Item 1. FINANCIAL STATEMENTS

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Item 1. FINANCIAL STATEMENTS

Condensed Consolidated Balance Sheets

(Unaudited)


	June 30, 2025		December 31, 2024

	(in millions, except share and per share amounts)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	1,350	$	1,524
Restricted cash	763		437

Accounts receivable, net of allowance of $54 and $52, respectively	1,865		1,646
Inventory	647		593
Prepaid expenses	132		157
Other current assets, net of allowance of $2 and $0, respectively	1,532		1,612
Current held-for-sale assets	31		862
Total current assets	6,320		6,831
NONCURRENT ASSETS





Property, plant and equipment, net of accumulated depreciation of $9,311 and $8,701, respectively	34,727		33,166

Investments in and advances to affiliates	1,091		1,124
Debt service reserves and other deposits	88		78
Goodwill	345		345
Other intangible assets, net of accumulated amortization of $472 and $426, respectively	2,050		1,947
Deferred income taxes	402		365

Loan receivable, net of allowance of $20 and $0, respectively	800		—
Other noncurrent assets, net of allowance of $22 and $20, respectively	2,719		2,917
Noncurrent held-for-sale assets	—		633
Total noncurrent assets	42,222		40,575
TOTAL ASSETS	$	48,542	$	47,406
LIABILITIES, REDEEMABLE STOCK OF SUBSIDIARIES, AND EQUITY
CURRENT LIABILITIES
Accounts payable	$	1,663	$	1,654
Accrued interest	277		256
Accrued non-income taxes	292		249
Supplier financing arrangements	621		917
Accrued and other liabilities	1,109		1,246
Recourse debt	990		899
Non-recourse debt	2,727		2,688

Current held-for-sale liabilities	—		662
Total current liabilities	7,679		8,571
NONCURRENT LIABILITIES
Recourse debt	4,802		4,805
Non-recourse debt	21,752		20,626

Deferred income taxes	1,635		1,490

Other noncurrent liabilities	2,812		2,881
Noncurrent held-for-sale liabilities	—		391
Total noncurrent liabilities	31,001		30,193
Commitments and Contingencies (see Note 9)
Redeemable stock of subsidiaries	2,179		938
EQUITY
THE AES CORPORATION STOCKHOLDERS’ EQUITY

Common stock ($0.01 par value, 1,200,000,000 shares authorized; 859,711,007 issued and 711,922,815 outstanding at June 30, 2025 and 859,709,987 issued and 711,074,269 outstanding at December 31, 2024)	9		9
Additional paid-in capital	6,070		5,913
Retained earnings (accumulated deficit)	(79)		293
Accumulated other comprehensive loss	(836)		(766)
Treasury stock, at cost (147,788,192 and 148,635,718 shares at June 30, 2025 and December 31, 2024, respectively)	(1,795)		(1,805)
Total AES Corporation stockholders’ equity	3,369		3,644
NONCONTROLLING INTERESTS	4,314		4,060
Total equity	7,683		7,704
TOTAL LIABILITIES, REDEEMABLE STOCK OF SUBSIDIARIES, AND EQUITY	$	48,542	$	47,406

See Notes to Condensed Consolidated Financial Statements.

4 | The AES Corporation

Condensed Consolidated Statements of Operations

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024

	(in millions, except share and per share amounts)
Revenue:
Non-Regulated	$	1,922	$	2,070	$	3,863	$	4,302
Regulated	933		872		1,918		1,725
Total revenue	2,855		2,942		5,781		6,027
Cost of Sales:
Non-Regulated	(1,607)		(1,671)		(3,268)		(3,404)
Regulated	(795)		(718)		(1,619)		(1,451)
Total cost of sales	(2,402)		(2,389)		(4,887)		(4,855)
Operating margin	453		553		894		1,172
General and administrative expenses	(49)		(66)		(126)		(141)
Interest expense	(352)		(389)		(694)		(746)
Interest income	70		88		139		193
Loss on extinguishment of debt	(5)		(9)		(13)		(10)
Other expense	(295)		(84)		(347)		(122)
Other income	31		21		38		56
Gain on disposal and sale of business interests	70		1		69		44

Asset impairment reversals (expense)	154		(38)		105		(84)
Foreign currency transaction gains (losses)	(28)		38		(38)		30
Other non-operating expense	(10)		—		(10)		—
INCOME FROM CONTINUING OPERATIONS BEFORE TAXES AND EQUITY IN EARNINGS OF AFFILIATES	39		115		17		392
Income tax benefit (expense)	(167)		35		(184)		51
Net equity in earnings (losses) of affiliates	(22)		3		(56)		(12)



NET INCOME (LOSS)	(150)		153		(223)		431



Less: Net loss attributable to noncontrolling interests and redeemable stock of subsidiaries	55		123		174		277
NET INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION	$	(95)	$	276	$	(49)	$	708
Decrease (increase) in redemption value of redeemable stock of subsidiaries	(10)		6		(10)		—
NET INCOME (LOSS) AVAILABLE TO THE AES CORPORATION COMMON STOCKHOLDERS	$	(105)	$	282	$	(59)	$	708




BASIC EARNINGS PER SHARE:


NET INCOME (LOSS) AVAILABLE TO THE AES CORPORATION COMMON STOCKHOLDERS	$	(0.15)	$	0.40	$	(0.08)	$	1.01
DILUTED EARNINGS PER SHARE:


NET INCOME (LOSS) AVAILABLE TO THE AES CORPORATION COMMON STOCKHOLDERS	$	(0.15)	$	0.39	$	(0.08)	$	0.99
DILUTED SHARES OUTSTANDING	712		713		712		713

See Notes to Condensed Consolidated Financial Statements.

5 | The AES Corporation

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024

	(in millions)
NET INCOME (LOSS)	$	(150)	$	153	$	(223)	$	431
Foreign currency translation activity:
Foreign currency translation adjustments, net of $0 income tax for all periods	42		(136)		72		(179)

Total foreign currency translation adjustments	42		(136)		72		(179)
Derivative activity:
Change in fair value of derivatives, net of income tax benefit (expense) of $3, $(22), $28 and $(66), respectively	(43)		92		(150)		292
Reclassification to earnings, net of income tax benefit (expense) of $6, $(7), $12 and $(7), respectively	9		23		(5)		21
Total change in fair value of derivatives	(34)		115		(155)		313
Pension activity:
Change in pension adjustments due to prior service cost, net of $0 income tax for all periods	1		—		1		—
Change in pension adjustments due to net actuarial gain for the period, net of income tax benefit of $1, $0, $1 and $0, respectively	(6)		1		(5)		1

Total pension adjustments	(5)		1		(4)		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)	3		(20)		(87)		138
COMPREHENSIVE INCOME (LOSS)	(147)		133		(310)		569
Less: Comprehensive loss attributable to noncontrolling interests and redeemable stock of subsidiaries	73		141		200		237
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION	$	(74)	$	274	$	(110)	$	806

See Notes to Condensed Consolidated Financial Statements.

6 | The AES Corporation

Condensed Consolidated Statements of Changes in Equity

(Unaudited)


	Six Months Ended June 30, 2025
	Preferred Stock			Common Stock			Treasury Stock			Additional Paid-In Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Loss		Noncontrolling Interests (1)
	Shares	Amount		Shares	Amount		Shares	Amount
	(in millions)
Balance at January 1, 2025	—	$	—	859.7	$	9	148.6	$	(1,805)	$	5,913	$	293	$	(766)	$	4,060
Net income (loss)	—	—		—	—		—	—		—		46		—		(149)
Foreign currency translation adjustments and reclassification to earnings, net of income tax	—	—		—	—		—	—		—		—		30		—
Change in fair value of derivatives and reclassification to earnings, net of income tax	—	—		—	—		—	—		—		—		(113)		(8)
Change in pension adjustments and reclassification to earnings, net of income tax	—	—		—	—		—	—		—		—		1		—

Total other comprehensive income (loss)	—	—		—	—		—	—		—		—		(82)		(8)


Reclassification of redeemable stock of subsidiaries to noncontrolling interests (2)	—	—		—	—		—	—		—		—		—		38


Distributions to noncontrolling interests	—	—		—	—		—	—		—		—		—		(57)

Contributions from noncontrolling interests	—	—		—	—		—	—		—		—		—		114
Sales to noncontrolling interests	—	—		—	—		—	—		(15)		—		—		250
Issuance of preferred shares in subsidiaries	—	—		—	—		—	—		—		—		—		9



Dividends declared on AES common stock ($0.17595/share)	—	—		—	—		—	—		—		(125)		—		—

Issuance and exercise of stock-based compensation benefit plans, net of income tax	—	—		—	—		(0.8)	10		(10)		—		—		—
Balance at March 31, 2025	—	$	—	859.7	$	9	147.8	$	(1,795)	$	5,888	$	214	$	(848)	$	4,257
Net loss	—	—		—	—		—	—		—		(95)		—		(58)
Foreign currency translation adjustments and reclassification to earnings, net of income tax	—	—		—	—		—	—		—		—		41		1
Change in fair value of derivatives and reclassification to earnings, net of income tax	—	—		—	—		—	—		—		—		(15)		(19)
Change in pension adjustments and reclassification to earnings, net of income tax	—	—		—	—		—	—		—		—		(5)		—

Total other comprehensive income (loss)	—	—		—	—		—	—		—		—		21		(18)

Adjustments to redemption value of redeemable stock of subsidiaries (3)	—	—		—	—		—	—		—		(10)		—		—
Reclassification of redeemable stock of subsidiaries to noncontrolling interests (2)	—	—		—	—		—	—		—		—		—		18


Distributions to noncontrolling interests	—	—		—	—		—	—		—		—		—		(290)
Acquisitions of noncontrolling interests	—	—		—	—		—	—		(26)		—		(17)		(46)
Contributions from noncontrolling interests	—	—		—	—		—	—		—		—		—		246
Sales to noncontrolling interests	—	—		—	—		—	—		199		(188)		8		200
Issuance of preferred shares in subsidiaries	—	—		—	—		—	—		—		—		—		5




Issuance and exercise of stock-based compensation benefit plans, net of income tax	—	—		—	—		—	—		9		—		—		—
Balance at June 30, 2025	—	$	—	859.7	$	9	147.8	$	(1,795)	$	6,070	$	(79)	$	(836)	$	4,314

7 | The AES Corporation


	Six Months Ended June 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)
Foreign currency translation adjustments and reclassification to earnings, net of income tax	—	—		—	—		—	—		—		—		(38)		(4)
Change in fair value of derivatives and reclassification to earnings, net of income tax	—	—		—	—		—	—		—		—		135		27

Change in fair value option liabilities and reclassification to earnings, net of income tax	—	—		—	—		—	—		—		—		3		—
Total other comprehensive income	—	—		—	—		—	—		—		—		100		23

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


Dispositions 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 AES 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)	—	—		—	—		—	—		—		276		—		(113)
Foreign currency translation adjustments and reclassification to earnings, net of income tax	—	—		—	—		—	—		—		—		(94)		(41)
Change in fair value of derivatives and reclassification to earnings, net of income tax	—	—		—	—		—	—		—		—		92		(15)
Change in pension adjustments and reclassification to earnings, net of income tax	—	—		—	—		—	—		—		—		—		1

Total other comprehensive income (loss)	—	—		—	—		—	—		—		—		(2)		(55)

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


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

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



Dividends declared on AES 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	$	(678)	$	(1,416)	$	4,031

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

(2) Related to the reclassification of AES Clean Energy Development common stock, certain tax equity partnerships at AES Clean Energy, and the Pike County BESS tax equity partnership from Redeemable stock of subsidiaries to Noncontrolling interests. See Note 11—Redeemable Stock of Subsidiaries.

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

See Notes to Condensed Consolidated Financial Statements.

