Item 1. FINANCIAL STATEMENTS

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Item 1. FINANCIAL STATEMENTS

Condensed Consolidated Balance Sheets

(Unaudited)


	September 30, 2024		December 31, 2023

	(in millions, except share and per share amounts)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	1,919	$	1,426
Restricted cash	563		370
Short-term investments	62		395
Accounts receivable, net of allowance of $32 and $15, respectively	1,868		1,420
Inventory	646		712
Prepaid expenses	134		177
Other current assets, net of allowance of $0 and $14, respectively	1,460		1,387
Current held-for-sale assets	3,874		762
Total current assets	10,526		6,649
NONCURRENT ASSETS





Property, plant and equipment, net of accumulated depreciation of $8,505 and $8,602, respectively	32,354		29,958

Investments in and advances to affiliates	1,162		941
Debt service reserves and other deposits	77		194
Goodwill	348		348
Other intangible assets, net of accumulated amortization of $426 and $498, respectively	1,928		2,243
Deferred income taxes	421		396


Other noncurrent assets, net of allowance of $11 and $9, respectively	2,593		3,259
Noncurrent held-for-sale assets	670		811
Total other assets	7,199		8,192
TOTAL ASSETS	$	50,079	$	44,799
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable	$	1,965	$	2,199
Accrued interest	328		315
Accrued non-income taxes	257		278
Supplier financing arrangements	698		974
Accrued and other liabilities	1,182		1,334
Recourse debt	1,709		200
Non-recourse debt, including $416 and $1,080, respectively, related to variable interest entities	3,237		3,932

Current held-for-sale liabilities	2,999		499
Total current liabilities	12,375		9,731
NONCURRENT LIABILITIES
Recourse debt	4,840		4,264
Non-recourse debt, including $1,947 and $1,715, respectively, related to variable interest entities	19,666		18,482

Deferred income taxes	1,696		1,245

Other noncurrent liabilities	2,501		3,114
Noncurrent held-for-sale liabilities	457		514
Total noncurrent liabilities	29,160		27,619
Commitments and Contingencies (see Note 9)
Redeemable stock of subsidiaries	905		1,464
EQUITY
THE AES CORPORATION STOCKHOLDERS’ EQUITY
Preferred stock (without par value, 50,000,000 shares authorized; 1,043,050 issued and outstanding at December 31, 2023)	—		838
Common stock ($0.01 par value, 1,200,000,000 shares authorized; 859,709,987 issued and 711,027,043 outstanding at September 30, 2024 and 819,051,591 issued and 669,693,234 outstanding at December 31, 2023)	9		8
Additional paid-in capital	6,949		6,355
Accumulated deficit	(267)		(1,386)
Accumulated other comprehensive loss	(1,595)		(1,514)
Treasury stock, at cost (148,682,944 and 149,358,357 shares at September 30, 2024 and December 31, 2023, respectively)	(1,806)		(1,813)
Total AES Corporation stockholders’ equity	3,290		2,488
NONCONTROLLING INTERESTS	4,349		3,497
Total equity	7,639		5,985
TOTAL LIABILITIES AND EQUITY	$	50,079	$	44,799

See Notes to Condensed Consolidated Financial Statements.

4 | The AES Corporation

Condensed Consolidated Statements of Operations

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023

	(in millions, except share and per share amounts)
Revenue:
Non-Regulated	$	2,352	$	2,571	$	6,654	$	7,051
Regulated	937		863		2,662		2,649
Total revenue	3,289		3,434		9,316		9,700
Cost of Sales:
Non-Regulated	(1,794)		(1,813)		(5,198)		(5,392)
Regulated	(773)		(703)		(2,224)		(2,298)
Total cost of sales	(2,567)		(2,516)		(7,422)		(7,690)
Operating margin	722		918		1,894		2,010
General and administrative expenses	(57)		(64)		(198)		(191)
Interest expense	(379)		(326)		(1,125)		(966)
Interest income	119		144		312		398
Loss on extinguishment of debt	(1)		—		(11)		(1)
Other expense	(31)		(12)		(153)		(38)
Other income	64		12		120		36
Gain (loss) on disposal and sale of business interests	(1)		—		43		(4)

Asset impairment expense	(79)		(158)		(355)		(352)
Foreign currency transaction gains (losses)	(28)		(100)		2		(209)

INCOME FROM CONTINUING OPERATIONS BEFORE TAXES AND EQUITY IN EARNINGS OF AFFILIATES	329		414		529		683
Income tax expense	(103)		(109)		(52)		(179)
Net equity in losses of affiliates	(9)		(14)		(21)		(43)
INCOME FROM CONTINUING OPERATIONS	217		291		456		461

Loss from disposal of discontinued businesses	(7)		—		(7)		—
NET INCOME	210		291		449		461



Less: Net loss (income) attributable to noncontrolling interests and redeemable stock of subsidiaries	292		(60)		670		(118)
NET INCOME ATTRIBUTABLE TO THE AES CORPORATION	$	502	$	231	$	1,119	$	343
AMOUNTS ATTRIBUTABLE TO THE AES CORPORATION COMMON STOCKHOLDERS:
Income from continuing operations, net of tax	$	509	$	231	$	1,126	$	343
Loss from discontinued operations, net of tax	(7)		—		(7)		—
NET INCOME ATTRIBUTABLE TO THE AES CORPORATION	$	502	$	231	$	1,119	$	343
BASIC EARNINGS PER SHARE:
Income from continuing operations attributable to The AES Corporation common stockholders, net of tax	$	0.72	$	0.34	$	1.60	$	0.51
Loss from discontinued operations attributable to The AES Corporation common stockholders, net of tax	(0.01)		—		(0.01)		—
NET INCOME ATTRIBUTABLE TO THE AES CORPORATION COMMON STOCKHOLDERS	$	0.71	$	0.34	$	1.59	$	0.51
DILUTED EARNINGS PER SHARE:
Income from continuing operations attributable to The AES Corporation common stockholders, net of tax	$	0.72	$	0.32	$	1.58	$	0.48
Loss from discontinued operations attributable to The AES Corporation common stockholders, net of tax	(0.01)		—		(0.01)		—
NET INCOME ATTRIBUTABLE TO THE AES CORPORATION COMMON STOCKHOLDERS	$	0.71	$	0.32	$	1.57	$	0.48
DILUTED SHARES OUTSTANDING	713		712		713		712

See Notes to Condensed Consolidated Financial Statements.

5 | The AES Corporation

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023

	(in millions)
NET INCOME	$	210	$	291	$	449	$	461
Foreign currency translation activity:
Foreign currency translation adjustments, net of income tax benefit of $9, $0, $9, and $0, respectively	36		(44)		(128)		75

Total foreign currency translation adjustments	36		(44)		(128)		75
Derivative activity:
Change in fair value of derivatives, net of income tax benefit (expense) of $65, $(73), $(1), and $(78), respectively	(262)		274		30		276
Reclassification to earnings, net of income tax benefit (expense) of $0, $0, $(7), and $11, respectively	(3)		(1)		18		(49)
Total change in fair value of derivatives	(265)		273		48		227
Pension activity:

Change in pension adjustments due to net actuarial gain for the period, net of $0 income tax for all periods	—		—		1		1

Total pension adjustments	—		—		1		1
Fair value option liabilities activity:
Change in fair value option liabilities due to instrument-specific credit risk, net of $0 income tax for all periods	—		—		3		—

Total change in fair value option liabilities	—		—		3		—
OTHER COMPREHENSIVE INCOME (LOSS)	(229)		229		(76)		303
COMPREHENSIVE INCOME (LOSS)	(19)		520		373		764
Less: Comprehensive loss (income) attributable to noncontrolling interests and redeemable stock of subsidiaries	335		(109)		665		(168)
COMPREHENSIVE INCOME ATTRIBUTABLE TO THE AES CORPORATION	$	316	$	411	$	1,038	$	596

See Notes to Condensed Consolidated Financial Statements.

6 | The AES Corporation

Condensed Consolidated Statements of Changes in Equity

(Unaudited)


	Nine Months Ended September 30, 2024
	Preferred Stock			Common Stock			Treasury Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Noncontrolling Interests (1)
	Shares	Amount		Shares	Amount		Shares	Amount
	(in millions)
Balance at January 1, 2024	1.0	$	838	819.1	$	8	149.4	$	(1,813)	$	6,355	$	(1,386)	$	(1,514)	$	3,497
Net income (loss)	—	—		—	—		—	—		—		432		—		(65)
Total foreign currency translation adjustments, net of income tax	—	—		—	—		—	—		—		—		(38)		(4)
Total change in fair value of derivatives, net of income tax	—	—		—	—		—	—		—		—		135		27

Total change in fair value option liabilities, net of income tax	—	—		—	—		—	—		—		—		3		—
Total other comprehensive income	—	—		—	—		—	—		—		—		100		23

Adjustments to redemption value of redeemable stock of subsidiaries (2)	—	—		—	—		—	—		(6)		—		—		—

Disposition of business interests	—	—		—	—		—	—		—		—		—		(111)
Distributions to noncontrolling interests	—	—		—	—		—	—		—		—		—		(13)

Contributions from noncontrolling interests	—	—		—	—		—	—		—		—		—		1
Sales to noncontrolling interests	—	—		—	—		—	—		1		—		—		48


Conversion of Corporate Units to shares of common stock	(1.0)	(838)		40.5	1		—	—		838		—		—		—
Dividends declared on common stock ($0.1725/share)	—	—		—	—		—	—		(116)		—		—		—
Purchase of treasury stock	—	—		—	—		0.1	(3)		3		—		—		—
Issuance and exercise of stock-based compensation benefit plans, net of income tax	—	—		—	—		(0.6)	7		(7)		—		—		—
Balance at March 31, 2024	—	$	—	859.6	$	9	148.9	$	(1,809)	$	7,068	$	(954)	$	(1,414)	$	3,380
Net income (loss)	—	—		—	—		—	—		—		185		—		(214)
Total foreign currency translation adjustments, net of income tax	—	—		—	—		—	—		—		—		(87)		(33)
Total change in fair value of derivatives, net of income tax	—	—		—	—		—	—		—		—		92		(15)
Total pension adjustments, net of income tax	—	—		—	—		—	—		—		—		—		1

Total other comprehensive income	—	—		—	—		—	—		—		—		5		(47)

Adjustments to redemption value of redeemable stock of subsidiaries (2)	—	—		—	—		—	—		6		—		—		—
Reclassification of redeemable stock of subsidiaries (3)	—	—		—	—		—	—		—		—		—		670


Distributions to noncontrolling interests	—	—		—	—		—	—		—		—		—		(94)

Contributions from noncontrolling interests	—	—		—	—		—	—		—		—		—		51
Sales to noncontrolling interests	—	—		—	—		—	—		(9)		—		—		192


Dividends declared on common stock	—	—		—	—		—	—		(7)		—		—		—

Issuance and exercise of stock-based compensation benefit plans, net of income tax	—	—		—	—		(0.1)	2		9		—		—		—
Balance at June 30, 2024	—	$	—	859.6	$	9	148.8	$	(1,807)	$	7,067	$	(769)	$	(1,409)	$	3,938
Net income (loss)	—	—		—	—		—	—		—		502		—		(308)
Total foreign currency translation adjustments, net of income tax	—	—		—	—		—	—		—		—		23		13
Total change in fair value of derivatives, net of income tax	—	—		—	—		—	—		—		—		(209)		(56)


Total other comprehensive income (loss)	—	—		—	—		—	—		—		—		(186)		(43)


Reclassification of redeemable stock of subsidiaries (3)	—	—		—	—		—	—		—		—		—		62


Distributions to noncontrolling interests	—	—		—	—		—	—		—		—		—		(20)
Acquisitions of noncontrolling interests	—	—		—	—		—	—		2		—		—		(2)
Contributions from noncontrolling interests	—	—		—	—		—	—		—		—		—		233
Sales to noncontrolling interests	—	—		—	—		—	—		(7)		—		—		489


Dividends declared on common stock ($0.1725/share)	—	—		—	—		—	—		(123)		—		—		—

Issuance and exercise of stock-based compensation benefit plans, net of income tax	—	—		0.1	—		(0.1)	1		10		—		—		—
Balance at September 30, 2024	—	$	—	859.7	$	9	148.7	$	(1,806)	$	6,949	$	(267)	$	(1,595)	$	4,349

7 | The AES Corporation


	Nine Months Ended September 30, 2023
	Preferred Stock			Common Stock			Treasury Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Noncontrolling Interests (1)
	Shares	Amount		Shares	Amount		Shares	Amount
	(in millions)
Balance at January 1, 2023	1.0	$	838	818.8	$	8	150.0	$	(1,822)	$	6,688	$	(1,635)	$	(1,640)	$	2,067
Net income	—	—		—	—		—	—		—		151		—		52
Total foreign currency translation adjustments, net of income tax	—	—		—	—		—	—		—		—		33		7
Total change in fair value of derivatives, net of income tax	—	—		—	—		—	—		—		—		(135)		1
Total pension adjustments, net of income tax	—	—		—	—		—	—		—		—		—		1

Total other comprehensive income (loss)	—	—		—	—		—	—		—		—		(102)		9




Distributions to noncontrolling interests	—	—		—	—		—	—		—		—		—		(37)
Acquisitions of noncontrolling interests	—	—		—	—		—	—		(1)		—		—		1
Contributions from noncontrolling interests	—	—		—	—		—	—		—		—		—		2
Sales to noncontrolling interests	—	—		—	—		—	—		(7)		—		—		3
Issuance of preferred shares in subsidiaries	—	—		—	—		—	—		—		—		—		4
Dividends declared on common stock ($0.1659/share)	—	—		—	—		—	—		(111)		—		—		—

Issuance and exercise of stock-based compensation benefit plans, net of income tax	—	—		—	—		(0.5)	7		(12)		—		—		—
Balance at March 31, 2023	1.0	$	838	818.8	$	8	149.5	$	(1,815)	$	6,557	$	(1,484)	$	(1,742)	$	2,101
Net income (loss)	—	—		—	—		—	—		—		(39)		—		42
Total foreign currency translation adjustments, net of income tax	—	—		—	—		—	—		—		—		74		4
Total change in fair value of derivatives, net of income tax	—	—		—	—		—	—		—		—		101		—


Total other comprehensive income	—	—		—	—		—	—		—		—		175		4




Distributions to noncontrolling interests	—	—		—	—		—	—		—		—		—		(90)


Sales to noncontrolling interests	—	—		—	—		—	—		(17)		—		—		209




Issuance and exercise of stock-based compensation benefit plans, net of income tax	—	—		—	—		(0.1)	1		10		—		—		—
Balance at June 30, 2023	1.0	$	838	818.8	$	8	149.4	$	(1,814)	$	6,550	$	(1,523)	$	(1,567)	$	2,266
Net income	—	—		—	—		—	—		—		231		—		68
Total foreign currency translation adjustments, net of income tax	—	—		—	—		—	—		—		—		(36)		(7)
Total change in fair value of derivatives, net of income tax	—	—		—	—		—	—		—		—		216		(3)


Total other comprehensive income (loss)	—	—		—	—		—	—		—		—		180		(10)




Distributions to noncontrolling interests	—	—		—	—		—	—		—		—		—		(7)
Acquisitions of noncontrolling interests	—	—		—	—		—	—		25		—		—		(46)

Sales to noncontrolling interests	—	—		—	—		—	—		(21)		—		(23)		206

Dividends declared on AES common stock ($0.1659/share)	—	—		—	—		—	—		(111)		—		—		—

Issuance and exercise of stock-based compensation benefit plans, net of income tax	—	—		0.3	—		—	—		6		—		—		—
Balance at September 30, 2023	1.0	$	838	819.1	$	8	149.4	$	(1,814)	$	6,449	$	(1,292)	$	(1,410)	$	2,477

(1) Excludes redeemable stock of subsidiaries. See Note 11—Redeemable Stock of Subsidiaries.

