreements could be net settled and meet the definition of a derivative.

Foreign currency contracts are used to reduce risks arising from the change in fair value of certain foreign currency denominated assets and liabilities.

The objective of

See *New Accounting Pronouncements* below for further information regarding the impact on the Company's financial statements upon adoption of ASC 326.

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| 2021-05, Leases (Topic 842), Lessors—Certain Leases with Variable Lease Payments | | | The amendments in this update affect lessors with lease contracts that (1) have variable lease payments that do not depend on a reference index or a rate and (2) would have resulted in the recognition of a selling loss at lease commencement if classified as sales-type or direct financing. Lessors should classify and account for a lease with variable lease payments that do not depend on a reference index or a rate as an operating lease if both of the following criteria are met: (a) The lease would have been classified as a sales-type lease or a direct financing lease in accordance with the classification criteria in paragraphs 842-10-25-2 through 25-3, (b) The lessor would have otherwise recognized a day-one loss. This update could be applied either (1) retrospectively to leases that commenced or were modified on or after the adoption of Update 2016-02 or (2) prospectively to leases that commence or are modified on or after the date that an entity first applies the amendments. | | | January 1, 2022 | | | The Company adopted this standard on a prospective basis and it did not have a material impact on the financial statements. | | |

| 2020-06, Debt - Debt with conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Equity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Equity’s Own Equity | | | The amendments in this update affect entities that issue convertible instruments and/or contracts indexed to and potentially settled in an entity’s own equity. The new ASU eliminates the beneficial conversion and cash conversion accounting models for convertible instruments. It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions. In addition, the new guidance modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted EPS computation. | | | January 1, 2022 | | | The Company adopted this standard on a fully retrospective basis and its adoption resulted in a $13 million increase to *Preferred Stock* and a corresponding decrease to *Additional paid-in capital.* No impact to Earnings per Share amounts reported in 2021 or 2022. | | |

| 2020-04, 2021-01, and 2022-06 Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting | | | The amendments in these updates provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference to LIBOR or another reference rate expected to be discontinued by reference rate reform, and clarify that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. These amendments are effective for a limited period of time (March 12, 2020 - December 31, 2024). | | | Effective for all entities as of March 12, 2020 through December 31, 2024 | | | The Company adopted this standard on a prospective basis and it did not have a material impact on the financial statements. | | |

ASC 326 — Financial Instruments *—* Credit Losses

On January 1, 2020, the Company adopted ASC 326 *Financial Instruments — Credit Losses* and its subsequent corresponding updates (“ASC 326”).

The new standard updates the impairment model for financial assets measured at amortized cost, known as the Current Expected Credit Loss (“CECL”) model.

For trade and other receivables, held-to-maturity debt securities, loans, and other instruments, entities are required to use a new forward-looking "expected loss" model that generally results in the earlier recognition of an allowance for credit losses.

For available-for-sale debt securities with unrealized losses, entities measure credit losses as it was done under previous GAAP, except that unrealized losses due to credit-related factors are now recognized as an allowance on the balance sheet with a corresponding adjustment to earnings in the income statement.

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934, as amended (the "Exchange Act") is recorded, processed, [removed: summarized] [added: summarized,] and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosures.

Based upon this evaluation, the CEO and CFO concluded that as of December 31, [removed: 2022,] [added: 2023,] our disclosure controls and procedures were effective.

Management assessed the effectiveness of our internal control over financial reporting as of December 31, [removed: 2022.][added: 2023.]

Based on this assessment, management believes that the Company maintained effective internal control over financial reporting as of December 31, [removed: 2022.][added: 2023.]