8 | The AES Corporation

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Six Months Ended June 30,
	2025		2024

	(in millions)
OPERATING ACTIVITIES:
Net income (loss)	$	(223)	$	431
Adjustments to net income (loss):
Depreciation, amortization, and accretion of AROs	691		633
Emissions allowance expense	178		71
Loss (gain) on realized/unrealized derivatives	71		(137)
Loss on commencement of sales-type leases	208		67
Gain on disposal and sale of business interests	(69)		(44)

Impairment expense (reversals)	(95)		84
Loss on realized/unrealized foreign currency	24		78





Deferred income tax expense (benefit), net of tax credit transfers allocated to AES	149		258
Tax credit transfers allocated to noncontrolling interests	212		26
Other	220		(210)
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable	26		(239)
(Increase) decrease in inventory	(29)		31
(Increase) decrease in prepaid expenses and other current assets	198		133
(Increase) decrease in other assets	75		47
Increase (decrease) in accounts payable and other current liabilities	(116)		(160)
Increase (decrease) in income tax payables, net and other tax payables	(82)		(464)

Increase (decrease) in other liabilities	83		74
Net cash provided by operating activities	1,521		679
INVESTING ACTIVITIES:
Capital expenditures	(2,586)		(3,833)
Acquisitions of business interests, net of cash and restricted cash acquired	(112)		(73)
Proceeds from the sale of business interests, net of cash and restricted cash sold	5		11

Sale of short-term investments	52		534
Purchase of short-term investments	(36)		(604)
Contributions and loans to equity affiliates	(1)		(50)



Purchase of emissions allowances	(234)		(91)

Other investing	30		(118)
Net cash used in investing activities	(2,882)		(4,224)
FINANCING ACTIVITIES:
Borrowings under the revolving credit facilities	2,128		4,003
Repayments under the revolving credit facilities	(2,398)		(2,582)
Commercial paper borrowings (repayments), net	67		690
Issuance of recourse debt	800		950
Repayments of recourse debt	(774)		—
Issuance of non-recourse debt	2,332		3,798
Repayments of non-recourse debt	(1,490)		(2,726)
Payments for financing fees	(49)		(75)
Purchases under supplier financing arrangements	567		708
Repayments of obligations under supplier financing arrangements	(862)		(1,055)
Distributions to noncontrolling interests	(338)		(128)

Contributions from noncontrolling interests	274		97
Sales to noncontrolling interests	1,138		323
Issuance of preferred shares in subsidiaries	452		—

Dividends paid on AES common stock	(250)		(238)
Payments for financed capital expenditures	(21)		(19)


Other financing	(114)		13
Net cash provided by financing activities	1,462		3,759
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(5)		(43)
(Increase) decrease in cash, cash equivalents and restricted cash of held-for-sale businesses	66		(13)
Total increase in cash, cash equivalents and restricted cash	162		158
Cash, cash equivalents and restricted cash, beginning	2,039		1,990
Cash, cash equivalents and restricted cash, ending	$	2,201	$	2,148

9 | The AES Corporation

Condensed Consolidated Statements of Cash Flows (continued)

(Unaudited)


			Six Months Ended June 30,
			2025						2024

			(in millions)


SUPPLEMENTAL DISCLOSURES:
Cash payments for interest, net of amounts capitalized	$	598	$	765
Cash payments for income taxes, net of refunds	134		209
SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:







Noncash contributions from noncontrolling interests	$	254	$	25

Receivable for proceeds from sale of Dominican Republic Renewables (see Note 18)	100		—
Noncash recognition of new operating and financing leases	78		180
Noncash distributions to noncontrolling interests	45		—
Initial recognition of contingent consideration for acquisitions	11		14
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

See Notes to Condensed Consolidated Financial Statements.

10 | Notes to Condensed Consolidated Financial Statements | June 30, 2025 and 2024

Notes to Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2025 and 2024

(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 an ownership interest and is the primary beneficiary, thus controlling the VIE, have been consolidated. Certain consolidated VIEs have arrangements which may require the Company to contribute additional equity totaling $1.7 billion. Such contributions are generally contingent upon the underlying asset achieving specific project milestones. Investments in entities where 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 are 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 six months ended June 30, 2025 are not necessarily indicative of expected results for the year ending December 31, 2025. The accompanying condensed consolidated financial statements are unaudited and should be read in conjunction with the 2024 audited consolidated financial statements and notes thereto, which are included in the 2024 Form 10-K filed with the SEC on March 11, 2025 (the “2024 Form 10-K”).

Revision of Prior Period Condensed Consolidated Financial Statements — In connection with the preparation of our 2024 consolidated financial statements, the Company determined that we used incomplete data in the estimation of the fair value of net assets of AES Brasil which caused an overstatement of the impairment expense recorded in the second and third quarters of 2024. As a result, the Company restated the previously issued unaudited quarterly financial information for the second quarter of 2024 presented in this Form 10-Q. For additional information and quantification of prior period restatement impacts, refer to the 2024 audited consolidated financial statements and notes thereto, which are included in our 2024 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):


	June 30, 2025		December 31, 2024
Cash and cash equivalents	$	1,350	$	1,524
Restricted cash	763		437
Debt service reserves and other deposits	88		78
Cash, Cash Equivalents, and Restricted Cash	$	2,201	$	2,039

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 a reduction in income tax expense by either including the expected amount of the tax credit to be claimed or the cash to be received when transferred, respectively, in the calculation of its annual effective tax rate throughout the year the renewables project is placed in service. The estimated tax credits are updated on a quarterly basis, with the year-end calculation including only the tax credits that are associated with projects placed in service, comprising credits claimed or transferred during the year. In assessing realizability for credits to be transferred, the Company includes cash it anticipates receiving in establishing any valuation allowance and establishes a valuation allowance equal to its best estimate of any discount on the transfer. The receipt of cash from the transfer of tax credits is treated as an operating cash inflow on the Condensed Consolidated Statements of Cash Flows.

During the six months ended June 30, 2025, the Company executed agreements to transfer ITCs directly to third parties for $354 million. Of this amount, $142 million was allocated to AES and will be recognized ratably as an

11 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2025 and 2024

income tax benefit throughout the year and $212 million was allocated to noncontrolling interests and treated as a contribution from noncontrolling interest holders. The Company received cash proceeds from these tax credit transfers of $309 million during the six months ended June 30, 2025 and recorded a receivable in Other current assets on the Condensed Consolidated Balance Sheets for the remaining $45 million. The Company is contractually obligated to distribute the remaining $45 million in proceeds to the noncontrolling interest holder, and therefore recorded a corresponding payable in Accrued and other liabilities. In addition, during the six months ended June 30, 2025, the Company received cash proceeds of $75 million related to a tax credit transfer agreement which was executed in 2024.

During the six months ended June 30, 2024, the Company executed an agreement to transfer an ITC directly to a third party for $103 million. Of this amount, $51 million and $26 million was allocated to AES and recorded as an income tax benefit in 2024 and 2023, respectively, and $26 million was allocated to noncontrolling interests and treated as a contribution from noncontrolling interest holders. The Company received cash proceeds from this tax credit transfer of $103 million during the six months ended June 30, 2024.

New Accounting Pronouncements Adopted in 2025 — The Company assessed all accounting pronouncements adopted in 2025 and determined they were either not applicable or did not have a material impact on the Company’s condensed consolidated 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.



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



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 a 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.	The Company is currently evaluating the impact of adopting the standard on its consolidated financial statements. This ASU only affects annual disclosures, which will be provided when the amendment becomes effective.
2024-03: Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40)	The amendments in this Update require disclosure, in the notes to financial statements, of specified information about certain costs and expenses. The amendments require that at each interim and annual reporting period an entity: 1. Disclose the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depreciation, depletion, and amortization recognized as part of oil- and gas-producing activities (DD&A) (or other amounts of depletion expense) included in each relevant expense caption. A relevant expense caption is an expense caption presented on the face of the income statement within continuing operations that contains any of the expense categories listed in (a)–(e). 2. Include certain amounts that are already required to be disclosed under current generally accepted accounting principles (GAAP) in the same disclosure as the other disaggregation requirements. 3. Disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. 4. Disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses.	The date for each amendment in this Update is effective for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted.	The Company is currently evaluating the impact of adopting the standard on its consolidated financial statements. This ASU only affects disclosures, which will be provided when the amendment becomes effective.
2024-04: Debt—Debt with Conversion and Other Options (Subtopic 470-20)	The amendments in this Update clarify the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion.	The date for each amendment in this Update is effective beginning after December 15, 2025, and interim reporting periods within those annual reporting periods.	The Company is currently evaluating the impact of adopting the standard on its consolidated financial statements.

12 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2025 and 2024

INVENTORY

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


	June 30, 2025		December 31, 2024
Spare parts and supplies	$	384	$	347
Fuel and other raw materials	263		246
Total	$	647	$	593

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 2024 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:


	June 30, 2025								December 31, 2024
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets
DEBT SECURITIES:
Available-for-sale:

Certificates of deposit	$	—	$	2	$	—	$	2	$	—	$	4	$	—	$	4
Government debt securities	—		1		—		1		—		4		—		4
Total debt securities	—		3		—		3		—		8		—		8
EQUITY SECURITIES:
Mutual funds	53		—		—		53		51		—		—		51
Common stock	1		—		—		1		4		—		—		4

Total equity securities	54		—		—		54		55		—		—		55
DERIVATIVES:
Interest rate derivatives	—		183		—		183		—		349		—		349

Foreign currency derivatives	—		10		35		45		—		9		52		61
Commodity derivatives	158		58		4		220		193		80		5		278
Total derivatives — assets (1)	158		251		39		448		193		438		57		688
TOTAL ASSETS	$	212	$	254	$	39	$	505	$	248	$	446	$	57	$	751
Liabilities
Contingent consideration (2)	$	—	$	—	$	144	$	144	$	—	$	—	$	145	$	145
DERIVATIVES:
Interest rate derivatives	—		76		—		76		—		14		1		15

Foreign currency derivatives	—		25		—		25		—		18		—		18
Commodity derivatives	197		31		26		254		185		44		26		255
Total derivatives — liabilities (1)	197		132		26		355		185		76		27		288
TOTAL LIABILITIES	$	197	$	132	$	170	$	499	$	185	$	76	$	172	$	433

(1)Includes $3 million of derivative assets reported in Current held-for-sale assets and $3 million of derivative liabilities reported in Current held-for-sale liabilities on the Condensed Consolidated Balance Sheets related to Dominican Republic Renewables as of December 31, 2024.

(2)The level 3 contingent consideration is mainly related to the acquisition of Bellefield in June 2023.

As of June 30, 2025, all available-for-sale debt securities had stated maturities within one year. For the three and six months ended June 30, 2025, no impairments of marketable securities were recognized in earnings or other comprehensive income (loss). Credit-related impairments are recognized as an allowance with a corresponding impact recognized as a credit loss in Other expense. Gains and losses on sales of investments are determined using the specific identification method. The following table presents gross proceeds from the sale of available-for-sale securities for the periods indicated (in millions):

13 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2025 and 2024


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Gross proceeds from sale of available-for-sale securities	$	1	$	375	$	4	$	494

The Company accounts for equity securities without readily determinable fair values using the measurement alternative in accordance with ASC 321*.* These securities are measured at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investments of the same issuer. As of December 31, 2024, the carrying amount of equity securities accounted for using the measurement alternative was $62 million, inclusive of $22 million of cumulative upward adjustments recorded in Other income in prior years to reflect observable price changes for our investment in 5B Holdings Ptd. Ltd. (“5B”). During the three months ended June 30, 2025, the Company recorded a $48 million downward adjustment to our investment in 5B in Other expense due to an observable price change resulting from a transaction between 5B and a third-party. As a result, the carrying amount of equity securities accounted for using the measurement alternative as of June 30, 2025 was $19 million.

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 six months ended June 30, 2025 and 2024 (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.