(2) Adjustment to record the redeemable stock of a tax equity partnership at AES Clean Energy Development at redemption value.

(3) Related to the reclassification of AES Clean Energy Development common stock and the Chevelon Butte Phase II, Kuihelani, and Silver Peak tax equity partnerships from Redeemable stock of subsidiaries to Noncontrolling interests. See Note 11—Redeemable Stock of Subsidiaries.

See Notes to Condensed Consolidated Financial Statements.

8 | The AES Corporation

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended September 30,
	2024		2023

	(in millions)
OPERATING ACTIVITIES:
Net income	$	449	$	461
Adjustments to net income:
Depreciation and amortization	926		836
Emissions allowance expense	144		211
Loss (gain) on realized/unrealized derivatives	(194)		79
Loss (gain) on disposal and sale of business interests	(43)		4

Impairment expense	355		358
Loss on realized/unrealized foreign currency	92		184





Deferred income tax expense (benefit), net of tax credit transfers	423		(102)

Other	81		118
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable	(576)		16
(Increase) decrease in inventory	58		253
(Increase) decrease in prepaid expenses and other current assets	120		76
(Increase) decrease in other assets	177		(4)
Increase (decrease) in accounts payable and other current liabilities	34		(187)
Increase (decrease) in income tax payables, net and other tax payables	(514)		(67)

Increase (decrease) in other liabilities	132		73
Net cash provided by operating activities	1,664		2,309
INVESTING ACTIVITIES:
Capital expenditures	(5,665)		(5,295)
Acquisitions of business interests, net of cash and restricted cash acquired	(79)		(311)
Proceeds from the sale of business interests, net of cash and restricted cash sold	11		98

Sale of short-term investments	731		1,002
Purchase of short-term investments	(725)		(764)
Contributions and loans to equity affiliates	(71)		(147)



Purchase of emissions allowances	(157)		(161)

Other investing	(134)		(95)
Net cash used in investing activities	(6,089)		(5,673)
FINANCING ACTIVITIES:
Borrowings under the revolving credit facilities	5,652		3,939
Repayments under the revolving credit facilities	(4,051)		(2,730)
Commercial paper borrowings (repayments), net	611		604
Issuance of recourse debt	950		1,400

Issuance of non-recourse debt	5,199		1,784
Repayments of non-recourse debt	(3,311)		(1,262)
Payments for financing fees	(88)		(76)
Purchases under supplier financing arrangements	1,211		1,307
Repayments of obligations under supplier financing arrangements	(1,412)		(1,099)
Distributions to noncontrolling interests	(165)		(173)

Contributions from noncontrolling interests	137		63
Sales to noncontrolling interests	869		371


Dividends paid on AES common stock	(361)		(333)
Payments for financed capital expenditures	(29)		(8)


Other financing	(25)		(47)
Net cash provided by financing activities	5,187		3,740
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(47)		(108)
Increase in cash, cash equivalents and restricted cash of held-for-sale businesses	(146)		(20)
Total increase in cash, cash equivalents and restricted cash	569		248
Cash, cash equivalents and restricted cash, beginning	1,990		2,087
Cash, cash equivalents and restricted cash, ending	$	2,559	$	2,335
SUPPLEMENTAL DISCLOSURES:
Cash payments for interest, net of amounts capitalized	$	1,103	$	735
Cash payments for income taxes, net of refunds	270		267
SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:






Conversion of Corporate Units to shares of common stock (see Note 12)	838		—
Liabilities derecognized upon completion of remaining performance obligation for sale of Warrior Run receivables (see Note 14)	273		—
Noncash recognition of new operating and financing leases	240		187
Noncash contributions from noncontrolling interests	213		60
Initial recognition of contingent consideration for acquisitions	14		215

See Notes to Condensed Consolidated Financial Statements.

9 | Notes to Condensed Consolidated Financial Statements | September 30, 2024 and 2023

Notes to Condensed Consolidated Financial Statements

For the Three and Nine Months Ended September 30, 2024 and 2023

(Unaudited)

FINANCIAL STATEMENT PRESENTATION

Consolidation — In this Quarterly Report, the terms “AES,” “the Company,” “us” or “we” refer to the consolidated entity, including its subsidiaries and affiliates. The terms “The AES Corporation” or “the Parent Company” refer only to the publicly held holding company, The AES Corporation, excluding its subsidiaries and affiliates. Furthermore, VIEs in which the Company has a variable interest have been consolidated where the Company is the primary beneficiary. Investments in which the Company has the ability to exercise significant influence, but not control, are accounted for using the equity method of accounting, except for our investment in Alto Maipo, for which we have elected the fair value option as permitted under ASC 825. All intercompany transactions and balances have been eliminated in consolidation.

Interim Financial Presentation — The accompanying unaudited condensed consolidated financial statements and footnotes have been prepared in accordance with GAAP, as contained in the FASB ASC, for interim financial information and Article 10 of Regulation S-X issued by the SEC. Accordingly, they do not include all the information and footnotes required by GAAP for annual fiscal reporting periods. In the opinion of management, the interim financial information includes all adjustments of a normal recurring nature necessary for a fair presentation of the results of operations, financial position, comprehensive income, changes in equity, and cash flows. The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of expected results for the year ending December 31, 2024. The accompanying condensed consolidated financial statements are unaudited and should be read in conjunction with the 2023 audited consolidated financial statements and notes thereto, which are included in the 2023 Form 10-K filed with the SEC on February 26, 2024 (the “2023 Form 10-K”).

Cash, Cash Equivalents, and Restricted Cash — The following table provides a summary of cash, cash equivalents, and restricted cash amounts reported on the Condensed Consolidated Balance Sheets that reconcile to the total of such amounts as shown on the Condensed Consolidated Statements of Cash Flows (in millions):


	September 30, 2024		December 31, 2023
Cash and cash equivalents	$	1,919	$	1,426
Restricted cash	563		370
Debt service reserves and other deposits	77		194
Cash, Cash Equivalents, and Restricted Cash	$	2,559	$	1,990

ASC 450*—Liabilities—*Supplier Finance Programs — With some purchases, AES enters into supplier financing arrangements. The Company generally uses an intermediary entity between the supplier and the Company, but sometimes enters into these agreements directly with the supplier, with the goal of securing improved payment terms. These arrangements are included in Supplier financing arrangements on the Condensed Consolidated Balance Sheets as the amounts are all due in less than a year; the related interest expense is recorded on the Condensed Consolidated Statements of Operations within Interest expense. The Company had supplier financing arrangements with a total outstanding balance of $698 million and $974 million, as of September 30, 2024, and December 31, 2023, respectively. The agreements ranged from less than $1 million to $62 million with a weighted average interest rate of 6.93% as of September 30, 2024; as of December 31, 2023, the agreements ranged from less than $1 million to $69 million with a weighted average interest rate of 7.51%. Of the amounts outstanding under supplier financing arrangements, $447 million and $814 million were guaranteed by the Company as of September 30, 2024 and December 31, 2023, respectively.

Tax Credit Transferability — The U.S Inflation Reduction Act of 2022 (the “IRA”) allows us to directly transfer investment tax credits (“ITCs”) to unrelated tax credit buyers. The Company accounts for tax credits that it will retain or transfer under ASC 740*—Income Taxes*, as tax benefit throughout the year the renewables project is placed in service. During the nine months ended September 30, 2024, the Company executed agreements to transfer ITCs directly to third parties for $351 million, of which $173 million was allocated to AES and recorded as an income tax benefit to AES, and $178 million was allocated to noncontrolling interests and treated as a contribution from noncontrolling interests. The Company received proceeds from these tax credit transfers of $227 million during the nine months ended September 30, 2024, and the remaining $124 million during October 2024. The receipt of cash from the transfer of tax credits is treated as an operating cash flow on the Condensed Consolidated Statements of Cash Flows.

10 | Notes to Condensed Consolidated Financial Statements—(Continued) | September 30, 2024 and 2023

New Accounting Pronouncements Adopted in 2024 — The following table provides a brief description of recent accounting pronouncements that had an impact on the Company’s condensed consolidated financial statements. Accounting pronouncements not listed below were assessed and determined to be either not applicable or did not have a material impact on the Company’s condensed consolidated financial statements.


New Accounting Standards Adopted
ASU Number and Name	Description	Date of Adoption	Effect on the financial statements upon adoption
2022-04, Liabilities - Supplier Finance Programs (Topic 450-50): Disclosure of Supplier Finance Program Obligations	This update is to provide additional information and disclosures about an entity’s use of supplier finance programs to see how these programs will affect an entity’s working capital, liquidity, and cash flows. Entities that use supplier finance programs as the buyer party should disclose (1) the key terms of the payment terms and assets pledged as security or other forms of guarantees provided and (2) the unpaid amount outstanding, a description of where those obligations are presented on the balance sheet, and a rollforward of those obligations during the annual period.	January 1, 2023, except for the rollforward information, which is effective for fiscal years beginning after December 15, 2023.	The ASU only requires disclosures related to the Company's supplier finance programs and does not affect the recognition, measurement, or presentation of supplier finance program obligations on the balance sheet or cash flow statement. The Company adopted the new disclosure requirements in the first quarter of 2023, except for the annual requirement to disclose rollforward information, which the Company expects to adopt and present prospectively beginning in the 2024 annual financial statements.

New Accounting Pronouncements Issued But Not Yet Effective — The following table provides a brief description of recent accounting pronouncements that could have a material impact on the Company’s condensed consolidated financial statements once adopted. Accounting pronouncements not listed below were assessed and determined to be either not applicable or are expected to have no material impact on the Company’s condensed consolidated financial statements.

11 | Notes to Condensed Consolidated Financial Statements—(Continued) | September 30, 2024 and 2023



New Accounting Standards Issued But Not Yet Effective
ASU Number and Name	Description	Date of Adoption	Effect on the financial statements upon adoption


2023-07 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures	The amendments in this section are designed to improve the disclosures related to segment reporting on an interim and annual basis. Public companies must disclose significant segment expenses and an amount for other segment items. This will also require that a company disclose its annual disclosures under Topic 280 in each interim period. Furthermore, companies will need to disclose the Chief Operating Decision Maker (“CODM”) and how the CODM assesses the performance of a segment. Lastly, public companies that have a single reportable segment must report the required disclosures under Topic 280.	The amendments in this Update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted.	This ASU only affects disclosures, which will be provided when the amendment becomes effective.
2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures	The amendments in this Update require that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold. Furthermore, companies are required to disclose a disaggregated amount of income taxes paid at a federal, state, and foreign level as well as a breakdown of income taxes paid in an jurisdiction that comprises 5% of a company's total income taxes paid. Lastly, this ASU requires that companies disclose income (loss) from continuing operations before income tax at a domestic and foreign level and that companies disclose income tax expense from continuing operations on a federal, state, and foreign level.	The amendments in this Update are effective for fiscal years beginning after December 15, 2024	This ASU only affects disclosures, which will be provided when the amendment becomes effective.

INVENTORY

The following table summarizes the Company’s inventory balances as of the dates indicated (in millions):


	September 30, 2024		December 31, 2023
Fuel and other raw materials	$	320	$	424
Spare parts and supplies	326		288
Total	$	646	$	712

FAIR VALUE

The fair value of current financial assets and liabilities, debt service reserves, and other deposits approximate their reported carrying amounts. The estimated fair values of the Company’s assets and liabilities have been determined using available market information. Because these amounts are estimates and based on hypothetical transactions to sell assets or transfer liabilities, the use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. For further information on our valuation techniques and policies, see Note 5—Fair Value in Item 8.—Financial Statements and Supplementary Data of our 2023 Form 10-K.

Recurring Measurements

The following table presents, by level within the fair value hierarchy, the Company’s financial assets and liabilities that were measured at fair value on a recurring basis as of the dates indicated (in millions). For the Company’s investments in marketable debt securities, the security classes presented were determined based on the nature and risk of the security and are consistent with how the Company manages, monitors, and measures its marketable securities:

12 | Notes to Condensed Consolidated Financial Statements—(Continued) | September 30, 2024 and 2023


	September 30, 2024								December 31, 2023
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets
DEBT SECURITIES:
Available-for-sale:

Certificates of deposit (1)	$	—	$	295	$	—	$	295	$	—	$	360	$	—	$	360
Government debt securities	—		3		—		3		—		—		—		—
Total debt securities	—		298		—		298		—		360		—		360
EQUITY SECURITIES:
Mutual funds	52		—		—		52		46		—		—		46
Common stock	4		—		—		4		—		—		—		—

Total equity securities	56		—		—		56		46		—		—		46
DERIVATIVES:
Interest rate derivatives	—		131		—		131		—		182		2		184
Cross-currency derivatives	—		10		—		10		—		—		—		—
Foreign currency derivatives	—		34		56		90		—		15		59		74
Commodity derivatives	—		525		3		528		—		127		1		128
Total derivatives — assets (2)	—		700		59		759		—		324		62		386
TOTAL ASSETS	$	56	$	998	$	59	$	1,113	$	46	$	684	$	62	$	792
Liabilities
Contingent consideration	$	—	$	—	$	163	$	163	$	—	$	—	$	165	$	165
DERIVATIVES:
Interest rate derivatives	—		164		4		168		—		102		6		108
Cross-currency derivatives	—		11		—		11		—		63		—		63
Foreign currency derivatives	—		17		—		17		—		19		—		19
Commodity derivatives	—		399		76		475		—		145		111		256
Total derivatives — liabilities (2)	—		591		80		671		—		329		117		446
TOTAL LIABILITIES	$	—	$	591	$	243	$	834	$	—	$	329	$	282	$	611

(1)Includes $292 million reported in Current held-for-sale assets on the Condensed Consolidated Balance Sheets related to AES Brasil as of September 30, 2024.

(2)Includes $234 million of derivative assets reported in Current held-for-sale assets and $236 million of derivative liabilities reported in Current held-for-sale liabilities on the Condensed Consolidated Balance Sheets related to AES Brasil as of September 30, 2024.

As of September 30, 2024, all available-for-sale debt securities had stated maturities within one year. There were no other-than-temporary impairments of marketable securities during the three and nine months ended September 30, 2024. The level 3 contingent consideration relates mainly to the acquisition of Bellefield in June 2023. Credit-related impairments are recognized in earnings under ASC 326. Gains and losses on the sale of investments are determined using the specific-identification method. The following table presents gross proceeds from the sale of available-for-sale securities during the periods indicated (in millions):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Gross proceeds from sale of available-for-sale securities	$	189	$	308	$	683	$	1,047

The following tables present a reconciliation of assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and nine months ended September 30, 2024 and 2023 (derivative balances are presented net), in millions. Transfers between Level 3 and Level 2 principally result from changes in the significance of unobservable inputs used to calculate the credit valuation adjustment.

13 | Notes to Condensed Consolidated Financial Statements—(Continued) | September 30, 2024 and 2023


	Derivative Assets and Liabilities
Three Months Ended September 30, 2024	Interest Rate		Foreign Currency		Commodity		Contingent Consideration		Total
Balance at July 1, 2024	$	(2)	$	60	$	(71)	$	(162)	$	(175)
Total realized and unrealized gains (losses):
Included in earnings	—		5		—		(8)		(3)
Included in other comprehensive income (loss) — derivative activity	(2)		1		(1)		—		(2)



Settlements	—		(10)		(1)		7		(4)


Balance at September 30, 2024	$	(4)	$	56	$	(73)	$	(163)	$	(184)
Total losses for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities held at the end of the period	$	—	$	(3)	$	—	$	—	$	(3)

	Derivative Assets and Liabilities
Three Months Ended September 30, 2023	Interest Rate		Foreign Currency		Commodity		Contingent Consideration		Total
Balance at July 1, 2023	$	(1)	$	63	$	(78)	$	(274)	$	(290)
Total realized and unrealized gains (losses):
Included in earnings	—		(6)		(3)		(1)		(10)
Included in other comprehensive income (loss) — derivative activity	5		(2)		7		—		10


Acquisitions	—		—		—		3		3
Settlements	—		(9)		(2)		5		(6)

Transfers of assets, net out of Level 3	(4)		—		—		—		(4)
Balance at September 30, 2023	$	—	$	46	$	(76)	$	(267)	$	(297)
Total losses for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities held at the end of the period	$	—	$	(13)	$	(3)	$	(1)	$	(17)


	Derivative Assets and Liabilities
Nine Months Ended September 30, 2024	Interest Rate		Foreign Currency		Commodity		Contingent Consideration		Total
Balance at January 1, 2024	$	(4)	$	59	$	(110)	$	(165)	$	(220)
Total realized and unrealized gains (losses):
Included in earnings	—		19		4		(3)		20
Included in other comprehensive income (loss) — derivative activity	—		6		31		—		37

Included in regulatory (assets) liabilities	—		—		5		—		5
Acquisitions	—		—		—		(14)		(14)
Settlements	—		(28)		(3)		19		(12)


Balance at September 30, 2024	$	(4)	$	56	$	(73)	$	(163)	$	(184)
Total gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities held at the end of the period	$	—	$	(3)	$	6	$	—	$	3

	Derivative Assets and Liabilities
Nine Months Ended September 30, 2023	Interest Rate		Foreign Currency		Commodity		Contingent Consideration		Total
Balance at January 1, 2023	$	—	$	64	$	(47)	$	(48)	$	(31)
Total realized and unrealized gains (losses):
Included in earnings	—		—		(3)		(9)		(12)
Included in other comprehensive income (loss) — derivative activity	2		—		(20)		—		(18)

Included in regulatory (assets) liabilities	—		—		(2)		—		(2)
Acquisitions	—		—		—		(215)		(215)
Settlements	—		(18)		(5)		5		(18)

Transfers of (assets) liabilities, net out of Level 3	(2)		—		1		—		(1)
Balance at September 30, 2023	$	—	$	46	$	(76)	$	(267)	$	(297)
Total losses for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities held at the end of the period	$	—	$	(14)	$	(4)	$	(9)	$	(27)

14 | Notes to Condensed Consolidated Financial Statements—(Continued) | September 30, 2024 and 2023

The following table summarizes the significant unobservable inputs used for Level 3 derivative assets (liabilities) as of September 30, 2024 (in millions, except range amounts):


Type of Derivative	Fair Value		Unobservable Input	Amount or Range (Average)
Interest rate	$	(4)	Subsidiary credit spread	0.8% to 3.2% (2.3%)

Foreign currency:
Argentine peso	56		Argentine peso to U.S. dollar currency exchange rate after one year	1,254 to 1,456 (1,351)

Commodity:
CAISO energy swap	(75)		Forward energy prices per MWh after 2030	$11.85 to $132.09 ($65.40)
Other	2
Total	$	(21)

For the Argentine peso foreign currency derivatives, increases in the estimate of the above exchange rate would increase the value of the derivative. For the CAISO energy swap, increases in the estimate above would decrease the value of the derivative.

Contingent consideration is primarily related to future milestone payments associated with acquisitions of renewables development projects. The estimated fair value of contingent consideration is determined using probability-weighted discounted cash flows based on internal forecasts, which are considered Level 3 inputs. Changes in Level 3 inputs, particularly changes in the probability of achieving development milestones, could result in material changes to the fair value of the contingent consideration and could materially impact the amount of expense or income recorded each reporting period. Contingent consideration is updated quarterly with any prospective changes in fair value recorded through earnings.

Nonrecurring Measurements

The Company measures fair value using the applicable fair value measurement guidance. Impairment expense, shown as pre-tax loss below, is measured by comparing the fair value at the evaluation date to the then-latest available carrying amount and is included in Asset impairment expense on the Condensed Consolidated Statements of Operations. The following table summarizes our major categories of asset groups measured at fair value on a nonrecurring basis and their level within the fair value hierarchy (in millions):


	Measurement Date		Carrying Amount (1)			Fair Value								Pre-tax Loss
Nine Months Ended September 30, 2024		Level 1			Level 2			Level 3





Held-for-sale businesses: (2)
Mong Duong	3/31/2024		$	450		$	—		$	413		$	—	$	37
AES Brasil (3)	5/15/2024		1,556			—			1,352			—		217
Mong Duong (5)	6/30/2024		390			—			389			—		6
AES Brasil (4)	9/30/2024		1,351			—			1,313			—		60
Mong Duong (5)	9/30/2024		407			—			400			—		11

	Measurement Date		Carrying Amount (1)			Fair Value
Nine Months Ended September 30, 2023		Level 1			Level 2			Level 3			Pre-tax Loss
Long-lived asset groups held and used:
Norgener (6)	5/1/2023		$	196		$	—		$	—		$	24	$	137
GAF Projects (AES Renewable Holdings)	5/31/2023		29			—			—			11		18
TEG	7/31/2023		170			—			—			93		77
TEP	7/31/2023		153			—			—			94		59
Held-for-sale businesses: (2)
Jordan (7)	3/31/2023		$	179		$	—		$	170		$	—	$	14
Jordan (7)	6/30/2023		179			—			170			—		15
Jordan (7)	9/30/2023		178			—			170			—		14

(1)Represents the carrying values of the asset groups at the dates of measurement, before fair value adjustment.

(2)See Note 18—Held-for-Sale and Dispositions for further information.

(3)The pre-tax loss recognized was calculated using the fair value of the AES Brasil disposal group less costs to sell of $13 million. For purposes of the impairment analysis, the Company used the carrying value of the disposal group as of April 30, 2024. A subsequent impairment analysis was performed as of June 30, 2024 and no additional impairment was identified.

(4)The pre-tax loss recognized was calculated using the fair value of the AES Brasil disposal group less costs to sell of $22 million.

(5)The pre-tax loss recognized was calculated using the fair value of the Mong Duong disposal group less costs to sell of $5 million for both the June 30, 2024 and September 30, 2024 measurement dates.

(6)The Norgener asset group includes long-lived assets, inventory, land, and other working capital, however per ASC 360-10, the pre-tax impairment expense is limited to the carrying amount of the long-lived assets. See Note 16—Asset Impairment Expense for further information. The Company evaluated the carrying amount of the assets outside the scope of ASC 360-10 and determined that the carrying value of the other assets should not be reduced.

15 | Notes to Condensed Consolidated Financial Statements—(Continued) | September 30, 2024 and 2023

(7)The pre-tax loss recognized was calculated using the fair value of the Jordan disposal group less costs to sell of $5 million, $6 million, and $6 million for the March 31, 2023, June 30, 2023, and September 30, 2023 measurement dates, respectively.

The following table summarizes the significant unobservable inputs used in the Level 3 measurement of long-lived assets held and used measured on a nonrecurring basis during the nine months ended September 30, 2023 (in millions, except range amounts):















Nine Months Ended September 30, 2023	Fair Value		Valuation Technique	Unobservable Input	Range (Weighted Average)
Long-lived asset groups held and used:
TEP	$	94	Discounted cash flow	Annual revenue growth	(31)% to 6% (-2%)
				Annual variable margin	22% to 37% (26%)
				Discount rate	14% to 25% (14%)
TEG	93		Discounted cash flow	Annual revenue growth	(7)% to 9% (0%)
				Annual variable margin	14% to 33% (20%)
				Discount rate	14% to 25% (14%)
Norgener (1)	24		Discounted cash flow	Annual revenue growth	(90)% to 994% (85%)
				Annual variable margin	(75)% to 276% (16%)

GAF Projects (AES Renewable Holdings)	11		Discounted cash flow	Annual revenue growth	(42)% to 44% (1%)

				Discount rate	9%
Total	$	222

(1)The fair value of the Norgener asset group is mainly related to existing coal inventory not subject to impairment under ASC 360-10.

Financial Instruments Not Measured at Fair Value in the Condensed Consolidated Balance Sheets

The following table presents (in millions) the carrying amount, fair value, and fair value hierarchy of the Company’s financial assets and liabilities that are not measured at fair value in the Condensed Consolidated Balance Sheets as of the periods indicated, but for which fair value is disclosed:


		September 30, 2024
		Carrying Amount		Fair Value
		Total		Level 1		Level 2		Level 3
Assets:	Accounts receivable — noncurrent (1)	$	97	$	166	$	—	$	—	$	166
Liabilities:	Non-recourse debt	22,483		23,150		—		20,919		2,231
	Recourse debt	6,549		6,459		—		6,459		—


		December 31, 2023
		Carrying Amount		Fair Value
		Total		Level 1		Level 2		Level 3
Assets:	Accounts receivable — noncurrent (1)	$	193	$	239	$	—	$	—	$	239
Liabilities:	Non-recourse debt	22,144		22,174		—		20,676		1,498
	Recourse debt	4,464		4,210		—		4,210		—

(1)These amounts primarily relate to the sale of the Redondo Beach land, the amounts impacted by the Stabilization Funds enacted by the Chilean government, and for December 31, 2023 only, the receivables under the Warrior Run PPA termination agreement. These are included in Other noncurrent assets in the accompanying Condensed Consolidated Balance Sheets. See Note 5—Financing Receivables for further information.

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

For further information on the Company’s derivative and hedge accounting policies, see Note 1—General and Summary of Significant Accounting Policies—Derivatives and Hedging Activities of Item 8.—Financial Statements and Supplementary Data in the 2023 Form 10-K.

16 | Notes to Condensed Consolidated Financial Statements—(Continued) | September 30, 2024 and 2023

Volume of Activity — The following tables present the Company’s maximum notional (in millions) over the remaining contractual period by type of derivative as of September 30, 2024, and the dates through which the maturities for each type of derivative range:


Interest Rate and Foreign Currency Derivatives	Maximum Notional Translated to USD		Latest Maturity
Interest rate	$	10,010	2059
Cross-currency swaps (Brazilian real)	404		2026
Foreign currency:
Brazilian real	392		2026
Chilean peso	165		2027
Mexican peso	112		2025
Euro	95		2026
Colombian peso	41		2026


Commodity Derivatives	Maximum Notional	Latest Maturity
Natural Gas (in MMBtu)	213	2029
Power (in MWhs)	51	2040
Coal (in Metric Tons)	11	2027

Accounting and Reporting — Assets and Liabilities — The following tables present the fair value of the Company’s derivative assets and liabilities as of the dates indicated (in millions):


Fair Value	September 30, 2024						December 31, 2023
Assets	Designated		Not Designated		Total		Designated		Not Designated		Total
Interest rate derivatives	$	131	$	—	$	131	$	184	$	—	$	184
Cross-currency derivatives	10		—		10		—		—		—
Foreign currency derivatives	21		69		90		23		51		74
Commodity derivatives	1		527		528		—		128		128
Total assets (1)	$	163	$	596	$	759	$	207	$	179	$	386
Liabilities
Interest rate derivatives	$	168	$	—	$	168	$	108	$	—	$	108
Cross-currency derivatives	11		—		11		63		—		63
Foreign currency derivatives	9		8		17		5		14		19
Commodity derivatives	78		397		475		107		149		256
Total liabilities (1)	$	266	$	405	$	671	$	283	$	163	$	446


	September 30, 2024				December 31, 2023
Fair Value	Assets		Liabilities		Assets		Liabilities
Current	$	531	$	363	$	216	$	152
Noncurrent	228		308		170		294
Total (1)	$	759	$	671	$	386	$	446

(1)Includes $234 million of derivative assets reported in Current held-for-sale assets and $236 million of derivative liabilities reported in Current held-for-sale liabilities on the Condensed Consolidated Balance Sheets related to AES Brasil as of September 30, 2024.