	Derivative Assets and Liabilities
Three Months Ended June 30, 2025	Interest Rate		Foreign Currency		Commodity		Contingent Consideration		Total
Balance at April 1, 2025	$	(2)	$	43	$	2	$	(173)	$	(130)
Total realized and unrealized gains (losses):
Included in earnings	—		1		1		20		22
Included in other comprehensive income (loss) — derivative activity	—		1		(29)		—		(28)

Included in regulatory (assets) liabilities	—		—		5		—		5
Acquisitions	—		—		—		(11)		(11)
Settlements	—		(10)		(1)		20		9

Transfers of assets, net out of Level 3	2		—		—		—		2
Balance at June 30, 2025	$	—	$	35	$	(22)	$	(144)	$	(131)
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	$	—	$	(6)	$	—	$	20	$	14

	Derivative Assets and Liabilities
Three Months Ended June 30, 2024	Interest Rate		Foreign Currency		Commodity		Contingent Consideration		Total
Balance at April 1, 2024	$	(2)	$	64	$	(79)	$	(158)	$	(175)
Total realized and unrealized gains (losses):
Included in earnings	—		4		—		(1)		3
Included in other comprehensive income (loss) — derivative activity	—		2		4		—		6
Included in other comprehensive income (loss) — foreign currency translation activity	—		—		—		1		1
Included in regulatory (assets) liabilities	—		—		5		—		5
Acquisitions	—		—		—		(5)		(5)
Settlements	—		(10)		(1)		1		(10)


Balance at June 30, 2024	$	(2)	$	60	$	(71)	$	(162)	$	(175)
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)	$	—	$	(1)	$	(4)

14 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2025 and 2024


	Derivative Assets and Liabilities
Six Months Ended June 30, 2025	Interest Rate		Foreign Currency		Commodity		Contingent Consideration		Total
Balance at January 1, 2025	$	(1)	$	52	$	(21)	$	(145)	$	(115)
Total realized and unrealized gains (losses):
Included in earnings	—		2		—		(18)		(16)
Included in other comprehensive income (loss) — derivative activity	—		1		(3)		—		(2)

Included in regulatory (assets) liabilities	—		—		5		—		5
Acquisitions	—		—		—		(11)		(11)
Settlements	—		(20)		(2)		30		8
Transfers of assets (liabilities), net into Level 3	—		—		(1)		—		(1)
Transfers of assets, net out of Level 3	1		—		—		—		1
Balance at June 30, 2025	$	—	$	35	$	(22)	$	(144)	$	(131)
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	$	—	$	(12)	$	—	$	(18)	$	(30)

	Derivative Assets and Liabilities
Six Months Ended June 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	—		14		4		5		23
Included in other comprehensive income (loss) — derivative activity	2		5		32		—		39

Included in regulatory (assets) liabilities	—		—		5		—		5
Acquisitions	—		—		—		(14)		(14)
Settlements	—		(18)		(2)		12		(8)


Balance at June 30, 2024	(2)		60		(71)		(162)		(175)
Total gains 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	$	—	$	—	$	6	$	5	$	11

The following table summarizes the significant unobservable inputs used to value Level 3 derivative assets (liabilities) as of June 30, 2025 (in millions, except range amounts):


Type of Derivative	Fair Value		Unobservable Input	Amount or Range (Average)


Foreign currency:
Argentine peso	$	35	Argentine peso to USD currency exchange rate after one year	1,210 to 1,520 (1,384)

Commodity:
CAISO energy swap	(2)		Forward CAISO energy prices per MWh after 2031	$13.45 to $132.30 ($68.56)
MISO energy swap	(25)		Forward MISO energy prices per MWh after 2031	$22.42 to $75.68 ($43.07)
Other	5
Total	$	13

For the Argentine peso foreign currency derivatives, increases (decreases) in the estimate of the above exchange rate would increase (decrease) the value of the derivative. For the CAISO and MISO energy swap, increases (decreases) in the estimate above would decrease (increase) 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. Gains and losses on the remeasurement of contingent consideration are recognized in Other income and Other expense, respectively, on the Condensed Consolidated Statements of Operations.

15 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2025 and 2024

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 reversals (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
Six Months Ended June 30, 2025		Level 1			Level 2			Level 3










Held-for-sale businesses: (2)
Mong Duong (3)	3/31/2025		$	383		$	—		$	371		$	—	$	17









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










Held-for-sale businesses: (2)
Mong Duong	3/31/2024		$	450		$	—		$	413		$	—	$	37
AES Brasil (4)	5/15/2024		1,577			—			1,565			—		25
Mong Duong (3)	6/30/2024		390			—			389			—		6

(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 Mong Duong disposal group less costs to sell of $5 million.

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

Mong Duong — During the six months ended June 30, 2025, the Company recognized a $243 million increase in the carrying value of the Mong Duong asset group due to the derecognition of a $239 million valuation allowance on the loan receivable accounted for under ASC 310, which had been recognized in Asset impairment expense between December 31, 2023 and March 31, 2025 while Mong Duong was classified as held-for-sale, and the elimination of $4 million in net estimated costs to sell from the measurement of the asset group. Upon reclassification out of held-for-sale, the loan receivable was remeasured at amortized cost and individual non-loan assets were remeasured at the lower of (i) carrying value before Mong Duong was classified as held for sale, adjusted for any depreciation expense or impairment losses that would have been recognized had the asset been continuously classified as held and used, or (ii) fair value at the date of the subsequent determination that held-for-sale criteria was no longer met. See Note 16—Asset Impairment Expense for further information.

AES Clean Energy Development Projects — On a quarterly basis, the Company reviews the status of development projects to identify projects that are no longer viable and will be abandoned. The fair value of each abandoned project with no salvage value is determined to be zero as there are no future projected cash flows, resulting in a full write-off of the carrying value of project development intangibles and capitalized development costs incurred.

The Company recognized $117 million and $14 million of pre-tax asset impairment expense related to AES Clean Energy Development Projects during the six months ended June 30, 2025 and 2024, respectively. See Note 16—Asset Impairment Expense for further information.

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 dates indicated, but for which fair value is disclosed:

16 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2025 and 2024


		June 30, 2025
		Carrying Amount		Fair Value
		Total		Level 1		Level 2		Level 3
Assets:	Financing receivables (1)	$	893	$	1,007	$	—	$	—	$	1,007
Liabilities:	Non-recourse debt	23,865		24,525		—		22,035		2,490
	Recourse debt	5,792		4,735		—		4,735		—


		December 31, 2024
		Carrying Amount		Fair Value
		Total		Level 1		Level 2		Level 3
Assets:	Financing receivables (1)	$	87	$	171	$	—	$	—	$	171
Liabilities:	Non-recourse debt	22,743		23,066		—		20,981		2,085
	Recourse debt	5,704		4,538		—		4,538		—

(1)These amounts primarily relate to the sale of the Redondo Beach land, payment deferrals granted to mining customers as part of our green blend agreements in Chile, fair value of the Argentine FONINVEMEM receivables, and as of June 30, 2025, the Mong Duong loan receivable. These are included in Other noncurrent assets and Loan receivable 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 2024 Form 10-K.

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 June 30, 2025, 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 (1)
Interest rate	$	11,441	2058

Foreign currency:

Colombian peso	180		2027
Euro	153		2026
Chilean peso	141		2028
Mexican peso	77		2026


Commodity Derivatives	Maximum Notional	Latest Maturity
Natural Gas (in MMBtu)	260	2029
Power (in MWhs) (2)	65	2040
Coal (in Metric Tons)	4	2028

(1)Maturity dates are consistent for both designated and non-designated positions.

(2)Includes one contract designated as a cash flow hedge with a final maturity date in 2038.

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	June 30, 2025						December 31, 2024
Assets	Designated		Not Designated		Total		Designated		Not Designated		Total
Interest rate derivatives	$	181	$	2	$	183	$	349	$	—	$	349

Foreign currency derivatives	11		34		45		16		45		61
Commodity derivatives	—		220		220		4		274		278
Total assets (1)	$	192	$	256	$	448	$	369	$	319	$	688
Liabilities
Interest rate derivatives	$	76	$	—	$	76	$	15	$	—	$	15

Foreign currency derivatives	4		21		25		10		8		18
Commodity derivatives	27		227		254		29		226		255
Total liabilities (1)	$	107	$	248	$	355	$	54	$	234	$	288


	June 30, 2025				December 31, 2024
Fair Value	Assets		Liabilities		Assets		Liabilities
Current	$	302	$	199	$	369	$	170
Noncurrent	146		156		319		118
Total (1)	$	448	$	355	$	688	$	288

17 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2025 and 2024

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


	Three Months Ended June 30,						Six Months Ended June 30,
2025			2024			2025			2024
Cash flow hedges
Gains (losses) recognized in AOCL
Interest rate derivatives	$	(19)		$	115		$	(185)		$	340

Foreign currency derivatives	3			(1)			7			(10)
Commodity derivatives	(30)			—			—			28
Total	$	(46)		$	114		$	(178)		$	358
Gains (losses) reclassified from AOCL into earnings
Interest rate derivatives — Interest expense	$	(6)		$	(31)		$	9		$	(30)

Foreign currency derivatives — Foreign currency transaction gains (losses)	2			1			5			2
Commodity derivatives — Cost of sales—Non-Regulated	1			—			3			—
Total	$	(3)		$	(30)		$	17		$	(28)
Gains (losses) on fair value hedging relationships
Cross-currency derivatives
Derivatives designated as hedging instruments	$	—		$	50		$	—		$	(6)
Hedged items	—			(48)			—			(5)
Total	$	—		$	2		$	—		$	(11)


Gains reclassified from AOCL to earnings due to change in forecast	$	—		$	11		$	8		$	11
Gain (losses) recognized in earnings related to

Not designated as hedging instruments:
Interest rate derivatives — Interest expense	$	—		$	1		$	—		$	1
Foreign currency derivatives — Foreign currency transaction gains (losses)	(7)			45			(9)			58
Commodity derivatives — Revenue—Non-Regulated	(62)			17			(39)			112
Commodity derivatives — Cost of sales—Non-Regulated	(9)			(15)			(14)			(19)
Total	$	(78)		$	48		$	(62)		$	152

Reclassifications from AOCL to earnings are forecasted to decrease pre-tax income from continuing operations by $9 million for the twelve months ended June 30, 2026, primarily related to interest rate derivatives.

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 and amounts classified as held-for-sale, by country as of the dates indicated (in millions):


	June 30, 2025						December 31, 2024
	Gross Receivable		Allowance		Net Receivable		Gross Receivable		Allowance		Net Receivable
Vietnam	$	820	$	20	$	800	$	—	$	—	$	—
Chile	53		—		53		45		—		45
U.S.	49		17		32		48		15		33



Other	8		—		8		9		—		9
Total	$	930	$	37	$	893	$	102	$	15	$	87

Vietnam — AES has recorded loan receivables of $905 million as of June 30, 2025 pertaining to our Mong Duong plant in Vietnam. The plant was constructed under a build, operate, and transfer contract and sold to the Vietnamese government, while we remain the operator for the duration of the 25-year PPA. Mong Duong was reclassified from held-for-sale to held and used as of May 31, 2025 and therefore $105 million was classified in Other current assets, and $800 million in Loan receivable on the Condensed Consolidated Balance Sheet as of June 30, 2025. See Note 14—Revenue and Note 18—Held-For-Sale and Dispositions for further information.

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

18 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2025 and 2024

incorporated to supply regulated contracts. Consequently, costs incurred in excess of the July 1, 2019 price are accumulated and borne by generators. AES Andes aimed to reduce its exposure through the sale of receivables.

Through different agreements and programs, as of June 30, 2025, AES Andes sold and collected $151 million and $228 million related to agreements executed in August 2023 and October 2024 to sell up to $227 million and $254 million of receivables pursuant to the Stabilization Funds, respectively. In April 2025, AES Andes sold and collected the remaining $11 million of receivables pursuant to the Stabilization Funds. Additionally, $47 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 June 30, 2025.

U.S. — AES has recorded non-current receivables pertaining to the sale of the Redondo Beach land. The anticipated collection period extends beyond June 30, 2026.