17 | Notes to Condensed Consolidated Financial Statements—(Continued) | September 30, 2024 and 2023

Earnings and Other Comprehensive Income (Loss) — The following table presents the pre-tax gains (losses) recognized in AOCL and earnings on the Company’s derivative instruments for the periods indicated (in millions):


	Three Months Ended September 30,						Nine Months Ended September 30,
2024			2023			2024			2023
Cash flow hedges
Gains (losses) recognized in AOCL
Interest rate derivatives	$	(337)		$	358		$	3		$	380

Foreign currency derivatives	10			(18)			—			(6)
Commodity derivatives	1			7			29			(20)
Total	$	(326)		$	347		$	32		$	354
Gains (losses) reclassified from AOCL into earnings
Interest rate derivatives	$	2		$	(2)		$	(28)		$	47

Foreign currency derivatives	1			(1)			3			(4)
Commodity derivatives	—			4			—			17
Total	$	3		$	1		$	(25)		$	60
Gains (losses) on fair value hedging relationship

Cross-currency derivatives	$	4		$	29		$	(2)		$	(57)
Hedged items	4			1			(1)			54
Total	$	8		$	30		$	(3)		$	(3)


Gains reclassified from AOCL to earnings due to change in forecast	$	—		$	—		$	11		$	14
Gains (losses) recognized in earnings

Not designated as hedging instruments:
Interest rate derivatives	$	—		$	—		$	1		$	—
Foreign currency derivatives	(12)			3			46			3
Commodity derivatives and other	65			74			158			265
Total	$	53		$	77		$	205		$	268

Reclassifications from AOCL to earnings are forecasted to decrease pre-tax income from continuing operations for the twelve months ended September 30, 2025 by $22 million.

FINANCING RECEIVABLES

Receivables with contractual maturities of greater than one year are considered financing receivables. The following table presents long-term financing receivables, excluding lease receivables, by country as of the dates indicated (in millions):


	September 30, 2024						December 31, 2023
	Gross Receivable		Allowance		Net Receivable		Gross Receivable		Allowance		Net Receivable
U.S.	$	47	$	—	$	47	$	149	$	—	$	149
Chile	41		—		41		33		—		33



Other	9		—		9		11		—		11
Total (1)	$	97	$	—	$	97	$	193	$	—	$	193

(1)Mong Duong loan receivable, which was classified in held-for-sale assets on the Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023, is excluded from the table above. See Note 14—Revenue for further information.

U.S. — AES has recorded non-current receivables pertaining to the sale of the Redondo Beach land. The anticipated collection period extends beyond September 30, 2025. As of December 31, 2023, a significant financing receivable existed for the Warrior Run PPA termination agreement where $108 million was recorded in Other non-current assets on the Consolidated Balance Sheets. On February 1, 2024, the Company executed an agreement to sell all remaining future cash flows under the termination agreement. At the time of execution, the transaction was considered a sale of future revenue under U.S. GAAP. Upon completion of the remaining performance obligation in May 2024, the corresponding receivable balance of $267 million, net of valuation allowance of $7 million, was derecognized*.* See Note 14—Revenue for further details regarding the Warrior Run PPA termination agreement.

Chile — AES Andes has recorded receivables pertaining to revenues recognized on regulated energy contracts that were impacted by the Stabilization Funds created by the Chilean government in October 2019, August 2022, and April 2024, in conjunction with the Tariff Stabilization Laws. Historically, the government updated the prices for these contracts every six months to reflect the contracts' indexation to exchange rates and commodities prices. The Tariff Stabilization Laws do not allow the pass-through of these contractual indexation updates to customers beyond the pricing in effect at July 1, 2019, until new lower-cost renewables contracts are incorporated to supply regulated contracts. Consequently, costs incurred in excess of the July 1, 2019 price are

18 | Notes to Condensed Consolidated Financial Statements—(Continued) | September 30, 2024 and 2023

accumulated and borne by generators. As of September 30, 2024, AES Andes aims to reduce its exposure through the sale of receivables.

On August 14, 2023, AES Andes executed an agreement to sell up to $227 million of receivables pursuant to the Stabilization Funds, of which $151 million was sold and collected as of September 30, 2024. Through different agreements and programs, as of September 30, 2024, $7 million of current receivables and $5 million of noncurrent receivables were recorded in Accounts receivable and Other noncurrent assets, respectively. Additionally, $36 million of payment deferrals granted to mining customers as part of our green blend agreements were recorded as financing receivables included in Other noncurrent assets at September 30, 2024.

In October 2024, AES Andes sold and collected $217 million of receivables pursuant to the Stabilization Funds. As of September 30, 2024, these receivables were recorded in Accounts receivable on the Condensed Consolidated Balance Sheet.

ALLOWANCE FOR CREDIT LOSSES

The following table represents the rollforward of the allowance for credit losses for the periods indicated (in millions):


Nine Months Ended September 30, 2024	Accounts Receivable		Mong Duong Loan Receivable (1)		Argentina Receivables		Other (2)		Total
CECL reserve balance at beginning of period	$	15	$	26	$	7	$	16	$	64
Current period provision	22		—		—		5		27
Write-offs charged against allowance	(5)		—		—		(8)		(13)
Recoveries collected	1		(2)		—		—		(1)
Foreign exchange	(1)		—		(1)		(1)		(3)
CECL reserve balance at end of period	$	32	$	24	$	6	$	12	$	74


Nine Months Ended September 30, 2023	Accounts Receivable		Mong Duong Loan Receivable		Argentina Receivables		Lease Receivable (3)		Other		Total












CECL reserve balance at beginning of period	$	4	$	28	$	31	$	20	$	1	$	84
Current period provision	14		—		—		—		11		25
Write-offs charged against allowance	(12)		—		—		(20)		—		(32)
Recoveries collected	2		(2)		—		—		—		—
Foreign exchange	—		—		(15)		—		—		(15)
CECL reserve balance at end of period	$	8	$	26	$	16	$	—	$	12	$	62

(1)Mong Duong loan receivable credit losses allowance was classified in held-for-sale assets on the Condensed Consolidated Balance Sheet as of September 30, 2024.

(2)Primarily relates to credit losses allowance at AES Brasil which was classified in held-for-sale assets on the Condensed Consolidated Balance Sheet as of September 30, 2024.

(3)Lease receivable credit losses allowance at Southland Energy (AES Gilbert).

INVESTMENTS IN AND ADVANCES TO AFFILIATES

Summarized Financial Information — The following table summarizes financial information of the Company’s 50%-or-less-owned affiliates that are accounted for using the equity method (in millions):


	50%-or-less Owned Affiliates				Majority-Owned Unconsolidated Subsidiaries
Nine Months Ended September 30,	2024		2023		2024		2023
Revenue	$	2,067	$	2,089	$	1	$	1
Operating income (loss)	48		(21)		(1)		(1)
Net loss	(143)		(129)		(1)		(1)
Net loss attributable to affiliates	(64)		(111)		(1)		(1)

19 | Notes to Condensed Consolidated Financial Statements—(Continued) | September 30, 2024 and 2023

Jordan — In March 2024, the Company completed the sale of approximately 26% ownership interest in Amman East and IPP4 for a sale price of $58 million. After adjusting for dividends received since the execution of the sale and purchase agreement, the Company received a net cash payment of $45 million. After completion of the sale, the Company retained 10% ownership interest in each of the businesses, which are accounted for as equity method investments. See Note 18—Held-for-Sale and Dispositions for further information. Amman East and IPP4 are reported in the Energy Infrastructure SBU reportable segment.

Uplight — In February 2024, Uplight acquired AutoGrid, a market leader in the Virtual Power Plant space, from Schneider Electric. As part of the transaction, Schneider contributed an additional $40 million to Uplight, and Uplight issued approximately 91 million additional common units to Schneider as consideration for the acquisition. No incremental investment was required from AES or any other investor. As a result, AES' 29.41% ownership interest in Uplight was diluted to 24.65%. The transaction was accounted for as a partial disposition in which AES recognized a gain of $52 million in Gain (loss) on disposal and sale of business interests. As the Company still does not control but has significant influence over Uplight after the transaction, it continues to be accounted for as an equity method investment and is reported in the New Energy Technologies SBU reportable segment.

Grupo Energía Gas Panamá — In September 2023, AES Latin America completed the sale of its interest in Grupo Energía Gas Panamá, a joint venture formed for the Gatun combined cycle natural gas development project, to AES Panama, a 49%-owned consolidated subsidiary. As a result of the transaction, the Company’s effective ownership in Grupo Energía Gas Panamá decreased from 49% to approximately 24%. As the Company still does not control the investment after this transaction, it continues to be accounted for as an equity method investment and is reported in the Energy Infrastructure SBU reportable segment.

sPower — In December 2022, the Company agreed to sell 49% of its indirect interest in a portfolio of sPower's operating assets ("OpCo B"). On February 28, 2023, sPower closed on the sale for $196 million. As a result of the transaction, the Company received $98 million in sales proceeds and recorded a pre-tax gain on sale of $5 million, recorded in Gain (loss) on disposal and sale of business interests. After the sale, the Company's ownership interest in OpCo B decreased from 50% to approximately 26%. As the Company still does not control but has significant influence over sPower after the transaction, it continues to be accounted for as an equity method investment and is reported in the Renewables SBU reportable segment.

Alto Maipo — In May 2022, Alto Maipo emerged from bankruptcy in accordance with Chapter 11 of the U.S. Bankruptcy Code. Alto Maipo, as restructured, is considered a VIE. As the Company lacks the power to make significant decisions, it does not meet the criteria to be considered the primary beneficiary of Alto Maipo and therefore does not consolidate the entity. The Company has elected the fair value option to account for its investment in Alto Maipo as management believes this approach will better reflect the economics of its equity interest. As of September 30, 2024, the fair value is insignificant. Alto Maipo is reported in the Energy Infrastructure SBU reportable segment.

20 | Notes to Condensed Consolidated Financial Statements—(Continued) | September 30, 2024 and 2023

DEBT

Recourse Debt

Term Loan due 2024 — In September 2024, the Company executed an amendment to its term loan agreement, under which it had borrowed $200 million on September 30, 2022. Under such amendment, the maturity date of the term loan agreement was extended from September 30, 2024 to December 31, 2024.

Subordinated Notes due 2055 — In May 2024, the Company issued $950 million aggregate principal of 7.60% fixed-to-fixed reset rate subordinated notes due in 2055. AES intends to allocate the net proceeds from this offering to one or more eligible green projects, which may include the development or redevelopment of such projects. Pending such allocation, AES intends to use the net proceeds from the offering for general corporate purposes.

Senior Notes due 2028 — In May 2023, the Company issued $900 million aggregate principal of 5.45% senior notes due in 2028. The Company used the proceeds from this issuance for general corporate purposes and to fund investments in the Company’s Renewables and Utilities SBUs.

AES Clean Energy Development — In March 2023, AES Clean Energy Development Holdings, LLC executed a $500 million bridge loan due in December 2023 and used the proceeds for general corporate purposes. The obligations under the bridge loan were unsecured and fully guaranteed by the Parent Company. The bridge loan was repaid in December 2023.

Commercial Paper Program — In March 2023, the Company established a commercial paper program under which the Company may issue unsecured commercial paper notes (the “Notes”) up to a maximum aggregate face amount of $750 million outstanding at any time. The maturities of the Notes may vary but will not exceed 397 days from the date of issuance. The proceeds of the Notes will be used for general corporate purposes. The Notes will be sold on customary terms in the U.S. commercial paper market on a private placement basis. The commercial paper program is backed by the Company's $1.5 billion revolving credit facility, and the Company cannot issue commercial paper in an aggregate amount exceeding the then available capacity under its revolving credit facilities. For the nine months ended September 30, 2024, the Company borrowed approximately $43.7 billion and repaid approximately $43.1 billion under the commercial paper program, with average daily outstanding borrowings of $625 million. As of September 30, 2024, the Company had $530 million outstanding drawings under its revolving credit facility, and $611 million outstanding borrowings under the commercial paper program with a weighted average interest rate of 5.42%. The Notes are classified as current.

Non-Recourse Debt

During the nine months ended September 30, 2024, the Company’s following subsidiaries had significant debt issuances (in millions):


Subsidiary	Issuances (1)
AES Clean Energy	$	1,760
AES Indiana (2)	1,350
AES Andes	1,191

(1) These amounts do not include revolving credit facility activity at the Company’s subsidiaries.

(2) Issuances relate to both AES Indiana and its parent company, IPALCO.

21 | Notes to Condensed Consolidated Financial Statements—(Continued) | September 30, 2024 and 2023

AES Clean Energy — In July 2024, AES Clean Energy Development executed a construction loan that includes letters of credit to further support the construction and operation of certain projects. As of September 30, 2024, there were $456 million in borrowings under the agreement at a 6.59% interest rate, maturing in April 2025.

In December 2023, Bellefield Portfolio Seller, LLC and Bellefield 1 Finco, LLC, subsidiaries of AES Clean Energy Development, executed a construction, tax equity bridge, and letter of credit financing agreement for commitments of up to $2.4 billion due in 2026. As of September 30, 2024, there was $1.6 billion in outstanding borrowings under the facilities, and the net proceeds were used primarily to repay existing indebtedness and to fund development of renewables projects.