ALLOWANCE FOR CREDIT LOSSES

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


Six Months Ended June 30, 2025	Accounts Receivable		Argentina Receivables		Other (1)		Total
CECL reserve balance at beginning of period	$	52	$	5	$	39	$	96
Current period provision	27		—		2		29
Write-offs charged against allowance	(25)		—		—		(25)
Recoveries collected	—		—		(1)		(1)
Foreign exchange	—		(1)		—		(1)
CECL reserve balance at end of period	$	54	$	4	$	40	$	98


Six Months Ended June 30, 2024	Accounts Receivable		Argentina Receivables		Other (2)		Total
CECL reserve balance at beginning of period	$	15	$	7	$	42	$	64
Current period provision	10		—		4		14
Write-offs charged against allowance	(4)		—		(7)		(11)
Recoveries collected	1		1		(1)		1
Foreign exchange	—		(1)		(2)		(3)
CECL reserve balance at end of period	$	22	$	7	$	36	$	65

(1)Primarily relates to credit losses allowances on financing receivables as of June 30, 2025. See Note 5—Financing Receivables for further information.

(2)Primarily relates to credit losses allowance classified in Current held-for-sale assets and Noncurrent held-for-sale assets on the Condensed Consolidated Balance Sheet as of June 30, 2024.

Beginning in 2024 and continuing into 2025, the current period provision and allowance for credit losses on customer accounts receivable has increased due to a temporary pause of customer disconnections and certain collection efforts and write-off processes after the implementation of customer billing system upgrades at our utilities in 2023 and 2024. This has resulted in higher past due customer receivables as of June 30, 2025. AES Indiana and AES Ohio reinstituted customer disconnections and write-off processes in March and June 2025, respectively. As a result, $24 million of the $25 million in write-offs charged against allowance for the six months ended June 30, 2025 were related to AES Indiana.

INVESTMENTS IN AND ADVANCES TO AFFILIATES

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


	50%-or-less Owned Affiliates				Majority-Owned Unconsolidated Subsidiaries
Six Months Ended June 30,	2025		2024		2025		2024
Revenue	$	1,220	$	1,366	$	—	$	1
Operating income (loss)	3		5		(1)		—
Net loss	(165)		(114)		(1)		—
Net loss attributable to affiliates	(170)		(45)		(1)		—

19 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2025 and 2024

Dominican Republic Renewables — In June 2025, the Company completed the sale of 50% of its interests in AES DR Renewables Holdings, S.L. and its subsidiaries (collectively “Dominican Republic Renewables”) for $103 million and received cash proceeds for the sale of $100 million in July 2025. The Company retained a 50% ownership interest in Dominican Republic Renewables after the sale. However, the Company’s ownership in Dominican Republic Renewables is held through AES Hispanola Holdings II BV, a 65%-owned consolidated subsidiary, resulting in an AES effective ownership of 33%. The business was deconsolidated and accounted for as an equity method investment and is considered a related party. The Company recorded its retained interest in Dominican Republic Renewables at fair value of $103 million, using the market approach. See Note 18—Held-for-Sale and Dispositions for further information. Dominican Republic Renewables is reported in the Renewables SBU reportable segment.

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% ownership interest in Uplight was diluted to 25%. The transaction was accounted for as a partial disposition in which AES recognized a gain of $52 million in Gain on disposal and sale of business interests upon remeasurement. 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.

Alto Maipo — The Company holds a 99% ownership interest in Alto Maipo SpA (“Alto Maipo”), a hydroelectric plant in Chile. 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 both June 30, 2025 and December 31, 2024, the fair value was insignificant. Alto Maipo is reported in the Renewables SBU reportable segment.

Barry — The Company holds a 100% ownership interest in AES Barry Ltd. ("Barry"), a dormant entity in the U.K. that disposed of its generation and other operating assets. Due to a debt agreement, no material financial or operating decisions can be made without the banks' consent, and the Company does not control Barry. As of June 30, 2025 and December 31, 2024, other long-term liabilities included $45 million and $41 million, respectively, related to this debt agreement. Barry is reported in the Energy Infrastructure SBU reportable segment.

20 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2025 and 2024

OBLIGATIONS

Recourse Debt — Recourse debt represents debt that the Parent Company has an obligation to settle. This can be debt issued directly by the Parent Company or debt issued by a subsidiary under which the Parent Company has explicit commitments such as guarantees, indemnities, letters of credit, or agreements to settle if the subsidiary defaults.

Senior Unsecured Term Loan due June 2026 — In June 2025, the Company executed a $500 million senior unsecured term loan agreement, maturing in June 2026. As of June 30, 2025, AES had no outstanding drawings under the facility.

Senior Notes due 2032 — In March 2025, the Company issued $800 million aggregate principal of 5.80% senior notes due in 2032. The Company used the proceeds from this issuance to purchase via tender offer a portion of its 3.30% senior notes due in 2025. As a result of the latter transaction, the Company recognized a gain on extinguishment of debt of $2 million.

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 January 2055. AES allocates 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, the net proceeds from the offering are used for general corporate purposes.

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. In April 2025, the Company executed agreements to increase the maximum aggregate face amount to $1.5 billion 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 $1.8 billion in revolving credit facilities, and the Company cannot issue commercial paper in an aggregate amount exceeding the then available capacity under its revolving credit facilities. For the six months ended June 30, 2025, the Company borrowed approximately $22 billion and repaid approximately $21.9 billion under the commercial paper program, with average daily outstanding borrowings of $334 million. As of June 30, 2025, the Company had $67 million outstanding borrowings under the commercial paper program with a weighted average interest rate of 4.81%. The Notes are classified as current.

Revolving Credit Facilities — In December 2024, AES executed a $300 million senior unsecured revolving credit facility, maturing in December 2026. The aggregate commitment under its previously existing revolving credit facility is $1.5 billion and matures in August 2027. As of June 30, 2025, AES had no outstanding drawings under either of its revolving credit facilities.

Non-Recourse Debt — Non-recourse debt represents debt issued by one of our subsidiaries and is only required to be repaid solely from the subsidiary's assets. Repayments of the loans, and interest thereon, is secured solely by the capital stock, physical assets, contracts, and cash flows of that subsidiary, and the Parent Company is not otherwise liable for such debt. Non-recourse debt balances on the Condensed Consolidated Balance Sheet includes $1.3 billion of current and $12.3 billion of noncurrent non-recourse debt related to VIEs as of June 30, 2025.

During the six months ended June 30, 2025, the Company’s following subsidiaries had significant debt issuances (in millions):


Subsidiary	Issuances (1)
AES Clean Energy	$	976
AES Puerto Rico Solar	669
AES Andes	520

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

AES Puerto Rico Solar — The Marahu project, 70% owned by AES, is currently constructing the Salinas and Jobos renewables projects in Puerto Rico, including both solar and energy storage facilities. In October 2024, the Marahu project obtained a loan guarantee for $861 million from the U.S. Department of Energy, and began drawing on the loan in the first quarter of 2025. As of June 30, 2025, there were $667 million in outstanding borrowings, maturing in 2049. The remainder of the loan will be drawn upon as required to fund construction costs.

21 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2025 and 2024

AES Andes — In March 2025, AES Andes issued $400 million aggregate principal of 6.25% senior notes due in 2032. The net proceeds from the issuance were used to redeem the remaining $228 million aggregate principal of its 6.35% junior subordinated notes due in 2079 and to repay other existing indebtedness. As a result of the latter transaction, the Company recognized a loss on extinguishment of debt of $3 million.

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 this transaction, the Company recognized a loss on extinguishment of debt of $8 million.

AES Clean Energy — In December 2024, Bellefield 2 Seller, LLC executed a construction, tax equity bridge, and letter of credit financing agreement for commitments of up to $1.7 billion. As of June 30, 2025, there were $763 million in borrowings under the facilities at an interest rate of 4.30%, maturing in December 2026.

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 June 30, 2025, there was $1.7 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.

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 in 2022 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. 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. In May 2025, the Issuers issued $520 million of 6.70% notes due May 2050, resulting in an aggregate principal outstanding of $2.7 billion. As a result of the notes issued in 2025 and net of repayments, AES Clean Energy Development recorded, in aggregate, an increase in liabilities of $498 million, resulting in an aggregate carrying amount of notes of $1.9 billion as of June 30, 2025.

AES Clean Energy Development, AES Renewable Holdings, and sPower, collectively referred to as the Borrowers, executed two Credit Agreements for revolving credit facilities in 2021 and subsequent amendments in the following years for aggregate commitments of $3.6 billion with maturity dates in May 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 and net of repayments, AES Clean Energy Development and AES Renewable Holdings recorded, in aggregate, a decrease in liabilities of $231 million in 2025, resulting in total commitments used under the revolving credit facilities, as of June 30, 2025, of $2.7 billion. As of June 30, 2025, the aggregate commitments used under the revolving credit facilities for the Co-Borrowers was $2.9 billion.

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 contain 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 has been recognized as a result of this transaction. As of June 30, 2025, 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) | June 30, 2025 and 2024

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 at AES Indiana.

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.

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 June 30, 2025 and December 31, 2024, approximately $488 million and $147 million, respectively, of restricted cash was maintained in accordance with certain covenants of the non-recourse debt agreements. Of these amounts, $410 million and $79 million, respectively, were included within Restricted cash and $78 million and $68 million, respectively, were included within Debt service reserves and other deposits in the accompanying Condensed Consolidated Balance Sheets. As of June 30, 2025 and December 31, 2024, approximately $168 million and $155 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. Of total restricted cash and debt service reserves of $851 million, $608 million related to VIEs as of June 30, 2025.

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 June 30, 2025.

The following table summarizes the Company’s subsidiary non-recourse debt in default (in millions) as of June 30, 2025. 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	$	148	$	(188)

AES Ilumina (Puerto Rico)	Covenant	21		8
AES Jordan Solar	Covenant	6		13


Total		$	175

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.

AES Mexico Generation Holdings (TEG and TEP) — In December 2024, AES Mexico Generation Holdings executed an amendment to the original credit agreement with its noteholders that provided a full and complete waiver for all previous events of default for TEG and TEP and extended the waiver granted to June 30, 2025 to remain compliant. As of June 30, 2025, all requirements to remain in compliance with the debt covenant requirements were met. As such, the AES Mexico Generation Holdings debt balance of $129 million was not in default.

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 June 30, 2025, 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 facilities, 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) | June 30, 2025 and 2024

Supplier Financing Arrangements

With some purchases, the Company enters into supplier financing arrangements with the goal of securing improved payment terms. The Company confirms supplier invoices to an intermediary financial institution who will pay the supplier directly or reimburse the Company for payments made to the supplier. These arrangements are included in Supplier financing arrangements on the Condensed Consolidated Balance Sheets in Current liabilities 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 total outstanding balances of $621 million as of June 30, 2025. These agreements ranged from less than $1 million to $47 million with a weighted average interest rate of 6.36%. Of the amounts outstanding under supplier financing arrangements as of June 30, 2025, $393 million were guaranteed, including $216 million guaranteed by the Parent Company and $177 million guaranteed by subsidiaries.

The Company had total outstanding balances of $917 million as of December 31, 2024. These agreements ranged from less than $1 million to $69 million with a weighted average interest rate of 6.83%. Of the amounts outstanding under supplier financing arrangements as of December 31, 2024, $616 million were guaranteed, including $245 million guaranteed by the Parent Company and $371 million guaranteed by subsidiaries.

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 1 year to no more than 31 years.