In December 2022, AES Clean Energy Development, AES Renewable Holdings, and sPower, an equity method investment, collectively referred to as the Issuers, entered into a Master Indenture agreement whereby long-term notes will be issued from time to time to finance or refinance operating wind, solar, and energy storage projects that are owned by the Issuers. On December 13, 2022, the Issuers entered into the Note Purchase Agreement for the issuance of up to $647 million of 6.55% Senior Notes due in 2047. The notes were sold on December 14, 2022, at par for $647 million. The Issuers have executed amendments to the Note Purchase Agreement, which have resulted in an aggregate principal amount of notes issued of $1.4 billion as of September 30, 2024, including $491 million of 6.81% notes issued in 2024. Each of the Issuers is considered a “Co-Issuer” and will be jointly and severally liable with each other Co-Issuer for all obligations under the facility. As a result of the notes issued in 2024, AES Clean Energy Development and AES Renewable Holdings recorded, in aggregate, an increase in liabilities of $300 million, resulting in an aggregate carrying amount of notes of $552 million as of September 30, 2024.

In 2021, AES Clean Energy Development, AES Renewable Holdings, and sPower, collectively referred to as the Borrowers, executed two Credit Agreements with aggregate commitments of $1.2 billion and maturity dates in December 2024 and September 2025. The Borrowers executed amendments to the revolving credit facilities, which resulted in an aggregate increase in the commitments of $2.6 billion, bringing the total commitments under the new agreements to $3.8 billion. Under 2024 amendments, the maturity dates of the Credit Agreements were extended to May 2027 and June 2028. Each of the Borrowers is considered a “Co-Borrower” and will be jointly and severally liable with each other Co-Borrower for all obligations under the facilities. As a result of increases in commitments used, AES Clean Energy Development and AES Renewable Holdings recorded, in aggregate, an increase in liabilities of $1.2 billion in 2024, resulting in total commitments used under the revolving credit facilities, as of September 30, 2024, of $3.5 billion. As of September 30, 2024, the aggregate commitments used under the revolving credit facilities for the Co-Borrowers was $3.7 billion.

AES Andes — In March 2024, AES Andes issued $500 million aggregate principal of 6.30% senior unsecured notes due in 2029. The net proceeds from the issuance were used to purchase via tender offer $100 million and $43 million aggregate principal of its 6.35% and 5.00% notes due in 2079 and 2025, respectively, and repay other existing indebtedness.

In June 2024, AES Andes issued $530 million in Junior Subordinated Notes at 8.15%, due in 2055. The proceeds were used to repay its 7.125% notes due in 2079. As a result of the transaction, the Company recognized a loss on extinguishment of debt of $8 million.

AES Puerto Rico — On June 1, 2023, AES Puerto Rico was unable to pay principal and interest obligations on its Series A Bond Loans due to insufficient funds resulting from financial difficulties at the business. AES Puerto Rico signed forbearance and standstill agreements with its noteholders in July 2023 because of the insufficiency of funds to meet these obligations. On March 5, 2024, AES Puerto Rico and its noteholders executed a financial restructuring, under which the $156 million (including interest) of 6.625% Series A Bond Loans due 2026 was exchanged for $112 million of 6.625% senior secured bonds due January 2028 and $44 million of preferred shares in AES Puerto Rico. The preferred shares bear interest at 3.125% and contains an option whereby AES may call the preferred shares to be converted into 99.9% of the ordinary shares of AES Puerto Rico between December 30, 2025 and December 30, 2027, or would have the option to settle the preferred shares in cash. The noteholders also provided a $23 million bridge loan due March 2026 bearing interest at prime plus 4%. AES Puerto Rico is required to make mandatory prepayments through cash sweeps based on excess cash (as defined in the loan agreements) available from operations on the bridge loan, senior secured bonds, and preferred shares interest. The financial restructuring was accounted for as a troubled debt restructuring in accordance with ASC 470-60, “Troubled Debt Restructurings by Debtors” as AES Puerto Rico was experiencing financial difficulties and the lenders granted a concession. No gain was recognized for the nine months ended September 30, 2024 as a result of this transaction. As of September 30, 2024, cash settlement of the preferred shares is contingent, as the amounts would not be required to be settled in cash if the option to settle the preferred shares with common shares is exercised.

22 | Notes to Condensed Consolidated Financial Statements—(Continued) | September 30, 2024 and 2023

AES Indiana — In March 2024, AES Indiana issued $650 million aggregate principal of 5.70% First Mortgage Bonds due April 2054. The net proceeds from this issuance were used to repay existing indebtedness, including its unsecured $300 million term loan due in November 2024 and amounts outstanding under its $350 million revolving credit agreement maturing in December 2027, and for general corporate purposes.

In March 2024, IPALCO issued $400 million aggregate principal of 5.75% senior secured notes due April 2034. In April 2024, the net proceeds from this issuance, together with cash on hand, were used to redeem the outstanding $405 million of IPALCO’s 3.70% senior secured notes due in September 2024.

Netherlands and Colon — In January 2023, AES Hispanola Holdings BV, a Netherlands-based company, and Colon, as co-borrowers, executed a $350 million credit agreement at 8.85%, due in 2028. The Company allocated $300 million and $50 million of the proceeds from the agreement to AES Hispanola Holdings BV and Colon, respectively. The net proceeds from the agreement were used to repay existing indebtedness. As a result of the transaction, the Company recognized a loss on extinguishment of debt of $1 million.

Non-Recourse Debt Covenants, Restrictions, and Defaults — The terms of the Company's non-recourse debt include certain financial and nonfinancial covenants. These covenants are limited to subsidiary activity and vary among the subsidiaries. These covenants may include, but are not limited to, maintenance of certain reserves and financial ratios, minimum levels of working capital, and limitations on incurring additional indebtedness.

As of September 30, 2024 and December 31, 2023, approximately $441 million and $341 million, respectively, of restricted cash was maintained in accordance with certain covenants of the non-recourse debt agreements. These amounts were included within Restricted cash and Debt service reserves and other deposits in the accompanying Condensed Consolidated Balance Sheets. As of September 30, 2024 and December 31, 2023, approximately $116 million and $90 million, respectively, of the restricted cash balances were for collateral held to cover potential liability for current and future insurance claims being assumed by AGIC, AES' captive insurance company.

Various lender and governmental provisions restrict the ability of certain of the Company's subsidiaries to transfer their net assets to the Parent Company. Such restricted net assets of subsidiaries amounted to approximately $1.1 billion at September 30, 2024.

The following table summarizes the Company’s subsidiary non-recourse debt in default (in millions) as of September 30, 2024. Due to the defaults, these amounts are included in the current portion of non-recourse debt unless otherwise indicated:


Subsidiary	Primary Nature of Default	Debt in Default		Net Assets (Liabilities)
AES Puerto Rico	Payment	$	174	$	(122)
AES Mexico Generation Holdings (TEG and TEP)	Covenant	127		29
AES Ilumina (Puerto Rico)	Covenant	23		30
AES Jordan Solar	Covenant	6		11
Lafayette Solar (AES Clean Energy Development) (1)	Covenant	—		1

Total		$	330

(1) Debt in default at Lafayette Solar (AES Clean Energy Development) is less than $1 million.

AES Puerto Rico is in payment default on its long-term debt and preferred shares due to failure to implement the cash sweep mechanism in accordance with the terms of the loan agreements. AES Puerto Rico is working with the noteholders to resolve this matter. All other subsidiary defaults listed are not payment defaults, but are instead technical defaults triggered by failure to comply with covenants or other requirements contained in the non-recourse debt documents of the applicable subsidiary.

The AES Corporation’s recourse debt agreements include cross-default clauses that will trigger if a subsidiary provides 20% or more of the Parent Company’s total cash distributions from businesses for the four most recently completed fiscal quarters and has an outstanding principal in excess of $200 million in default. As of September 30, 2024, the Company’s subsidiaries had no defaults which resulted in a cross-default under the recourse debt of the Parent Company. In the event the Parent Company is not in compliance with the financial covenants of its revolving credit facility, restricted payments will be limited to regular quarterly shareholder dividends at the then-prevailing rate. Payment defaults and bankruptcy defaults would preclude the making of any restricted payments.

23 | Notes to Condensed Consolidated Financial Statements—(Continued) | September 30, 2024 and 2023

COMMITMENTS AND CONTINGENCIES

Parent Guarantees, Letters of Credit, and Commitments — In connection with certain project financings (including tax equity transactions), acquisitions and dispositions, power purchases, EPC contracts, and other agreements, the Parent Company has expressly undertaken limited obligations and commitments, most of which will only be effective or will be terminated upon the occurrence of future events. In the normal course of business, the Parent Company has entered into various agreements, mainly guarantees and letters of credit, to provide financial or performance assurance to third parties on behalf of AES businesses. These agreements are entered into primarily to support or enhance the creditworthiness otherwise achieved by a business on a stand-alone basis, thereby facilitating the availability of sufficient credit to accomplish their intended business purposes. Most of the contingent obligations relate to future performance commitments which the Company or its businesses expect to fulfill within the normal course of business. The expiration dates of these guarantees vary from less than less than 1 year to no more than 32 years.

The following table summarizes the Parent Company’s contingent contractual obligations as of September 30, 2024. Amounts presented in the following table represent the Parent Company’s current undiscounted exposure to guarantees and the range of maximum undiscounted potential exposure. The maximum exposure is not reduced by the amounts, if any, that could be recovered under the recourse or collateralization provisions in the guarantees.


Contingent Contractual Obligations	Maximum Exposure (in millions)		Number of Agreements	Maximum Exposure Range for Each Agreement (in millions)
Guarantees and commitments	$	4,287	90	<$1 — 970
Letters of credit under bilateral agreements	290		8	$11 — 58
Letters of credit under the unsecured credit facilities	237		32	<$1 — 70
Letters of credit under the revolving credit facility	24		8	<$1 — 6
Surety bonds	2		2	<$1 — 1

Total	$	4,840	140

During the nine months ended September 30, 2024, the Company paid letter of credit fees ranging from 1% to 3% per annum on the outstanding amounts of letters of credit.

Subsidiary Guarantees and Letters of Credit — In connection with certain project financings (including tax equity transactions), acquisitions and dispositions, power purchases, EPC contracts, and other agreements, certain of the Company's subsidiaries have expressly undertaken limited obligations and commitments, most of which will only be effective or will be terminated upon the occurrence of future events, or are customary payment guarantees for amounts due under existing contracts in the normal course of business. These contingent contractual obligations are issued at the subsidiary level and are non-recourse to the Parent Company. As of September 30, 2024, the maximum undiscounted potential exposure to guarantees issued by our subsidiaries was $2.6 billion, including $1.6 billion of customary payment guarantees under EPC contracts and other agreements, and $996 million of tax equity financing related guarantees. In addition, as of September 30, 2024, our subsidiaries had $1.9 billion of letters of credit outstanding.

Contingencies

Environmental — The Company periodically reviews its obligations as they relate to compliance with environmental laws, including site restoration and remediation. For the periods ended September 30, 2024 and December 31, 2023, the Company recognized liabilities of $2 million and $9 million for projected environmental remediation costs, respectively. Due to the uncertainties associated with environmental assessment and remediation activities, future costs of compliance or remediation could be higher or lower than the amount currently accrued. Moreover, where no liability has been recognized, it is reasonably possible that the Company may be required to incur remediation costs or make expenditures in amounts that could be material but could not be estimated as of September 30, 2024. In aggregate, the Company estimates the range of potential losses related to environmental matters, where estimable, to be immaterial. The amounts considered reasonably possible do not include amounts accrued as discussed above.

Litigation — The Company is involved in certain claims, suits and legal proceedings in the normal course of business. The Company accrues for litigation and claims when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. The Company has recognized aggregate liabilities for all claims of approximately $5 million and $17 million as of September 30, 2024 and December 31, 2023, respectively. These amounts are reported on the Condensed Consolidated Balance Sheets within Accrued and other liabilities and Other noncurrent liabilities. A significant portion of these accrued liabilities relate to regulatory matters and

24 | Notes to Condensed Consolidated Financial Statements—(Continued) | September 30, 2024 and 2023

commercial disputes in international jurisdictions. There can be no assurance that these accrued liabilities will be adequate to cover all existing and future claims or that we will have the liquidity to pay such claims as they arise.

Where no accrued liability has been recognized, it is reasonably possible 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 could not be estimated as of September 30, 2024. The material contingencies where a loss is reasonably possible primarily include disputes with offtakers, suppliers and EPC contractors; alleged breaches of contract; alleged violation of laws and regulations; income tax and non-income tax matters with tax authorities; and regulatory matters. In aggregate, the Company estimates the range of potential losses, where estimable, related to these reasonably possible material contingencies to be between $51 million and $80 million. The amounts considered reasonably possible do not include the amounts accrued, as discussed above. These material contingencies do not include income tax-related contingencies which are considered part of our uncertain tax positions.

LEASES

LESSOR — The Company has operating leases for certain generation contracts that contain provisions to provide capacity to a customer, which is a stand-ready obligation to deliver energy when required by the customer. Capacity obligations are generally considered lease elements as they cover the majority of available output from a facility. The allocation of contract payments between the lease and non-lease elements is made at the inception of the lease. Lease receipts from such contracts are recognized as lease revenue on a straight-line basis over the lease term, whereas variable lease receipts are recognized when earned.

The following table presents lease revenue from operating leases in which the Company is the lessor, recognized in Revenue on the Condensed Consolidated Statements of Operations for the periods indicated (in millions):


	Three Months Ended September 30,				Nine Months Ended September 30,
Operating Lease Revenue	2024		2023		2024		2023
Non-variable lease revenue	$	90	$	111	$	327	$	336
Variable lease revenue	19		22		50		54
Total lease revenue	$	109	$	133	$	377	$	390

The following table presents the underlying gross assets and accumulated depreciation of operating leases included in Property, plant and equipment on the Condensed Consolidated Balance Sheets as of the dates indicated (in millions):


Property, Plant and Equipment, Net	September 30, 2024		December 31, 2023
Gross assets	$	1,209	$	1,227
Less: Accumulated depreciation	(216)		(182)
Net assets	$	993	$	1,045

The option to extend or terminate a lease is based on customary early termination provisions in the contract, such as payment defaults, bankruptcy, and lack of performance on energy delivery. The Company has not recognized any early terminations as of September 30, 2024. Certain leases may provide for variable lease payments based on usage or index-based (e.g., the U.S. Consumer Price Index) adjustments to lease payments.

The following table shows the future lease receipts as of September 30, 2024 for the remainder of 2024 through 2028 and thereafter (in millions):


	Future Cash Receipts for
	Sales-Type Leases		Operating Leases
2024	$	11	$	84
2025	40		335
2026	40		221
2027	40		123
2028	40		—
Thereafter	646		1
Total	$	817	$	764
Less: Imputed interest	(361)
Present value of total lease receipts	$	456

25 | Notes to Condensed Consolidated Financial Statements—(Continued) | September 30, 2024 and 2023

Battery Storage Lease Arrangements — The Company constructs and operates projects consisting only of a stand-alone BESS facility, as well as projects that pair a BESS with solar energy systems. These projects allow more flexibility on when to provide energy to the grid. The Company will enter into PPAs for the full output of the facility that allow customers the ability to determine when to charge and discharge the BESS. These arrangements include both lease and non-lease elements under ASC 842, with the BESS component typically constituting a sales-type lease. The Company recognized lease revenue on sales-type leases through interest income of $7 million and $15 million for the three and nine months ended September 30, 2024 and $3 million and $10 million for the three and nine months ended September 30, 2023, respectively.

The Company recorded net losses at commencement of sales-type leases of $67 million for the nine months ended September 30, 2024. No gains or losses were recorded for the three months ended September 30, 2024, or the three and nine months ended September 30, 2023. Gains and losses at commencement of sales-type leases are recognized in Other income and Other expense, respectively, in the Condensed Consolidated Statement of Operations. See Note 15—Other Income and Expense for further information.

REDEEMABLE STOCK OF SUBSIDIARIES

Equity securities with redemption features that are not solely within the control of the issuer are classified as temporary equity and recorded in Redeemable stock of subsidiaries on the Condensed Consolidated Balance Sheets. Generally, these instruments are initially measured at fair value and are subsequently adjusted for income and dividends allocated to the noncontrolling interest. Subsequent measurement may vary depending on whether the instrument is probable of becoming redeemable. For those securities that are currently redeemable or where it is probable that the instrument will become redeemable, any changes from the carrying value to redemption value are recognized in temporary equity against Additional paid-in capital. When the instrument is not probable of becoming redeemable, no adjustment to the carrying value is recognized.

The following table summarizes the Company’s redeemable stock of subsidiaries balances as of the dates indicated (in millions):


	September 30, 2024		December 31, 2023
IPALCO common stock	$	820	$	773
AES Clean Energy tax equity partnerships	68		129
Potengi common and preferred stock	17		18

AES Clean Energy Development common stock	—		544

Total redeemable stock of subsidiaries	$	905	$	1,464

AES Clean Energy Development — As part of the formation of AES Clean Energy Development in February 2021, the noncontrolling interest partner received certain partnership rights that would enable them to exit in the future. As a result, the noncontrolling ownership interest was considered temporary equity. In May 2024, these redemption features expired without being exercised and the noncontrolling ownership interest of $577 million was reclassified from Redeemable stock of subsidiaries to Noncontrolling interests on the Condensed Consolidated Balance Sheets. AES Clean Energy Development is reported in the Renewables SBU reportable segment.

AES Clean Energy Tax Equity Partnerships — The majority of solar projects in the U.S. have been financed with tax equity structures, in which tax equity investors receive a portion of the economic attributes of the facilities, including tax attributes, that vary over the life of the projects. In some cases, these agreements contain certain partnership rights, though not currently in effect, that may enable the tax equity investor to exit in the future. As a result, the noncontrolling ownership interest is considered temporary equity. During the nine months ended September 30, 2024, AES Clean Energy, through multiple transactions, sold noncontrolling interests in project companies to tax equity investors, resulting in increases to Redeemable stock of subsidiaries of $172 million.

During the second and third quarters of 2024, the Chevelon Butte Phase II, Kuihelani, and Silver Peak renewables projects reached commercial operations. The redemption features of these partnerships expired upon the projects being placed in service. As a result, noncontrolling ownership interests of $155 million were reclassified from Redeemable stock of subsidiaries to Noncontrolling interests on the Condensed Consolidated Balance Sheets. AES Clean Energy is reported in the Renewables SBU reportable segment.

IPALCO — In May 2024, CDPQ made equity capital contributions of $45 million to IPALCO as part of a capital call primarily for funding needs related to AES Indiana’s capital expenditure program. The Company and CDPQ made capital contributions on a proportional share basis, therefore the contributions did not change the Company’s ownership interest in IPALCO. IPALCO is reported in the Utilities SBU reportable segment.

26 | Notes to Condensed Consolidated Financial Statements—(Continued) | September 30, 2024 and 2023

EQUITY

Equity Units

In March 2021, the Company issued 10,430,500 Equity Units with a total notional value of $1,043 million. Each Equity Unit had a stated amount of $100 and was initially issued as a Corporate Unit, consisting of a forward stock purchase contract (“2024 Purchase Contracts”) and a 10% undivided beneficial ownership interest in one share of 0% Series A Cumulative Perpetual Convertible Preferred Stock, issued without par and with a liquidation preference of $1,000 per share (“Series A Preferred Stock”).

The Company concluded that the Equity Units should be accounted for as one unit of account based on the economic linkage between the 2024 Purchase Contracts and the Series A Preferred Stock, as well as the Company's assessment of the applicable accounting guidance relating to combining freestanding instruments. The Equity Units represent mandatorily convertible preferred stock. Accordingly, the shares associated with the combined instrument were reflected in diluted earnings per share using the if-converted method.

In conjunction with the issuance of the Equity Units, the Company received approximately $1 billion in proceeds, net of underwriting costs and commissions, before offering expenses. The proceeds for the issuance of 1,043,050 shares were attributed to the Series A Preferred Stock for $838 million and $205 million for the present value of the quarterly payments due to holders of the 2024 Purchase Contracts ("Contract Adjustment Payments"). The proceeds were used for the development of the AES renewables businesses, U.S. utility businesses, LNG infrastructure, and for other developments determined by management.

The Series A Preferred Stock did not bear any dividends and the liquidation preference of the convertible preferred stock did not accrete. The Series A Preferred Stock had no maturity date and would remain outstanding unless converted by holders or redeemed by the Company. Holders of the preferred shares had limited voting rights. The Series A Preferred Stock was pledged as collateral to support holders’ purchase obligations under the 2024 Purchase Contracts, which obligated the holders to purchase, on February 15, 2024, for a price of $100 in cash, a maximum number of 57,467,883 shares of the Company’s common stock (subject to customary anti-dilution adjustments). The initial settlement rate determining the number of shares that each holder must purchase could not exceed the maximum settlement rate and was determined over a market value averaging period preceding February 15, 2024. The initial maximum settlement rate of 3.864 was calculated using an initial reference price of $25.88, equal to the last reported sale price of the Company’s common stock on March 4, 2021. On February 15, 2024, the Series A Preferred Stock was tendered to satisfy the 2024 Purchase Contract’s settlement price and the Corporate Units were converted into shares of the Company’s common stock at the maximum settlement rate of 3.8859, equivalent to a reference price of $25.73. The Series A Preferred Stock was canceled and 40,531,845 shares of AES common stock were issued upon conversion.

The Company paid Contract Adjustment Payments to the holders of the 2024 Purchase Contracts at a rate of 6.875% per annum, payable quarterly in arrears on February 15, May 15, August 15, and November 15, commencing on May 15, 2021. The $205 million present value of the Contract Adjustment Payments at inception reduced the Series A Preferred Stock. As each quarterly Contract Adjustment Payment was made, the related liability was reduced and the difference between the cash payment and the present value accreted to interest expense, approximately $5 million over the three-year term. The final Contract Adjustment Payments were made on February 15, 2024.

Equity Transactions with Noncontrolling Interests

AES Clean Energy Tax Equity Partnerships — The majority of solar projects in the U.S. have been financed with tax equity structures, in which tax equity investors receive a portion of the economic attributes of the facilities, including tax attributes, that vary over the life of the projects.

During the nine months ended September 30, 2024 and 2023, AES Clean Energy Development and AES Renewable Holdings, through multiple transactions, sold noncontrolling interests in project companies to tax equity investors, resulting in increases to NCI of $599 million and $292 million, respectively.

In the third quarter of 2023, AES Renewable Holdings completed buyouts of tax equity partners at Buffalo Gap I, Buffalo Gap II and six other project companies, resulting in a decrease to NCI of $45 million and an increase to additional paid-in capital of $34 million. AES Clean Energy Development and AES Renewable Holdings are reported in the Renewables SBU reportable segment.

27 | Notes to Condensed Consolidated Financial Statements—(Continued) | September 30, 2024 and 2023

Hardy Hills Solar — In May 2024, the Hardy Hills solar project reached commercial operations and AES Indiana received an additional $47 million from the tax equity investor, resulting in an increase to NCI. AES Indiana is reported in the Utilities SBU reportable segment.

AES Puerto Rico Solar — In May 2024, AES CFE Holding II entered into an agreement for the sale of a 30% ownership interest in the Marahu project for $35 million, resulting in an increase to NCI. As the Company maintained control after this transaction, AES Puerto Rico Solar continues to be consolidated by the Company within the Renewables SBU reportable segment.

Chile Renovables — Under its renewables partnership agreement with Global Infrastructure Management, LLC (“GIP”), AES Andes will contribute a specified pipeline of renewables development projects to Chile Renovables as the projects reach commercial operations, and GIP may make additional contributions to maintain its 49% ownership interest. During the nine months ended September 30, 2023 and 2024, AES Andes completed the sale of the following projects to Chile Renovables (in millions):


Business	Transaction Period	Sale Price		Increase to Noncontrolling Interests		Decrease to Additional Paid-In Capital
Mesamávida	February 2024	$	40	$	51	$	(11)
Campo Lindo	September 2023	50		59		(9)

As the Company maintained control after these transactions, Chile Renovables continues to be consolidated by the Company within the Energy Infrastructure SBU reportable segment.

AES Panama — In September 2023, AES Latin America completed the sale of its interest in the Grupo Energía Gas Panamá joint venture to AES Panama, a 49%-owned consolidated subsidiary. See Note 7—Investments in and Advances to Affiliates for further information. As a result of the transaction, AES Panama received $42 million from noncontrolling interest holders and the Company reclassified accumulated other comprehensive income from AOCL to NCI of $23 million. AES Panama is reported in the Renewables SBU reportable segment however the investment in Grupo Energía Gas Panamá is reported in the Energy Infrastructure SBU reportable segment.

Accumulated Other Comprehensive Loss — The following table summarizes the changes in AOCL by component, net of tax and NCI, for the nine months ended September 30, 2024 (in millions):


	Foreign currency translation adjustments, net		Change in fair value of derivatives, net		Pension adjustments, net		Change in fair value option liabilities, net		Total
Balance at the beginning of the period	$	(1,692)	$	204	$	(26)	$	—	$	(1,514)
Other comprehensive income (loss) before reclassifications	(102)		4		—		3		(95)
Amount reclassified to earnings	—		14		—		—		14
Other comprehensive income (loss)	(102)		18		—		3		(81)

Balance at the end of the period	$	(1,794)	$	222	$	(26)	$	3	$	(1,595)

Reclassifications out of AOCL are presented in the following table. The Company’s accounting policy for releasing the income tax effects from AOCL occurs on a portfolio basis. Amounts for the periods indicated are in millions and those in parentheses indicate debits to the Condensed Consolidated Statements of Operations:


AOCL Components				Three Months Ended September 30,						Nine Months Ended September 30,
	2024		2023			2024			2023





Derivative gains (losses), net
		Non-regulated revenue		$	—		$	—		$	—	$	(8)
		Non-regulated cost of sales		(1)			(1)			(2)		(2)
		Interest expense		3			(3)			(27)		13
		Gain (loss) on disposal and sale of business interests		—			—			—		33

		Foreign currency transaction gains (losses)		1			—			3		(3)
		Income from continuing operations before taxes and equity in earnings of affiliates		3			(4)			(26)		33
		Income tax expense		—			—			7		(11)
		Net equity in losses of affiliates		—			5			1		27

		Net income (loss)		3			1			(18)		49
		Less: Net loss (income) attributable to noncontrolling interests and redeemable stock of subsidiaries		—			1			4		(4)
		Net income (loss) attributable to The AES Corporation		$	3		$	2		$	(14)	$	45

28 | Notes to Condensed Consolidated Financial Statements—(Continued) | September 30, 2024 and 2023

Common Stock Dividends — The Parent Company paid dividends of $0.1725 per outstanding share to its common stockholders during the first, second, and third quarters of 2024 for dividends declared in December 2023, February 2024, and July 2024, respectively.

On October 11, 2024, the Board of Directors declared a quarterly common stock dividend of $0.1725 per share payable on November 15, 2024, to shareholders of record at the close of business on November 1, 2024.

SEGMENTS

The segment reporting structure uses the Company’s management reporting structure as its foundation to reflect how the Company manages the businesses internally. The management reporting structure is composed of four SBUs, mainly organized by technology, led by our President and Chief Executive Officer. Using the accounting guidance on segment reporting, the Company determined that its four operating segments are aligned with its four reportable segments corresponding to its 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, which have a mix of generation sources, including renewables, that are pooled to service our existing PPAs; and

*•*New Energy Technologies — Green hydrogen initiatives and investments in Fluence, Uplight, 5B, and other new and innovative energy technology businesses.

Our Renewables, Utilities, and Energy Infrastructure SBUs participate in our generation business line, in which we own and/or operate power plants to generate and sell power to customers, such as utilities, industrial users, and other intermediaries. Our Utilities SBU participates in our utilities business line, in which we own and/or operate utilities to generate or purchase, distribute, transmit, and sell electricity to end-user customers in the residential, commercial, industrial, and governmental sectors within a defined service area. In certain circumstances, our utilities also generate and sell electricity on the wholesale market. Our New Energy Technologies SBU includes investments in new and innovative technologies to support leading-edge greener energy solutions.