The following table summarizes the Parent Company’s contingent contractual obligations as of June 30, 2025. Amounts presented in the following table represent the Parent Company’s current undiscounted exposure to guarantees and the range of maximum undiscounted potential exposure per individual agreement. 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	$	4,725	101	<$1 — 1,110
Letters of credit under bilateral agreements	310		7	$11 — 88
Letters of credit under the unsecured credit facilities	163		11	<$1 — 60
Letters of credit under the revolving credit facilities	48		22	<$1 — 20
Surety bonds	2		2	<$1 — 1

Total	$	5,248	143

During the six months ended June 30, 2025, 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 June 30, 2025, the maximum undiscounted potential exposure to guarantees and letters of credit issued by our subsidiaries was $5.6 billion, including $1.9 billion of customary payment guarantees under EPC contracts and other agreements, $1.6 billion of letters of credit outstanding, $1.3 billion of surety bonds and other guarantees issued by insurance companies, and $816 million of tax equity financing related guarantees.

24 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2025 and 2024

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 June 30, 2025 and December 31, 2024, the Company recognized liabilities of $1 million and $2 million for projected environmental remediation costs, respectively. These amounts are reported on the Condensed Consolidated Balance Sheets within Accrued and other liabilities and Other noncurrent liabilities. 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 June 30, 2025. Unasserted claims are not included in the range of potential losses related to environmental matters until it is probable that a claim will be asserted and there is a reasonable possibility that the outcome will be unfavorable. In aggregate, the Company estimates the range of potential losses related to environmental matters, where estimable, to be between $1 million and $5 million. 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 $14 million and $5 million as of June 30, 2025 and December 31, 2024, 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 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 June 30, 2025. 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 $194 million and $225 million. Included in this range is a reasonably possible legal contingency for environmental remediation costs related to AES Sul, a business the Company disposed of in 2016, estimated to be approximately R$15 million to R$60 million ($3 million to $11 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 June 30,				Six Months Ended June 30,
Operating Lease Revenue	2025		2024		2025		2024
Non-variable lease revenue	$	81	$	135	$	157	$	237
Variable lease revenue	28		18		43		31
Total lease revenue	$	109	$	153	$	200	$	268

25 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2025 and 2024

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


Property, Plant and Equipment, Net	June 30, 2025		December 31, 2024
Gross assets	$	2,208	$	1,085
Less: Accumulated depreciation	(273)		(218)
Net assets	$	1,935	$	867

The option to extend or terminate a lease is based on customary early termination provisions in the contract, such as payment defaults, bankruptcy, or lack of performance on energy delivery. The Company has not recognized any early terminations as of June 30, 2025. 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 June 30, 2025 for the remainder of 2025 through 2029 and thereafter (in millions):


	Future Cash Receipts for
	Sales-Type Leases		Operating Leases
2025	$	26	$	133
2026	49		144
2027	50		65
2028	50		—
2029	50		—
Thereafter	719		1
Total	$	944	$	343
Less: Imputed interest	(352)
Present value of total lease receipts	$	592

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. Generally, these arrangements include both lease and non-lease elements under ASC 842, with the BESS component typically constituting a sales-type lease. Generally, losses recognized on the commencement of sales-type leases primarily relate to PPAs that contain no variable lease payments and the exclusion of the value of ITCs from the fair value of the renewable asset, which is used in the determination of the rate implicit in the lease. This results in a higher discount rate, reducing the lease receivable to an amount below the carrying value of the associated lease asset, and a resulting pre-tax loss on commencement.

The following table presents variable lease revenue, interest income, and gains (losses) on commencement of sales-type leases in which the Company is the lessor, for the periods indicated (in millions):


	Three Months Ended June 30,				Six Months Ended June 30,
Sales-Type Leases	2025		2024		2025		2024
Variable lease revenue	$	—	$	—	$	1	$	1
Interest income	6		4		12		8
Net losses on commencement of sales-types leases (1)	(199)		(72)		(208)		(67)

(1)Gains and losses 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

Noncontrolling interests with redemption features that are not solely within the control of the issuer are classified as temporary equity and are included 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 varies 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 Retained earnings or Additional paid-in capital in the absence of retained earnings. When the instrument is not probable of becoming redeemable, no adjustment to the carrying value is recognized.

26 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2025 and 2024

The following table is a reconciliation of changes in redeemable stock of subsidiaries for the periods indicated (in millions):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Balance at the beginning of the period	$	899	$	1,502	$	938	$	1,464
Net income (loss)	3		(10)		33		(99)
Other comprehensive income	—		37		—		72
Adjustments to redemption value of redeemable stock of subsidiaries	10		(6)		10		—
Reclassification of redeemable stock of subsidiaries to noncontrolling interests	(18)		(670)		(56)		(670)

Distributions to holders of redeemable stock of subsidiaries	(10)		(11)		(41)		(25)

Contributions from holders of redeemable stock of subsidiaries	168		45		168		71
Sales of redeemable stock of subsidiaries	687		14		687		88
Issuance of preferred shares in subsidiaries	440		—		440		—
Balance at the end of the period	$	2,179	$	901	$	2,179	$	901

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


	June 30, 2025		December 31, 2024
IPALCO common stock	$	958	$	835
AES Ohio common stock	584		—
AES Global Insurance preferred stock	456		—
AES Clean Energy tax equity partnerships	181		65


AES Indiana Pike County BESS tax equity partnership	—		38
Total redeemable stock of subsidiaries	$	2,179	$	938

AES Global Insurance — On April 30, 2025, the Company sold minority interests in AES Global Insurance Company, LLC (“AGIC”), AES’ captive insurance company, and AGIC Holdings, LLC (together with AGIC, the “AGIC Companies”) in exchange for $450 million in total proceeds for Class B units representing 17.5% and 18.0%, respectively, of each entity’s total outstanding units, for a combined ownership (directly and indirectly) of AGIC’s total outstanding units of 32.4% by the Class B Member. The Company continues to own Class A units for the remaining economic interest in the AGIC Companies. The Class B units provide for target distribution amounts for the Class B Member, with a call option for AES for years 2030 through 2035 to redeem these units at pre-agreed redemption prices.

As the agreement contains certain redemption features that may require future redemption of the Class B units and are not solely in AES’ control, the noncontrolling interest is considered temporary equity. The contractual target rate of return increases the redemption price on the Class B units and the annual distributions reduce the applicable redemption price. Annual dividends are subject to regulatory and the AGIC Companies Boards’ approval. Through March 31, 2045, the AGIC Companies Boards will approve distributions to the Class B Member to the extent that there is sufficient cash generated from operations each annual period. After March 31, 2045, all dividends are discretionary if the Class B units remain outstanding. It is probable that the AGIC Companies’ performance will generate sufficient cash to require distributions to be made to the Class B Member of an amount that would redeem the instrument after the call option period. Therefore, as of June 30, 2025, the noncontrolling interest is probable of becoming redeemable and the carrying value of the Class B units will be adjusted to equal the redemption value each reporting period. As of June 30, 2025, the redemption value of the noncontrolling ownership interest of $456 million exceeded the carrying value; as such, an adjustment of $10 million was recorded to Redeemable stock of subsidiaries on the Condensed Consolidated Balance Sheets to increase the carrying value to the Class B units’ redemption value. The AGIC Companies are reported in Corporate and Other.

As part of the transaction, it is required that either (i) the AGIC Companies achieve a minimum distribution target to the Class B Member ranging from $146 million to $199 million over pre-defined periods of time ranging from three to five years (the “distribution period”) or (ii) AGIC achieves an average cash basis quarterly net income threshold for the period comprising the relevant distribution period and the four quarters immediately prior to the start of such distribution period. AES can make disproportionate distributions to the Class B Member to meet the minimum distribution target for the distribution period. If, at the end of a distribution period, (1) such cash basis net income threshold is not met and (2) the minimum distribution target for such distribution period is not achieved, AES would be required to address the shortfall by issuing AES common stock (“Shortfall Stock”) to AGIC for the net difference between actual and targeted distributions. Distributions of cash from the sale of Shortfall Stock are subject to regulatory approval and at the discretion of AES.

27 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2025 and 2024

AES Ohio — On April 4, 2025, DPL sold an indirect equity interest in AES Ohio of approximately 30% to Astrid Holdings LP, a wholly-owned subsidiary of CDPQ, for total proceeds of approximately $544 million, resulting in an increase to Redeemable stock of subsidiaries of $538 million, net of transaction costs. The Company also recognized an increase to additional paid-in capital and a reduction to retained earnings of $188 million for the excess of the fair value of the shares over the share of the net assets sold. The agreement contains certain redemption features that, while not currently in effect, are not solely in AES’ control. As a result, the noncontrolling ownership interest is considered temporary equity. The Company has concluded that the likelihood of an event that would allow CDPQ to redeem its interest under the terms of the shareholder agreement is not probable, but would require redemption at fair value. Therefore, as of June 30, 2025, the noncontrolling ownership interest is not probable of becoming redeemable and subsequent adjustments to the carrying value were not required. AES Ohio is reported in the Utilities 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. The substance of such arrangements is that of a preferred structure, whereby tax equity investors are granted preferential returns in the form of significant earnings and tax allocations from the partnership, until a specified internal rate of return is achieved.

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. Some of these tax equity partnership agreements have redemption features dependent upon the passage of time, therefore the noncontrolling ownership interests are probable of becoming redeemable. As of June 30, 2025, the carrying values of these noncontrolling ownership interests exceeded the redemption values, therefore no adjustments to the carrying values were necessary. Certain other tax equity partnership agreements have redemption features contingent upon the underlying assets achieving agreed-upon project milestones. The Company has concluded it is probable that these projects will reach the specified milestones, therefore the noncontrolling ownership interests are not probable of becoming redeemable and subsequent adjustments to the carrying value were not required.

During the six months ended June 30, 2025 and 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 $149 million and $100 million, respectively, net of transaction costs.

During the six months ended June 30, 2025 and 2024, certain renewables development projects with redemption features were placed in service, resulting in the expiration of the redemption features. As a result, noncontrolling ownership interests of $18 million and $107 million, respectively, 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.

AES Indiana Pike County BESS — The redemption feature of the tax equity partnership agreement was contingent upon the underlying assets being placed in service by a guaranteed date. In March 2025, the Pike County BESS project was placed in service, resulting in the expiration of the redemption feature. As a result, the noncontrolling ownership interest of $38 million was reclassified from Redeemable stock of subsidiaries to Noncontrolling interests on the Condensed Consolidated Balance Sheets. AES Indiana is reported in the Utilities SBU reportable segment.

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 $563 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.

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”).

28 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2025 and 2024

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. The substance of such arrangements is that of a preferred structure, whereby tax equity investors are granted preferential returns in the form of significant earnings and tax allocations from the partnership, until a specified internal rate of return is achieved.

During the six months ended June 30, 2025 and 2024, 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 $282 million, and $112 million, respectively. AES Clean Energy Development and AES Renewable Holdings are reported in the Renewables SBU reportable segment.

Cochrane — In May 2025, the Company acquired the remaining 40% of the common shares in Empresa Electrica Cochrane SpA (“Cochrane”), a coal-fired plant in Chile, from a third-party investor for $89 million, increasing AES’ ownership in Cochrane to 96.7%. This transaction resulted in a $46 million decrease in Parent Company Stockholder’s Equity due to a decrease in additional paid-in-capital of $29 million and a reclassification of accumulated other comprehensive losses from NCI to AOCL of $17 million. The preferred shares in Cochrane, previously issued by AES Andes in September 2020, remain outstanding. Under the terms of the operating agreement, preferred shareholders have the preferential right to receive distributions from the earnings or available distributable capital of Cochrane until reaching their original investment plus a specified rate of return. Cochrane is reported in the Energy Infrastructure SBU reportable segment.

29 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2025 and 2024

AES Indiana Pike County BESS — In March 2025, as a result of the Pike County BESS project being placed in service, the noncontrolling ownership interest of $38 million was reclassified from Redeemable stock of subsidiaries to Noncontrolling interests on the Condensed Consolidated Balance Sheets. See Note 11—Redeemable Stock of Subsidiaries for further information. Subsequently, AES Indiana received an additional $150 million from the tax equity investor, resulting in an increase to NCI. AES Indiana is reported in the Utilities SBU reportable segment.