Included in “Corporate and Other” are the results of the AES self-insurance company, corporate overhead costs which are not directly associated with the operations of our four reportable segments, and certain intercompany charges such as self-insurance premiums which are fully eliminated in consolidation.

The Company uses Adjusted EBITDA as its primary segment performance measure. Adjusted EBITDA, a non-GAAP measure, is defined by the Company as earnings before interest income and expense, taxes, depreciation and amortization, adjusted for the impact of NCI and interest, taxes, depreciation and amortization of our equity affiliates, and adding back interest income recognized under service concession arrangements; excluding gains or losses of both consolidated entities and entities accounted for under the equity method due to (a) unrealized gains or losses pertaining to derivative transactions, equity securities, and financial assets and liabilities measured using the fair value option; (b) unrealized foreign currency gains or losses; (c) gains, losses, benefits, and costs associated with dispositions and acquisitions of business interests, including early plant closures, and gains and losses recognized at commencement of sales-type leases; (d) losses due to impairments; and (e) gains, losses, and costs due to the early retirement of debt or troubled debt restructuring.

The Company has concluded Adjusted EBITDA better reflects the underlying business performance of the Company and is the most relevant measure considered in the Company's internal evaluation of the financial performance of its segments. Additionally, given its large number of businesses and overall complexity, the Company concluded that Adjusted EBITDA is a more transparent measure that better assists investors in determining which businesses have the greatest impact on the Company's results.

Revenue and Adjusted EBITDA are presented before inter-segment eliminations, which includes the effect of intercompany transactions with other segments except for charges for certain management fees and the write-off of intercompany balances, as applicable. All intra-segment activity has been eliminated within the segment. Inter-segment activity has been eliminated within the total consolidated results.

29 | Notes to Condensed Consolidated Financial Statements—(Continued) | September 30, 2024 and 2023

The following tables present financial information by segment for the periods indicated (in millions):


	Three Months Ended September 30,				Nine Months Ended September 30,
Total Revenue	2024		2023		2024		2023
Renewables SBU	$	726	$	708	$	1,941	$	1,744
Utilities SBU	961		880		2,730		2,703
Energy Infrastructure SBU	1,623		1,861		4,706		5,239
New Energy Technologies SBU	1		—		1		75
Corporate and Other	33		29		106		96
Eliminations	(55)		(44)		(168)		(157)
Total Revenue	$	3,289	$	3,434	$	9,316	$	9,700


	Three Months Ended September 30,				Nine Months Ended September 30,
Reconciliation of Adjusted EBITDA (in millions)	2024		2023		2024		2023
Net income	$	210	$	291	$	449	$	461
Income tax expense	103		109		52		179
Interest expense	379		326		1,125		966
Interest income	(119)		(144)		(312)		(398)
Depreciation and amortization	306		286		926		836
EBITDA	$	879	$	868	$	2,240	$	2,044
Less: Discontinued operations	7		—		7		—
Less: Adjustment for noncontrolling interests and redeemable stock of subsidiaries (1)	(229)		(183)		(471)		(508)
Less: Income tax expense (benefit), interest expense (income) and depreciation and amortization from equity affiliates	30		27		91		93
Interest income recognized under service concession arrangements	16		18		49		54
Unrealized derivatives, equity securities, and financial assets and liabilities losses (gains)	(47)		10		(185)		3
Unrealized foreign currency losses	7		97		10		161
Disposition/acquisition losses (gains)	(11)		8		8		21
Impairment losses	39		145		179		318
Loss on extinguishment of debt and troubled debt restructuring	1		—		51		1

Adjusted EBITDA	$	692	$	990	$	1,979	$	2,187

(1)The allocation of earnings and losses to tax equity investors from both consolidated entities and equity affiliates is removed from Adjusted EBITDA.


	Three Months Ended September 30,				Nine Months Ended September 30,
Adjusted EBITDA	2024		2023		2024		2023
Renewables SBU	$	199	$	267	$	443	$	557
Utilities SBU	223		216		619		526
Energy Infrastructure SBU	299		520		969		1,165
New Energy Technologies SBU	(7)		(22)		(38)		(61)
Corporate and Other	(23)		8		(3)		20
Eliminations	1		1		(11)		(20)
Adjusted EBITDA	$	692	$	990	$	1,979	$	2,187

The Company uses long-lived assets as its measure of segment assets. Long-lived assets include amounts recorded in Property, plant and equipment, net and right-of-use assets for operating leases recorded in Other noncurrent assets on the Condensed Consolidated Balance Sheets.

30 | Notes to Condensed Consolidated Financial Statements—(Continued) | September 30, 2024 and 2023


Long-Lived Assets	September 30, 2024		December 31, 2023
Renewables SBU	$	16,463	$	15,735
Utilities SBU	8,481		7,166
Energy Infrastructure SBU	7,750		7,414
New Energy Technologies SBU	19		14

Corporate and Other	25		9
Long-Lived Assets	32,738		30,338
Current assets	10,526		6,649
Investments in and advances to affiliates	1,162		941
Debt service reserves and other deposits	77		194
Goodwill	348		348
Other intangible assets	1,928		2,243
Deferred income taxes	421		396

Other noncurrent assets, excluding right-of-use assets for operating leases	2,209		2,879
Noncurrent held-for-sale assets	670		811
Total Assets	$	50,079	$	44,799

REVENUE

The following table presents our revenue from contracts with customers and other revenue for the periods indicated (in millions):



	Three Months Ended September 30, 2024
	Renewables SBU		Utilities SBU		Energy Infrastructure SBU		New Energy Technologies SBU		Corporate, Other and Eliminations		Total
Non-Regulated Revenue
Revenue from contracts with customers	$	648	$	23	$	1,431	$	1	$	(22)	$	2,081


Other non-regulated revenue (1)	78		1		192		—		—		271
Total non-regulated revenue	726		24		1,623		1		(22)		2,352
Regulated Revenue
Revenue from contracts with customers	—		929		—		—		—		929

Other regulated revenue	—		8		—		—		—		8
Total regulated revenue	—		937		—		—		—		937
Total revenue	$	726	$	961	$	1,623	$	1	$	(22)	$	3,289

	Three Months Ended September 30, 2023
	Renewables SBU		Utilities SBU		Energy Infrastructure SBU		New Energy Technologies SBU		Corporate, Other and Eliminations		Total
Non-Regulated Revenue
Revenue from contracts with customers	$	672	$	16	$	1,655	$	—	$	(14)	$	2,329


Other non-regulated revenue (1)	36		1		206		—		(1)		242
Total non-regulated revenue	708		17		1,861		—		(15)		2,571
Regulated Revenue
Revenue from contracts with customers	—		855		—		—		—		855

Other regulated revenue	—		8		—		—		—		8
Total regulated revenue	—		863		—		—		—		863
Total revenue	$	708	$	880	$	1,861	$	—	$	(15)	$	3,434

31 | Notes to Condensed Consolidated Financial Statements—(Continued) | September 30, 2024 and 2023



	Nine Months Ended September 30, 2024
	Renewables SBU		Utilities SBU		Energy Infrastructure SBU		New Energy Technologies SBU		Corporate, Other and Eliminations		Total
Non-Regulated Revenue
Revenue from contracts with customers	$	1,764	$	65	$	4,149	$	1	$	(62)	$	5,917


Other non-regulated revenue (1)	177		3		557		—		—		737
Total non-regulated revenue	1,941		68		4,706		1		(62)		6,654
Regulated Revenue
Revenue from contracts with customers	—		2,641		—		—		—		2,641

Other regulated revenue	—		21		—		—		—		21
Total regulated revenue	—		2,662		—		—		—		2,662
Total revenue	$	1,941	$	2,730	$	4,706	$	1	$	(62)	$	9,316

	Nine Months Ended September 30, 2023
	Renewables SBU		Utilities SBU		Energy Infrastructure SBU		New Energy Technologies SBU		Corporate, Other and Eliminations		Total
Non-Regulated Revenue
Revenue from contracts with customers	$	1,654	$	51	$	4,717	$	74	$	(60)	$	6,436


Other non-regulated revenue (1)	90		3		522		1		(1)		615
Total non-regulated revenue	1,744		54		5,239		75		(61)		7,051
Regulated Revenue
Revenue from contracts with customers	—		2,624		—		—		—		2,624

Other regulated revenue	—		25		—		—		—		25
Total regulated revenue	—		2,649		—		—		—		2,649
Total revenue	$	1,744	$	2,703	$	5,239	$	75	$	(61)	$	9,700

(1) Other non-regulated revenue primarily includes lease and derivative revenue not accounted for under ASC 606.

Contract Balances — The timing of revenue recognition, billings, and cash collections results in accounts receivable and contract liabilities. The contract liabilities from contracts with customers were $220 million and $328 million as of September 30, 2024 and December 31, 2023, respectively.

During the nine months ended September 30, 2024 and 2023, we recognized revenue of $77 million and $30 million, respectively, that was included in the corresponding contract liability balance at the beginning of the periods.

In June 2023, the Company closed on an agreement to terminate the PPA for the Warrior Run coal-fired power plant for total consideration of $357 million, to be paid by the offtaker through the end of the previous contract term in January 2030. Under the termination agreement, the plant continued providing capacity through May 2024. The termination represented a contract modification under which the discounted termination payments, as well as a pre-existing contract liability, were recognized as revenue on a straight-line basis over the remaining performance obligation period for approximately $32 million per month. On February 1, 2024, the Company executed a receivable sale agreement to transfer all of its rights, title, and interest in the remaining future cash flows under this agreement. At the time of execution, the transaction was considered a sale of future revenue under U.S. GAAP, and as such, the net proceeds of $273 million were recorded as debt*.* Upon completion of the remaining performance obligation in May 2024, the corresponding receivable balance of $267 million, net of valuation allowance of $7 million, and the remaining debt balance of $260 million were derecognized.

A significant financing arrangement exists for our Mong Duong plant in Vietnam. The plant was constructed under a build, operate, and transfer contract and will be transferred to the Vietnamese government after the completion of a 25-year PPA. The performance obligation to construct the facility was substantially completed in 2015. Contract consideration related to the construction, but not yet collected through the 25-year PPA, was reflected on the Condensed Consolidated Balance Sheet. As of September 30, 2024 and December 31, 2023, Mong Duong met the held-for-sale criteria and the loan receivable balance of $1 billion and $1.1 billion, net of CECL reserves of $24 million and $26 million, respectively, was classified in held-for-sale assets. Of the loan receivable balance, $118 million and $108 million, respectively, was classified in Current held-for-sale assets, and $873 million and $962 million, respectively, was classified in Noncurrent held-for-sale assets on the Condensed Consolidated Balance Sheets.

Remaining Performance Obligations — The transaction price allocated to remaining performance obligations represents future consideration for unsatisfied (or partially unsatisfied) performance obligations at the end of the reporting period. As of September 30, 2024, the aggregate amount of transaction price allocated to remaining performance obligations was $7 million, primarily consisting of fixed consideration for the sale of renewable energy

32 | Notes to Condensed Consolidated Financial Statements—(Continued) | September 30, 2024 and 2023

credits in long-term contracts in the U.S. We expect to recognize revenue of approximately $1 million per year between 2024 and 2028 and the remainder thereafter.

OTHER INCOME AND EXPENSE

Other income generally includes gains on insurance recoveries in excess of property damage, gains on asset sales and liability extinguishments, favorable judgments on contingencies, allowance for funds used during construction, gains on contingent consideration remeasurement, and other income from miscellaneous transactions. Other expense generally includes losses on asset sales and dispositions, losses on legal contingencies, losses on remeasurement of contingent consideration, losses at commencement of sales-type leases, and losses from other miscellaneous transactions. The components are summarized as follows (in millions):


		Three Months Ended September 30,				Nine Months Ended September 30,
		2024		2023		2024		2023
Other Income	Gain on remeasurement of contingent consideration (1)	$	14	$	—	$	26	$	—
	Indexation adjustment of receivables (2)	12		—		12		—
	AFUDC (US Utilities)	3		5		9		11
	Contract termination	—		—		5		—
	Gain on commencement of sales-type leases	—		—		5		—
	Insurance proceeds	—		—		5		—
	Gain on sale and disposal of assets	—		1		3		3








	Legal settlements	—		—		—		3
	Other income	35		6		55		19
	Total other income	$	64	$	12	$	120	$	36


Other Expense	Loss on commencement of sales-type leases (3)	$	—	$	—	$	72	$	—
	Loss on remeasurement of contingent consideration (1)	21		1		27		9
	Costs related to troubled debt restructuring (4)	—		—		20		—
	Loss on sale and disposal of assets	6		3		14		12
	Non-service pension and other postretirement costs	2		2		7		9







	Other	2		6		13		8
	Total other expense	$	31	$	12	$	153	$	38

(1) Primarily related to certain remeasurements of contingent consideration on projects acquired at AES Clean Energy.

(2) Related to an indexation adjustment on receivables for regulated energy contracts impacted by the Tariff Stabilization Laws at Chile. See Note 5—Financing Receivables for further information.

(3) Related to losses recognized at commencement of sales-type leases at AES Renewable Holdings. See Note 10—Leases for further information.

(4) Related to legal expenses and other direct costs associated with the troubled debt restructuring at Puerto Rico. See Note 8—Debt for further information.

ASSET IMPAIRMENT EXPENSE

The following table presents our asset impairment expense for the periods indicated (in millions):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
AES Brasil	$	60	$	—	$	277	$	—
Mong Duong	11		—		54		—
Norgener	—		—		—		137

TEG	—		77		—		77
TEP	—		59		—		59
Jordan	—		14		—		43
GAF Projects (AES Renewable Holdings)	—		—		—		18










Other	8		8		24		18
Total	$	79	$	158	$	355	$	352

33 | Notes to Condensed Consolidated Financial Statements—(Continued) | September 30, 2024 and 2023

AES Brasil — In May 2024, the Company entered into an agreement to sell its 47.3% controlling interest in AES Brasil, a 5.2 GW portfolio of renewable energy facilities. Upon meeting the held-for-sale criteria in May 2024, the Company performed an impairment analysis and determined that the carrying value of the disposal group of $1,556 million, which included cumulative translation losses of $533 million, was greater than its fair value less costs to sell of $1,339 million. As a result, the Company recognized pre-tax impairment expense of $217 million. The Company performed a subsequent impairment analysis as of September 30, 2024 and recognized additional pre-tax impairment expense of $60 million, primarily due to depreciation of the Brazilian real and increased costs to sell. See Note 18—Held-for-Sale and Dispositions for further information. AES Brasil is reported in the Renewables SBU reportable segment.

Mong Duong — In November 2023, the Company entered into an agreement to sell its entire 51% ownership interest in Mong Duong 2, a coal-fired plant in Vietnam, and 51% equity interest in Mong Duong Finance Holdings B.V., an SPV accounted for as an equity affiliate (collectively "Mong Duong"), and as of September 30, 2024, Mong Duong continued to be classified as held-for-sale. The carrying amount of the Mong Duong disposal group in subsequent periods exceeded the expected sales proceeds and as a result, the Company recognized total pre-tax impairment expense of $54 million during the nine months ended September 30, 2024. See Note 18—Held-for-Sale and Dispositions for further information. Mong Duong is reported in the Energy Infrastructure SBU reportable segment.

TEG and TEP — During the third quarter of 2023, management identified an impairment indicator at the TEG and TEP asset groups due to a reduction in expected cash flows after expiration of the current PPAs. The Company performed an impairment analysis as of July 31, 2023, and determined that the carrying amounts of the asset groups were not recoverable. The TEG and TEP asset groups were determined to have fair values of $93 million and $94 million, respectively, using the income approach. As a result, the Company recognized pre-tax asset impairment expense of $77 million and $59 million, respectively. TEG and TEP are reported in the Energy Infrastructure SBU reportable segment.

Norgener — In May 2023, AES Andes announced its intention to accelerate the retirement of the Norgener coal-fired plant in Chile in order to further advance its decarbonization strategy. Due to this strategic development and the resulting decrease in useful life of the generation facility, the Company performed an impairment analysis as of May 1, 2023, and determined that the carrying amount of the asset group was not recoverable. The Norgener asset group was determined to have a fair value of $24 million, using the income approach. As a result, and since pre-tax losses are limited to the carrying amount of the long-lived assets, the Company recognized pre-tax asset impairment expense of $137 million. Norgener is reported in the Energy Infrastructure SBU reportable segment.

Jordan — In November 2020, the Company signed an agreement to sell approximately 26% ownership interest in Amman East and IPP4 for $58 million. The generation plants were classified as held-for-sale until the sale was completed in March 2024. Due to the delay in closing the transaction, the carrying amount of the disposal group in subsequent periods exceeded the agreed-upon sales price, and total pre-tax impairment expense of $43 million was recorded during the nine months ended September 30, 2023. See Note 18*—Held-for-Sale and Dispositions* for further information. Amman East and IPP4 are reported in the Energy Infrastructure SBU reportable segment.

GAF Projects — During the second quarter of 2023, management concluded that the carrying value of six project companies at AES Renewable Holdings (the “GAF Projects”) may not be recoverable as the expected purchase price on the buyout of tax equity partners implied a loss on the transaction. The buyout was completed in July 2023. Management performed a recoverability test as of May 31, 2023 and concluded that the undiscounted cash flows of the GAF Projects did not exceed the carrying values of the asset groups for five of the six projects. The asset groups for the GAF Projects were determined to have a fair value of $11 million, using the income approach. As a result, the Company recognized pre-tax asset impairment expense of $18 million. AES Renewable Holdings is reported in the Renewables SBU reportable segment.

INCOME TAXES

The Company’s provision for income taxes is based on the estimated annual effective tax rate, plus discrete items. The effective tax rates for the three and nine months ended September 30, 2024 were 31% and 10%, respectively. The effective tax rate for both the three and nine months ended September 30, 2023 was 26%. The difference between the Company’s effective tax rates for the 2024 and 2023 periods and the U.S. statutory tax rate of 21% related primarily to foreign tax rate differentials, the impacts of foreign currency fluctuations at certain foreign subsidiaries, nondeductible expenses, valuation allowance, the impacts of U.S. investment tax credits (“ITCs”), and noncontrolling interest in our U.S. subsidiaries.

34 | Notes to Condensed Consolidated Financial Statements—(Continued) | September 30, 2024 and 2023

For the nine months ended September 30, 2024, the Company recorded discrete tax benefit of approximately $53 million related to U.S. capital losses associated with the restructuring of a foreign holding company. Additionally, for the nine months ended September 30, 2024, the Company recognized approximately $59 million of discrete tax benefit, net of valuation allowance, for tax over book investment basis differences related to the AES Brasil held-for-sale classification. See Note 18—Held-for-Sale and Dispositions for further information on AES Brasil.

For the three and nine months ended September 30, 2024, the Company recognized discrete tax expense of approximately $72 million and $100 million, respectively, resulting from allocations of losses to tax equity investors on renewables projects.

HELD-FOR-SALE AND DISPOSITIONS

Held-for-Sale

AES Brasil — On May 15, 2024, the Company entered into an agreement to sell its 47.3% controlling interest in AES Brasil Energia S.A. (“AES Brasil”), a 5.2 GW portfolio of renewable energy that is 51% hydroelectric, 43% wind, and 6% solar. The transaction is expected to close in the fourth quarter of 2024. As a result, AES Brasil was classified as held-for-sale, but did not meet the criteria to be reported as discontinued operations. On a consolidated basis, the carrying value of the disposal group after impairments of the plants held-for-sale as of September 30, 2024 was $1.3 billion. AES Brasil is reported in the Renewables SBU reportable segment.

Mong Duong — In November 2023, the Company entered into an agreement to sell its entire 51% ownership interest in Mong Duong 2, a coal-fired plant in Vietnam, and 51% equity interest in Mong Duong Finance Holdings B.V., an SPV accounted for as an equity affiliate (collectively "Mong Duong"). The sale is subject to regulatory approval and is expected to close in mid-2025. As a result, Mong Duong was classified as held-for-sale, but did not meet the criteria to be reported as discontinued operations. On a consolidated basis, the carrying value of the disposal group after impairment of the plant held-for-sale as of September 30, 2024 was $395 million. Mong Duong is reported in the Energy Infrastructure SBU reportable segment.

Excluding any impairment charges, pre-tax income and pre-tax income attributable to AES of businesses held-for-sale as of September 30, 2024 was as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	2024		2023		2024		2023
Pre-tax income of businesses held-for-sale:
Mong Duong	$	23	$	20	$	63	$	74
AES Brasil	25		28		13		80
Total pre-tax income of businesses held-for-sale	$	48	$	48	$	76	$	154

Pre-tax income attributable to AES of businesses held-for-sale:
Mong Duong	$	10	$	8	$	27	$	32
AES Brasil	11		12		4		34
Total pre-tax income attributable to AES of of businesses held-for-sale	$	21	$	20	$	31	$	66

Management has recorded pre-tax asset impairment expense of $54 million at Mong Duong, and $277 million at AES Brasil. As of September 30, 2024, the significant assets and liabilities of Mong Duong are a long-term financing receivable of $1 billion and debt of $582 million, respectively. As of September 30, 2024, AES Brasil’s major assets and liabilities include $2.2 billion in both property, plant and equipment and debt. See Note 16*—Asset Impairment Expense* and Note 14*—Revenue* for further information.

Dispositions

Jordan — In March 2024, the Company completed the sale of approximately 26% ownership interest in the Amman East and IPP4 generation plants for a sale price of $58 million. After adjusting for dividends received since the execution of the sale and purchase agreement, the Company received a net cash payment of $45 million. The transaction resulted in a pre-tax loss on sale of $10 million, reported in Gain on disposal and sale of business interests on the Condensed Consolidated Statement of Operations. After completion of the sale, the Company retained 10% ownership interest in each of the businesses, resulting in deconsolidation and recognition as equity method investments. Amman East and IPP4 are reported in the Energy Infrastructure SBU reportable segment.

35 | Notes to Condensed Consolidated Financial Statements—(Continued) | September 30, 2024 and 2023

ACQUISITIONS

Long Point and Hot Air — On September 20, 2024, the Company entered into an agreement to purchase Long Point, an early development-stage project consisting of a 300 MW wind facility, a 150 MW solar facility, and a 40 MW battery storage facility, and Hot Air, an early development-stage 350 MW wind facility, both located in Arizona. The transaction was accounted for as an asset acquisition. The total consideration paid of $6 million, including transaction costs, was allocated to the identifiable assets and liabilities on a relative fair value basis, primarily consisting of intangible assets. The remaining contingent consideration of up to $47 million, which is not recorded at this time, will be recognized as part of the projects’ assets when the contingencies are resolved, and the consideration is paid or becomes payable. Long Point and Hot Air are reported in the Renewables SBU reportable segment.

Birdseye — On April 5, 2024, the Company closed on the acquisition of 100% of Sol Madison Solar, LLC, a 63 MW construction-stage solar project in Virginia, and a pipeline of early-stage renewable energy development projects. The transaction was accounted for as a business combination at a purchase price of $20 million; therefore, the assets acquired and liabilities assumed at the acquisition date, primarily consisting of CWIP and a PPA liability, were recorded at their fair values. No goodwill was recognized as a result of the acquisition. The Company has recorded preliminary amounts for the purchase price allocation; however, the Company may continue to make adjustments. Birdseye is reported in the Renewables SBU reportable segment.

Hoosier Wind — In August 2023, the Company, through its subsidiary AES Indiana, filed for IURC issuance of a Certificate of Public Convenience and Necessity (“CPCN”) approving the acquisition of 100% of the interests in Hoosier Wind Project, LLC., which is an existing 106 MW wind facility located in Benton County, Indiana. IURC approval was received on January 24, 2024, and the transaction closed on February 29, 2024. The transaction was accounted for as an asset acquisition. Of the total consideration transferred of $93 million, including transaction costs, approximately $49 million was allocated to the identifiable assets acquired on a relative fair value basis, primarily consisting of tangible wind farm assets and typical working capital items. The remaining consideration was allocated to the termination of the pre-existing PPA between AES Indiana and the Hoosier Wind Project, estimated using a discounted cash flow valuation methodology, which was deferred as a long-term regulatory asset. Hoosier Wind is reported in the Utilities SBU reportable segment.

EARNINGS PER SHARE

Basic and diluted earnings per share are based on the weighted average number of shares of common stock and potential common stock outstanding during the period. Potential common stock, for purposes of determining diluted earnings per share, includes the effects of dilutive RSUs, stock options, and equity units. The effect of such potential common stock is computed using the treasury stock method for RSUs and stock options, and is computed using the if-converted method for equity units.

The following table is a reconciliation of the numerator and denominator of the basic and diluted earnings per share computation for income from continuing operations for the three and nine months ended September 30, 2024 and 2023, where income represents the numerator and weighted average shares represent the denominator.

36 | Notes to Condensed Consolidated Financial Statements—(Continued) | September 30, 2024 and 2023


Three Months Ended September 30,	2024					2023
(in millions, except per share data)	Income		Shares	$ per Share		Income		Shares	$ per Share

BASIC EARNINGS PER SHARE
Income from continuing operations attributable to The AES Corporation common stockholders	$	509	711	$	0.72	$	231	670	$	0.34



EFFECT OF DILUTIVE SECURITIES

Stock options	—		—	—		—		—	—
Restricted stock units	—		2	—		—		2	—
Equity units	—		—	—		—		40	(0.02)
DILUTED EARNINGS PER SHARE	$	509	713	$	0.72	$	231	712	$	0.32


Nine Months Ended	2024					2023
(in millions, except per share data)	Income		Shares	$ per Share		Income		Shares	$ per Share

BASIC EARNINGS PER SHARE
Income from continuing operations attributable to The AES Corporation common stockholders	$	1,126	704	$	1.60	$	343	669	$	0.51



EFFECT OF DILUTIVE SECURITIES

Stock options	—		—	—		—		1	—
Restricted stock units	—		2	—		—		2	—
Equity units	—		7	(0.02)		1		40	(0.03)
DILUTED EARNINGS PER SHARE	$	1,126	713	$	1.58	$	344	712	$	0.48

For the three and nine months ended September 30, 2024, the calculation of diluted earnings per share excluded 1 million outstanding stock awards, respectively, which would be anti-dilutive. These stock awards could potentially dilute basic earnings per share in the future.

The calculation of diluted earnings per share excluded 2 million outstanding stock awards for the three and nine months ended September 30, 2023, which would be anti-dilutive. These stock awards could potentially dilute basic earnings per share in the future.

As described in Note 12*—Equity*, the Company issued 10,430,500 Equity Units in March 2021 with a total notional value of $1,043 million. Each Equity Unit had a stated amount of $100 and was initially issued as a Corporate Unit, consisting of a 2024 Purchase Contract and a 10% undivided beneficial ownership interest in one share of Series A Preferred Stock. The conversion rate was initially 31.5428 shares of common stock per one share of Series A Preferred Stock, which was equivalent to an initial conversion price of approximately $31.70 per share of common stock. The Series A Preferred Stock and the 2024 Purchase Contracts were accounted for as one unit of account. In calculating diluted EPS, the Company has applied the if-converted method to determine the impact of the forward purchase feature and considered if there are incremental shares that should be included related to the Series A Preferred conversion value. On February 15, 2024, the Series A Preferred Stock was tendered to satisfy the 2024 Purchase Contract's settlement price and the Corporate Units were converted into shares of the Company's common stock at a settlement rate of 3.8859, equivalent to a reference price of $25.73. The Series A Preferred Stock was canceled upon conversion.

SUBSEQUENT EVENTS

AES Brasil — On October 31, 2024, the Company completed the sale of its 47.3% controlling interest in AES Brasil, a 5.2 GW portfolio of renewable energy facilities, for approximately $590 million. Separately, upon execution of the sale agreement in May 2024, the Parent Company executed foreign currency forward swaps to hedge the value of the expected sale proceeds, which had an asset value of approximately $40 million as of the closing of the sale. See Note 18—Held-for-sale and Dispositions for further information. Prior to its sale, AES Brasil was reported in the Renewables SBU reportable segment.

37 | The AES Corporation | September 30, 2024 Form 10-Q

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