Hardy Hills Solar — In December 2023, AES Indiana sold a noncontrolling interest in the Hardy Hills solar project to a tax equity investor, resulting in a $79 million increase to NCI. In May 2024, the project reached commercial operations and AES Indiana received an additional $47 million from the tax equity investor. 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. In February 2024, AES Andes completed the sale of Mesamávida to Chile Renovables for $40 million, resulting in an increase to NCI of $51 million and a decrease to additional paid-in capital of $11 million.

In December 2023, Chile Renovables issued $275 million of preferred shares to GIP, the proceeds of which are being used to fund the development of an additional pipeline of renewables projects. Under the terms of the operating agreement, GIP receives an escalating specified internal rate of return up until the point the projects reach commercial operations. As each project reaches commercial operations, the preferred shares convert to common stock and GIP may make additional contributions to maintain its 49% ownership interest. In February 2025, the Andes Solar 2a BESS project reached commercial operations. The preferred shares were converted to common stock and GIP made additional contributions of $14 million, resulting in an increase to NCI of $17 million and a decrease to additional paid-in capital of $3 million.

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

AES Renewable Holdings — In December 2023, AES Renewable Holdings issued preferred shares in a portfolio of operating assets ("OpCo 1"). Under the terms of the operating agreement, the preferred shareholder will receive cash distributions disproportionate to its ownership interest in OpCo 1 until a specified internal rate of return is reached. AES Renewable Holdings is reported in the Renewables SBU reportable segment.

The following table summarizes the net income (loss) attributable to The AES Corporation and all transfers (to) from noncontrolling interests for the periods indicated (in millions):


	Six Months Ended June 30,
	2025		2024
Net income (loss) attributable to The AES Corporation	$	(49)	$	708
Transfers (to) from noncontrolling interest:
Increase (decrease) in The AES Corporation's paid-in capital for sale of subsidiary shares	184		(8)
Additional paid-in capital transferred to redeemable stock of subsidiaries (1)	(188)		—
Decrease in The AES Corporation's paid-in capital for acquisition of subsidiary shares	(26)		—
Net transfers to noncontrolling interest	(30)		(8)
Change from net income (loss) attributable to The AES Corporation and transfers (to) from noncontrolling interests	$	(79)	$	700

(1) See Note 11*—Redeemable Stock of Subsidiaries* for further information on increase in paid-in capital transferred to redeemable stock of subsidiaries.

Accumulated Other Comprehensive Loss — The following table summarizes the changes in AOCL by component, net of tax and NCI, for the six months ended June 30, 2025 (in millions):

30 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2025 and 2024


	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	$	(1,282)	$	537	$	(24)	$	3	$	(766)
Other comprehensive income (loss) before reclassifications	71		(119)		(4)		—		(52)
Amount reclassified to earnings	—		(9)		—		—		(9)
Other comprehensive income (loss)	71		(128)		(4)		—		(61)
Reclassification from NCI due to share sales and repurchases	—		(17)		8		—		(9)
Balance at the end of the period	$	(1,211)	$	392	$	(20)	$	3	$	(836)

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 June 30,						Six Months Ended June 30,
	2025		2024			2025			2024





Change in fair value of derivatives, net

		Non-regulated cost of sales		1			—			2		(1)
		Interest expense		(6)			(31)			10		(30)


		Foreign currency transaction gains (losses)		2			1			5		2
		Income (loss) from continuing operations before taxes and equity in earnings of affiliates		(3)			(30)			17		(29)
		Income tax benefit (expense)		(6)			7			(12)		7
		Net equity in earnings (losses) of affiliates		—			—			—		1
		Net income (loss)		(9)			(23)			5		(21)

		Less: Net loss attributable to noncontrolling interests and redeemable stock of subsidiaries		3			4			4		4
		Net income (loss) attributable to The AES Corporation		$	(6)		$	(19)		$	9	$	(17)

Common Stock Dividends — The Parent Company paid dividends of $0.17595 per outstanding share to its common stockholders during the first and second quarters of 2025 for dividends declared in December 2024 and February 2025.

On July 10, 2025, the Board of Directors declared a quarterly common stock dividend of $0.17595 per share payable on August 15, 2025, to shareholders of record at the close of business on August 1, 2025.

31 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2025 and 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, who is our Chief Operating Decision Maker. 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

*•*New Energy Technologies — Investments in Fluence, Uplight, Maximo, and other new and innovative energy technology businesses.

Prior to the first quarter of 2025, our businesses in Chile (which had a mix of generation sources, including renewables, that were pooled to service our existing PPAs initially entered into for sale of the output of the coal plants) were reported in the Energy Infrastructure SBU. After the sale or disconnection of a significant portion of AES Andes’ coal plants and the expiration of its coal-indexed contracts with regulated customers at the end of 2024, the results of our businesses in Chile, excluding the two remaining coal plants, are now reported as part of the Renewables SBU in financial information regularly reviewed by the Chief Operating Decision Maker. The results of the two remaining coal plants in Chile, Angamos and Cochrane, remain within the Energy Infrastructure SBU. As the composition of the segments changed in the first quarter of 2025, the segment information for prior comparative periods has been retrospectively revised to reflect AES Andes’ renewables partnership with GIP, Chile Renovables, which is separable from the rest of the AES Andes portfolio, as part of the Renewables SBU. We determined that there was no separately identifiable financial information for the other renewables in the AES Andes portfolio as they were servicing the same coal-indexed PPAs as the coal facilities prior to 2025, therefore the rest of the renewables portfolio at AES Andes is presented within the Energy Infrastructure SBU in the 2024 segment information presented. Revenue and Adjusted EBITDA for AES Andes that are presented within the Energy Infrastructure SBU in historical periods and within the Renewables SBU in 2025 were $216 million and $12 million, respectively, during the three months ended June 30, 2025, and $419 million and $34 million, respectively, during the six months ended June 30, 2025.

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 AES Global Insurance Company, LLC (“AGIC”), AES’ captive 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, amortization, and accretion of AROs, adjusted for the impact of NCI and interest, taxes, depreciation, amortization, and accretion of AROs 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; (e) gains, losses, and costs due to the early retirement of debt or troubled debt restructuring; and (f) costs directly associated with a major restructuring program, including, but not limited to, workforce reduction efforts.

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

32 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2025 and 2024

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.

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


	Three Months Ended June 30, 2025
	Renewables SBU		Utilities SBU		Energy Infrastructure SBU		New Energy Technologies SBU		Total
Revenue	$	644	$	954	$	1,306	$	—	$	2,904
Corporate and other									43
Eliminations									(92)
Total Revenue									$	2,855
Less:
Total cost of sales excluding depreciation, amortization, and accretion of AROs (1)	422		687		1,048		2
Other segment items (2)	(18)		71		4		15
Segment Adjusted EBITDA	$	240	$	196	$	254	$	(17)	$	673
Reconciliation to income from continuing operations before taxes
Corporate and other									11
Eliminations									(3)
Interest expense									(352)
Interest income									70
Depreciation, amortization, and accretion of AROs									(354)
Adjusted for:
Noncontrolling interests and redeemable stock of subsidiaries									253
Income tax expense, interest expense, and depreciation, amortization, and accretion of AROs from equity affiliates									(45)
Interest income recognized under service concession arrangements									(14)
Unrealized derivatives, equity securities, and financial assets and liabilities losses									(133)
Unrealized foreign currency losses									(4)
Disposition/acquisition losses									(126)
Impairment reversals									87
Loss on extinguishment of debt and troubled debt restructuring									(4)
Restructuring costs									(42)
Income from continuing operations before taxes									$	17

(1)Segment-level total cost of sales excluding depreciation, amortization, and accretion of AROs is considered regularly provided to the chief operating decision maker. Total cost of sales excluding depreciation, amortization, and accretion of AROs includes items such as fuel cost, electricity purchases, transmission charges, supplies, salaries and wages, consulting costs, IT costs, market fees, insurance, and lease expense.

(2)Other segment items for each reportable segment includes:

Renewables SBU — business development costs, miscellaneous gains and losses in Other income and Other expense, realized foreign currency gains and losses, earnings from equity affiliates, and adjustment for noncontrolling interest expense.

Utilities SBU — miscellaneous gains and losses in Other income and Other expense, earnings from equity affiliates, and adjustment for noncontrolling interest expense.

Energy Infrastructure SBU — business development costs, miscellaneous gains and losses in Other income and Other expense, realized foreign currency gains and losses, earnings from equity affiliates, and adjustment for noncontrolling interest expense.

New Energy Technologies SBU — earnings from equity affiliates, and miscellaneous gains and losses in Other income and Other expense.

33 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2025 and 2024


	Three Months Ended June 30, 2024
	Renewables SBU		Utilities SBU		Energy Infrastructure SBU		New Energy Technologies SBU		Total
Revenue	$	619	$	896	$	1,462	$	—	$	2,977
Corporate and other									40
Eliminations									(75)
Total Revenue									$	2,942
Less:
Total cost of sales excluding depreciation, amortization, and accretion of AROs (1)	405		627		1,118		3
Other segment items (2)	60		55		41		11
Segment Adjusted EBITDA	$	154	$	214	$	303	$	(14)	$	657
Reconciliation to income from continuing operations before taxes
Corporate and other									12
Eliminations									(11)
Interest expense									(389)
Interest income									88
Depreciation, amortization, and accretion of AROs									(315)
Adjusted for:
Noncontrolling interests and redeemable stock of subsidiaries									182
Income tax expense, interest expense, and depreciation, amortization, and accretion of AROs from equity affiliates									(28)
Interest income recognized under service concession arrangements									(16)
Unrealized derivatives, equity securities, and financial assets and liabilities gains									53
Unrealized foreign currency losses									(12)
Disposition/acquisition losses									(62)
Impairment losses									(23)
Loss on extinguishment of debt and troubled debt restructuring									(18)
Income from continuing operations before taxes									$	118

(2)Other segment items for each reportable segment includes:

Utilities SBU — miscellaneous gains and losses in Other income and Other expense, earnings from equity affiliates, and adjustment for noncontrolling interest expense.

New Energy Technologies SBU — earnings from equity affiliates, and miscellaneous gains and losses in Other income and Other expense.

34 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2025 and 2024


	Six Months Ended June 30, 2025
	Renewables SBU		Utilities SBU		Energy Infrastructure SBU		New Energy Technologies SBU		Total
Revenue	$	1,310	$	1,963	$	2,626	$	—	$	5,899
Corporate and other									79
Eliminations									(197)
Total Revenue									$	5,781
Less:
Total cost of sales excluding depreciation, amortization, and accretion of AROs (1)	888		1,417		2,098		3
Other segment items (2)	21		127		20		39
Segment Adjusted EBITDA	$	401	$	419	$	508	$	(42)	$	1,286
Reconciliation to income from continuing operations before taxes
Corporate and other									(13)
Eliminations									(1)
Interest expense									(694)
Interest income									139
Depreciation, amortization, and accretion of AROs									(691)
Adjusted for:
Noncontrolling interests and redeemable stock of subsidiaries									387
Income tax expense, interest expense, and depreciation, amortization, and accretion of AROs from equity affiliates									(81)
Interest income recognized under service concession arrangements									(29)
Unrealized derivatives, equity securities, and financial assets and liabilities losses									(132)
Unrealized foreign currency gains									3
Disposition/acquisition losses									(167)
Impairment reversals									54
Loss on extinguishment of debt and troubled debt restructuring									(12)
Restructuring costs									(88)
Loss from continuing operations before taxes									$	(39)

(2)Other segment items for each reportable segment includes:

Utilities SBU — miscellaneous gains and losses in Other income and Other expense, earnings from equity affiliates, and adjustment for noncontrolling interest expense.

New Energy Technologies SBU — earnings from equity affiliates, and miscellaneous gains and losses in Other income and Other expense.

35 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2025 and 2024


	Six Months Ended June 30, 2024
	Renewables SBU		Utilities SBU		Energy Infrastructure SBU		New Energy Technologies SBU		Total
Revenue	$	1,262	$	1,769	$	3,071	$	—	$	6,102
Corporate and other									73
Eliminations									(148)
Total Revenue									$	6,027
Less:
Total cost of sales excluding depreciation, amortization, and accretion of AROs (1)	864		1,269		2,250		4
Other segment items (2)	133		104		162		27
Segment Adjusted EBITDA	$	265	$	396	$	659	$	(31)	$	1,289
Reconciliation to income from continuing operations before taxes
Corporate and other									20
Eliminations									(11)
Interest expense									(746)
Interest income									193
Depreciation, amortization, and accretion of AROs									(633)
Adjusted for:
Noncontrolling interests and redeemable stock of subsidiaries									346
Income tax expense, interest expense, and depreciation, amortization, and accretion of AROs from equity affiliates									(62)
Interest income recognized under service concession arrangements									(33)
Unrealized derivatives, equity securities, and financial assets and liabilities gains									138
Unrealized foreign currency losses									(3)
Disposition/acquisition losses									(19)
Impairment losses									(49)
Loss on extinguishment of debt and troubled debt restructuring									(50)
Income from continuing operations before taxes									$	380

(2)Other segment items for each reportable segment includes:

Utilities SBU — miscellaneous gains and losses in Other income and Other expense, earnings from equity affiliates, and adjustment for noncontrolling interest expense.

New Energy Technologies SBU — earnings from equity affiliates, and miscellaneous gains and losses in Other income and Other expense.

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.


Long-Lived Assets	June 30, 2025		December 31, 2024
Renewables SBU	$	21,136	$	19,151
Utilities SBU	8,853		8,535
Energy Infrastructure SBU	5,091		5,805
New Energy Technologies SBU	25		22

Corporate and Other	24		25
Long-Lived Assets	35,129		33,538
Current assets	6,320		6,831
Investments in and advances to affiliates	1,091		1,124
Debt service reserves and other deposits	88		78
Goodwill	345		345
Other intangible assets	2,050		1,947
Deferred income taxes	402		365
Loan receivable	800		—
Other noncurrent assets, excluding right-of-use assets for operating leases	2,317		2,545
Noncurrent held-for-sale assets	—		633
Total Assets	$	48,542	$	47,406

36 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2025 and 2024


Depreciation, Amortization, and Accretion of AROs	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2025		2024		2025		2024
Renewables SBU	$	138	$	116	$	267	$	237
Utilities SBU	131		112		255		223
Energy Infrastructure SBU	83		84		164		168
New Energy Technologies SBU	1		1		1		1

Corporate and Other	1		2		4		4
Total	$	354	$	315	$	691	$	633


Capital Expenditures	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2025		2024		2025		2024
Renewables SBU	$	1,086	$	1,185	$	2,056	$	2,713
Utilities SBU	232		414		492		862
Energy Infrastructure SBU	25		91		53		256
New Energy Technologies SBU	2		2		3		4

Corporate and Other	1		6		3		18
Total	$	1,346	$	1,698	$	2,607	$	3,853


Interest Income	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2025		2024		2025		2024
Renewables SBU	$	20	$	29	$	41	$	60
Utilities SBU	4		4		6		7
Energy Infrastructure SBU	41		48		82		113
New Energy Technologies SBU	2		2		4		3

Corporate and Other	3		5		6		10
Total	$	70	$	88	$	139	$	193


Interest Expense	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2025		2024		2025		2024
Renewables SBU	$	119	$	118	$	250	$	210
Utilities SBU	77		75		154		148
Energy Infrastructure SBU	76		127		150		261
New Energy Technologies SBU	—		—		—		—

Corporate and Other	80		69		140		127
Total	$	352	$	389	$	694	$	746


Net Equity in Earnings (Losses) of Affiliates	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2025		2024		2025		2024
Renewables SBU	$	(6)	$	21	$	(15)	$	22
Utilities SBU	2		2		4		3
Energy Infrastructure SBU	3		2		7		5
New Energy Technologies SBU	(17)		(11)		(44)		(28)

Corporate and Other	(4)		(11)		(8)		(14)
Total	$	(22)	$	3	$	(56)	$	(12)

37 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2025 and 2024

REVENUE

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



	Three Months Ended June 30, 2025
	Renewables SBU		Utilities SBU		Energy Infrastructure SBU		New Energy Technologies SBU		Corporate, Other and Eliminations		Total
Non-Regulated Revenue
Revenue from contracts with customers	$	638	$	20	$	1,236	$	—	$	(49)	$	1,845


Other non-regulated revenue (1)	6		1		70		—		—		77
Total non-regulated revenue	644		21		1,306		—		(49)		1,922
Regulated Revenue
Revenue from contracts with customers	—		927		—		—		—		927

Other regulated revenue	—		6		—		—		—		6
Total regulated revenue	—		933		—		—		—		933
Total revenue	$	644	$	954	$	1,306	$	—	$	(49)	$	2,855

	Three Months Ended June 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	$	569	$	23	$	1,304	$	—	$	(35)	$	1,861


Other non-regulated revenue (1)	50		1		158		—		—		209
Total non-regulated revenue	619		24		1,462		—		(35)		2,070
Regulated Revenue
Revenue from contracts with customers	—		865		—		—		—		865

Other regulated revenue	—		7		—		—		—		7
Total regulated revenue	—		872		—		—		—		872
Total revenue	$	619	$	896	$	1,462	$	—	$	(35)	$	2,942



	Six Months Ended June 30, 2025
	Renewables SBU		Utilities SBU		Energy Infrastructure SBU		New Energy Technologies SBU		Corporate, Other and Eliminations		Total
Non-Regulated Revenue
Revenue from contracts with customers	$	1,258	$	43	$	2,458	$	—	$	(118)	$	3,641


Other non-regulated revenue (1)	52		2		168		—		—		222
Total non-regulated revenue	1,310		45		2,626		—		(118)		3,863
Regulated Revenue
Revenue from contracts with customers	—		1,903		—		—		—		1,903

Other regulated revenue	—		15		—		—		—		15
Total regulated revenue	—		1,918		—		—		—		1,918
Total revenue	$	1,310	$	1,963	$	2,626	$	—	$	(118)	$	5,781

	Six Months Ended June 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	$	1,163	$	42	$	2,706	$	—	$	(75)	$	3,836


Other non-regulated revenue (1)	99		2		365		—		—		466
Total non-regulated revenue	1,262		44		3,071		—		(75)		4,302
Regulated Revenue
Revenue from contracts with customers	—		1,712		—		—		—		1,712

Other regulated revenue	—		13		—		—		—		13
Total regulated revenue	—		1,725		—		—		—		1,725
Total revenue	$	1,262	$	1,769	$	3,071	$	—	$	(75)	$	6,027

(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 $259 million and $237 million as of June 30, 2025 and December 31, 2024, respectively.

38 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2025 and 2024

During the six months ended June 30, 2025 and 2024, we recognized revenue of $15 million and $70 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 provided 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 upon accounting for the transaction as a sale of receivables.

A significant financing arrangement exists for our Mong Duong plant in Vietnam. The plant was constructed under a build, operate, and transfer contract and sold to the Vietnamese government, while we remain the operator for the duration of the 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 December 31, 2024, Mong Duong met the held-for-sale criteria and the loan receivable balance of $963 million was classified in held-for-sale assets. As of June 30, 2025, Mong Duong no longer met the held-for-sale criteria. Of the loan receivable balance of $905 million, $105 million was classified in Other current assets and $800 million in Loan receivable on the Condensed Consolidated Balance Sheets. See Note 18—Held-for-Sale and Dispositions for further information.

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 June 30, 2025, 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 credits in long-term contracts in the U.S. We expect to recognize revenue of approximately $1 million per year between 2025 and 2029 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

39 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2025 and 2024

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 June 30,				Six Months Ended June 30,
		2025		2024		2025		2024
Other Income	Gain on remeasurement of contingent consideration (1)	$	23	$	1	$	24	$	12

	Dividend income on investments	3		—		3		—
	Gain on sale and disposal of assets	1		1		1		3
	AFUDC (US Utilities)	—		3		1		6
	Contract termination	—		—		—		5
	Gain on commencement of sales-type leases	—		—		—		5
	Insurance proceeds	—		—		—		5








	Other income	4		16		9		20
	Total other income	$	31	$	21	$	38	$	56


Other Expense	Loss on commencement of sales-type leases (2)	$	199	$	72	$	208	$	72
	Loss on remeasurement of investment (3)	48		—		48		—
	Loss on remeasurement of contingent consideration (1)	3		1		42		6
	Loss on sale and disposal of assets	5		4		8		8
	Non-service pension and other postretirement costs	4		3		4		5
	Costs related to troubled debt restructuring (4)	—		1		—		20





	Other	36		3		37		11
	Total other expense	$	295	$	84	$	347	$	122

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

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

(3) Related to the remeasurement of our existing investment in 5B, accounted for using the measurement alternative. See Note 3—Fai r V alue for further information.

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

ASSET IMPAIRMENT EXPENSE

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


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024









Mong Duong	$	(243)	$	6	$	(226)	$	43
AES Clean Energy Development Projects (ACED)	86		7		117		14
AES Brasil	—		25		—		25








Other	3		—		4		2
Total	$	(154)	$	38	$	(105)	$	84

As of May 31, 2025, due to delays in closing the transaction and the pending expiration of the agreement in November 2025, the Company determined Mong Duong no longer met the held-for-sale criteria. As such, the Mong Duong asset group was reclassified as held and used. The loan receivable was remeasured at amortized cost and non-loan assets were each individually remeasured at the lower of (i) carrying value before being classified as held for sale, adjusted for any depreciation expense or impairment losses that would have been recognized had the assets been continuously classified as held and used, or (ii) fair value at the date of the subsequent determination that held-for-sale criteria was no longer met. As a result, the Company recorded a $243 million increase in the

40 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2025 and 2024

carrying value of the Mong Duong asset group due to the derecognition of a $239 million valuation allowance on the loan receivable accounted for under ASC 310, which had been recognized in Asset impairment expense between December 31, 2023 and March 31, 2025 while Mong Duong was classified as held-for-sale, and the elimination of $4 million in net estimated costs to sell from the measurement of the asset group. See Note 18—Held-for-Sale and Dispositions for further information. Mong Duong is reported in the Energy Infrastructure SBU reportable segment.

AES Clean Energy Development Projects — AES Clean Energy Development has a pipeline of U.S. renewables projects that are in various stages of development and construction. In some cases, if development efforts are not successful, the Company may abandon a particular project, writing off all the intangible assets and capitalized development costs incurred. The fair value of each abandoned project with no salvage value is determined to be zero as there are no future projected cash flows. The Company recognized $117 million and $14 million of pre-tax asset impairment expense related to the write-off of projects that were determined to be no longer viable during the six months ended June 30, 2025 and 2024, respectively. Of the $86 million pre-tax asset impairment expense recorded during the three months ended June 30, 2025, $51 million was related to right sizing our development company as part of the restructuring program initiated in February 2025. See Note 21—Restructuring for further information. AES Clean Energy Development is reported in the Renewables SBU reportable segment.

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 $1,577 million was greater than its fair value less costs to sell of $1,552 million. As a result, the Company recognized pre-tax impairment expense of $25 million. The sale of AES Brasil closed in October 2024. Prior to its sale, AES Brasil was 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 six months ended June 30, 2025 were 428% and 1082%, respectively. The effective tax rate for the six months ended June 30, 2025 was not meaningful due to pretax book income being near breakeven. The effective tax rates for the three and six months ended June 30, 2024 were (30)% and (13)%, respectively. The difference between the Company’s effective tax rates for the 2025 and 2024 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.

For the three and six months ended June 30, 2025, the Company recorded approximately $18 million and $44 million, respectively, of discrete tax expense resulting from allocations of losses to tax equity investors on renewables projects.

For the three and six months ended June 30, 2024, the Company recognized discrete tax expense of approximately $13 million and $28 million, respectively, resulting from allocations of losses to tax equity investors on renewables projects. Additionally, for the three and six months ended June 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.

Further, for the six months ended June 30, 2024, the Company recognized discrete tax benefit of approximately $56 million related to U.S. capital losses associated with the restructuring of a foreign holding company.

HELD-FOR-SALE AND DISPOSITIONS

Held-for-Sale

JK Projects — In April 2025, the Company executed an agreement to contribute the Jemeiwaa Ka’I wind projects (“JK Projects”) to two trusts. After closing the transaction, the Company will retain 51% ownership in the trusts, which will be accounted for as equity method investments. The transaction is expected to close in the third quarter of 2025. As a result, the JK Projects were classified as held-for-sale but did not meet the criteria to be reported as discontinued operations. Since the fair value exceeded the carrying value, no impairment was recorded. On a consolidated basis, the carrying value of the JK Projects as of June 30, 2025 was $31 million, including $19 million of intangible assets and $12 million of CWIP. The JK Projects are reported in the Renewables SBU reportable segment.

41 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2025 and 2024

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"). As a result, Mong Duong was classified as held-for-sale but did not meet the criteria to be reported as discontinued operations. The sale is subject to regulatory approval and due to delays in closing the transaction and the pending expiration of the agreement in November 2025, the Company determined the sale is no longer probable and that Mong Duong no longer met the held-for-sale criteria as of May 31, 2025. As a result, the Company recorded an increase in the carrying value of the Mong Duong asset group primarily due to the derecognition of a $239 million valuation allowance on the loan receivable accounted for under ASC 310, which had been recognized in Asset impairment expense between December 31, 2023 and March 31, 2025 while Mong Duong was classified as held-for-sale. As of June 30, 2025, the significant assets and liabilities of Mong Duong were loan receivables of $905 million and debt of $467 million. See Note 16—Asset Impairment Expense for further information. Mong Duong is reported in the Energy Infrastructure SBU reportable segment.

Dispositions

Dominican Republic Renewables — In June 2025, the Company completed the sale of 50% of its interest in AES DR Renewables Holdings, S.L. and its subsidiaries (collectively “Dominican Republic Renewables”), whose main objective is the operation and administration of energy generation assets from primary energy resources. Of the sale price of $103 million, the Company received cash proceeds of $100 million in July 2025. The Company retained a 50% ownership interest in Dominican Republic Renewables after the sale and the business was deconsolidated and accounted for as an equity method investment. The transaction resulted in a pre-tax gain on sale of $70 million reported in Gain on disposal and sale of business interests, of which $37 million was related to remeasurement of the Company’s retained interest to its fair value. See Note 7—Investments in and Advances to Affiliates for further information. Dominican Republic Renewables is reported in the Renewables SBU reportable segment.

Ventanas — In January 2025, the Company completed the sale of its 100% ownership interest in Empresa Electrica Ventanas SpA and Nucleo SpA (collectively “Ventanas”), owner of a coal-fired energy generation facility in Chile, for $5 million. An immaterial loss on sale was recognized during the three months ended March 31, 2025 as a result of this transaction. The sale did not meet the criteria to be reported as discontinued operations. Prior to its sale, Ventanas was reported in the Energy Infrastructure SBU reportable segment.

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. After completion of the sale, the Company retained 10% ownership interest in each of the businesses. The fair value of the retained interest was measured using the market approach and the businesses were deconsolidated and accounted for as equity method investments. Amman East and IPP4 are reported in the Energy Infrastructure SBU reportable segment.

42 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2025 and 2024

ACQUISITIONS

Crossvine — On May 16, 2025, the Company completed the acquisition of 100% of the membership interests in Crossvine Solar 1, LLC, which is developing an 85 MW solar generation facility and an 85 MW battery storage project in Indiana, for total consideration of $78 million. The nature of the assets acquired is largely intangible, consisting mainly of a project development intangible valued at $64 million. The transaction was accounted for as an asset acquisition of a variable interest entity that did not meet the definition of a business. Crossvine is reported in the Utilities SBU reportable segment.

AES Clean Energy Solar Project Acquisitions — On April 4, 2025, the Company closed on the acquisition of 100% of the membership interests in Homer Solar Energy Center, LLC, Moraine Solar Energy Center, LLC, and Tracy Solar Energy Center, LLC, which hold early-stage development solar energy projects in New York, with a capacity of 303 MW. The total fair value of the consideration was $30 million, including contingent consideration of $8 million. The contingent consideration will be updated quarterly with any prospective changes in fair value recorded through earnings. The fair value of the consideration paid was attributed mainly to a project development intangible asset. The transaction was accounted for as an asset acquisition of variable interest entities that did not meet the definition of a business. AES Clean Energy is reported in the Renewables SBU reportable segment.

Madison and Birdseye — On April 5, 2024, the Company closed on the acquisition of 100% of the Madison solar project, a 63 MW construction-stage solar project in Virginia under contract with a 15-year virtual power purchase agreement (“VPPA”), and a pipeline of early-stage renewable energy development projects (“Birdseye”), to enhance its renewable energy portfolio. The transaction was accounted for as a business combination with a purchase price of $20 million paid in cash; therefore, the assets acquired and liabilities assumed at the acquisition date, primarily consisting of CWIP valued at $78 million and an off-market VPPA liability of $53 million, were recorded at their fair values. The Company recorded preliminary amounts for the purchase price allocation at the time of the acquisition, with no goodwill being recognized as a result of the acquisition in the second quarter of 2024. During the fourth quarter of 2024, the Company finalized the purchase price allocation and made measurement period adjustments to the fair value of the assets acquired, primarily due to the determination that the Madison solar project would qualify for an ITC based on studies performed subsequent to the acquisition date. Madison and Birdseye are 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 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 resulting from AES Indiana regulatory approval to recover associated costs. 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 six months ended June 30, 2025 and 2024, where income represents the numerator and weighted average shares represent the denominator.

43 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2025 and 2024


Three Months Ended June 30,	2025					2024
(in millions, except per share data)	Loss		Shares	$ per Share		Income		Shares	$ per Share

BASIC EARNINGS PER SHARE
Income (loss) from continuing operations attributable to The AES Corporation	$	(95)	712	$	(0.13)	$	276	711	$	0.39
Decrease (increase) in redemption value of redeemable stock of subsidiaries	(10)		—	(0.02)		6		—	0.01
Income (loss) available to The AES Corporation common stockholders	$	(105)	712	$	(0.15)	$	282	711	$	0.40

EFFECT OF DILUTIVE SECURITIES


Restricted stock units	—		—	—		—		2	(0.01)
Equity units	—		—	—		—		—	—
DILUTED EARNINGS PER SHARE	$	(105)	712	$	(0.15)	$	282	713	$	0.39


Six Months Ended June 30,	2025					2024
(in millions, except per share data)	Loss		Shares	$ per Share		Income		Shares	$ per Share

BASIC EARNINGS PER SHARE
Income from continuing operations attributable to The AES Corporation common stockholders	$	(49)	712	$	(0.07)	$	708	700	$	1.01
Decrease (increase) in redemption value of redeemable stock of subsidiaries	(10)		—	(0.01)		—		—	—
Income (loss) available to The AES Corporation common stockholders	$	(59)	712	$	(0.08)	$	708	700	$	1.01

EFFECT OF DILUTIVE SECURITIES


Restricted stock units	—		—	—		—		2	—
Equity units	—		—	—		—		11	(0.02)
DILUTED EARNINGS PER SHARE	$	(59)	712	$	(0.08)	$	708	713	$	0.99

Adjustments to Redemption Value — For the three and six months ended June 30, 2025, income from continuing operations available to AES common stockholders included a $10 million adjustment related to the increase of the carrying value of redeemable stock of subsidiaries at the AGIC Companies, as discussed in Note 11*—Redeemable Stock of Subsidiaries*.

For the three months ended June 30, 2024, income from continuing operations available to AES common stockholders included a $6 million adjustment related to the decrease of the carrying value of redeemable stock of subsidiaries at AES Clean Energy Development, as a result of a non-fair value redemption feature. This adjustment is a recovery of the amount previously reflected in the computation of earnings per share in the first quarter of 2024.

The Company has elected to administer these entire non-fair value redemption adjustments consistent with the treatment of dividends in the earnings per share calculation. While the adjustments impacted net income available to AES common stockholders and earnings per share, they did not impact Net income in the Condensed Consolidated Statement of Operations.

Anti-Dilutive Securities — The calculation of diluted earnings per share excluded 6 million outstanding stock awards for the three and six months ended June 30, 2025 because their impact would be anti-dilutive given the loss from continuing operations. Had the Company generated income, potential shares of common stock of 2 million related to the stock awards would have been included in weighted-average shares outstanding for both the three and six months ended June 30, 2025. The calculation of diluted earnings per share excluded 2 million outstanding stock awards for the both the three and six months ended June 30, 2024, which would be anti-dilutive. These stock awards could potentially dilute basic earnings per share in the future.

AES Global Insurance — As described in Note 11*—Redeemable Stock of Subsidiaries*, on April 30, 2025, the Company sold noncontrolling interests in the AGIC Companies. It is required that either (i) the AGIC Companies achieve a minimum distribution target to the Class B Member ranging from $146 million to $199 million over pre-defined periods of time ranging from three to five years (the “distribution period”) or (ii) AGIC achieves an average cash basis quarterly net income threshold for the period comprising the relevant distribution period and the four quarters immediately prior to the start of such distribution period. AES can make disproportionate distributions to the Class B Member to meet the minimum distribution target for the distribution period. If, at the end of a distribution period, (1) such cash basis net income threshold is not met and (2) the minimum distribution target for such distribution period is not achieved, AES would be required to address the shortfall by issuing AES common stock (“Shortfall Stock”) to AGIC for the net difference between actual and targeted distributions. If AES is required to issue Shortfall Stock, the amount will be based upon the number of shares multiplied by the then current share price to equal the net difference between actual and targeted distributions. Distributions of cash from the sale of Shortfall Stock are subject to regulatory approval and at the discretion of AES.

44 | Notes to Condensed Consolidated Financial Statements—(Continued) | June 30, 2025 and 2024

As part of the quarterly diluted earnings per share calculation, AES evaluates whether (1) average cash basis quarterly net income in a given quarter exceeds the threshold or (2) aggregate distributions made to the investor for the related distribution period exceed such target distribution amount. If either condition is met, no Shortfall Stock will be included in the diluted earnings per share calculation. As of June 30, 2025, the average cash basis quarterly net income condition was met and, therefore, no shares are included in diluted EPS for the three and six months then ended.

Equity Units — 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.

RESTRUCTURING

In February 2025, the Company approved and initiated a restructuring program to streamline our organization given the significantly lower number of countries that we operate in. Additionally, we are right sizing our development company to focus on executing on the backlog and pursuing larger but fewer projects to better serve our core customers. Pre-tax restructuring charges related to employee severance costs were $4 million and $52 million for the three and six months ended June 30, 2025. Of the $52 million recognized for the six months ended June 30, 2025, $43 million was classified within Cost of sales and $9 million was classified as General and administrative expenses on the Condensed Consolidated Statements of Operations. For the six months ended June 30, 2025, $19 million was recognized at the Energy Infrastructure SBU, $17 million at the Renewables SBU, $5 million at the Utilities SBU, $1 million at the New Energy Technologies SBU, and $10 million at Corporate and Other.

The Company made cash payments of $36 million during the six months ended June 30, 2025, including $5 million of termination benefits previously accrued for in the projected pension benefit obligation. As of June 30, 2025, $22 million of pre-tax restructuring charges were reflected within Accrued and other liabilities on the Condensed Consolidated Balance Sheets.

In the second quarter of 2025, AES Clean Energy Development also recognized $51 million of pre-tax asset impairment expense as a result of the restructuring program. See Note 16—Asset Impairment Expense for further information. AES Clean Energy Development is reported in the Renewables SBU reportable segment.

45 | The AES Corporation | June 30, 2025 Form 10-Q

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