Item 1. FINANCIAL STATEMENTS

276K characters. Original on sec.gov · Markdown

Item 1. FINANCIAL STATEMENTS

Condensed Consolidated Balance Sheets

(Unaudited)


	June 30, 2026		December 31, 2025

	(in millions, except share and per share amounts)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	1,800	$	1,382
Restricted cash	530		691
Short-term investments	53		174
Accounts receivable, net of allowance of $37 and $39, respectively	1,934		1,683
Inventory	618		612
Prepaid expenses	101		192
Other current assets, net of allowance of $2 and $2, respectively	1,351		1,723
Current held-for-sale assets	16		45
Total current assets	6,403		6,502
NONCURRENT ASSETS





Property, plant, and equipment, net of accumulated depreciation of $9,508 and $9,796, respectively	40,657		37,818

Investments in and advances to affiliates	885		1,004
Debt service reserves and other deposits	53		89
Goodwill	342		342
Other intangible assets, net of accumulated amortization of $508 and $479, respectively	2,033		2,040
Deferred income taxes	356		397

Loan receivable, net of allowance of $17 and $19, respectively	710		755
Other noncurrent assets, net of allowance of $26 and $24, respectively	2,799		2,821

Total noncurrent assets	47,835		45,266
TOTAL ASSETS	$	54,238	$	51,768
LIABILITIES, REDEEMABLE STOCK OF SUBSIDIARIES, AND EQUITY
CURRENT LIABILITIES
Accounts payable	$	2,170	$	1,980
Accrued interest	286		268
Accrued non-income taxes	305		294
Supplier financing arrangements	826		616
Accrued and other liabilities	1,523		2,223
Recourse debt	300		879
Non-recourse debt	3,162		2,232

Current held-for-sale liabilities	6		—
Total current liabilities	8,578		8,492
NONCURRENT LIABILITIES
Recourse debt	5,800		5,105
Non-recourse debt	22,855		21,681

Deferred income taxes	1,604		1,581

Other noncurrent liabilities	2,577		2,980

Total noncurrent liabilities	32,836		31,347
Commitments and Contingencies (see Note 9)
Redeemable stock of subsidiaries	3,052		2,824
EQUITY
THE AES CORPORATION STOCKHOLDERS’ EQUITY

Common stock ($0.01 par value, 1,200,000,000 shares authorized; 859,837,679 issued and 713,157,713 outstanding at June 30, 2026 and 859,836,539 issued and 712,201,777 outstanding at December 31, 2025)	9		9
Additional paid-in capital	5,888		5,904
Retained earnings	1,429		641
Accumulated other comprehensive loss	(603)		(698)
Treasury stock, at cost (146,679,966 and 147,634,762 shares at June 30, 2026 and December 31, 2025, respectively)	(1,781)		(1,793)
Total AES Corporation stockholders’ equity	4,942		4,063
NONCONTROLLING INTERESTS	4,830		5,042
Total equity	9,772		9,105
TOTAL LIABILITIES, REDEEMABLE STOCK OF SUBSIDIARIES, AND EQUITY	$	54,238	$	51,768

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,
	2026		2025		2026		2025

	(in millions, except share and per share amounts)
Revenue:
Non-Regulated	$	2,427	$	1,922	$	4,493	$	3,863
Regulated	995		933		2,109		1,918
Total revenue	3,422		2,855		6,602		5,781
Cost of Sales:
Non-Regulated	(1,896)		(1,607)		(3,555)		(3,268)
Regulated	(834)		(795)		(1,715)		(1,619)
Total cost of sales	(2,730)		(2,402)		(5,270)		(4,887)
Operating margin	692		453		1,332		894
General and administrative expenses	(62)		(49)		(117)		(126)
Interest expense	(368)		(352)		(721)		(694)
Interest income	65		70		130		139
Loss on extinguishment of debt	(6)		(5)		(14)		(13)
Other expense	(27)		(295)		(85)		(347)
Other income	28		31		40		38
Gain on disposal and sale of business interests	209		70		209		69

Asset impairment reversals (expense)	(30)		154		(42)		105
Foreign currency transaction losses	(52)		(28)		(41)		(38)
Other non-operating expense	—		(10)		—		(10)
INCOME FROM CONTINUING OPERATIONS BEFORE TAXES AND EQUITY IN EARNINGS OF AFFILIATES	449		39		691		17
Income tax benefit (expense)	(28)		(167)		13		(184)
Net equity in losses of affiliates	(34)		(22)		(42)		(56)



NET INCOME (LOSS)	387		(150)		662		(223)



Less: Net loss attributable to noncontrolling interests and redeemable stock of subsidiaries	39		55		251		174
NET INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION	$	426	$	(95)	$	913	$	(49)
Increase in redemption value of redeemable stock of subsidiaries	—		(10)		—		(10)
NET INCOME (LOSS) AVAILABLE TO THE AES CORPORATION COMMON STOCKHOLDERS	$	426	$	(105)	$	913	$	(59)




BASIC EARNINGS PER SHARE:


NET INCOME (LOSS) AVAILABLE TO THE AES CORPORATION COMMON STOCKHOLDERS	$	0.60	$	(0.15)	$	1.28	$	(0.08)
DILUTED EARNINGS PER SHARE:


NET INCOME (LOSS) AVAILABLE TO THE AES CORPORATION COMMON STOCKHOLDERS	$	0.60	$	(0.15)	$	1.28	$	(0.08)
DILUTED SHARES OUTSTANDING	715		712		715		712

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,
	2026		2025		2026		2025

	(in millions)
NET INCOME (LOSS)	$	387	$	(150)	$	662	$	(223)
Foreign currency translation activity:
Foreign currency translation adjustments, net of $0 income tax for all periods	11		42		13		72

Total foreign currency translation adjustments	11		42		13		72
Derivative activity:
Change in fair value of derivatives, net of income tax benefit (expense) of $(21), $3, $(23), and $28, respectively	93		(43)		102		(150)
Reclassification to earnings, net of income tax benefit of $1, $6, $2, and $12, respectively	(2)		9		—		(5)
Total change in fair value of derivatives	91		(34)		102		(155)
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 $0, $1, $0, and $1, respectively	—		(6)		—		(5)

Total pension adjustments	—		(5)		—		(4)




OTHER COMPREHENSIVE INCOME (LOSS)	102		3		115		(87)
COMPREHENSIVE INCOME (LOSS)	489		(147)		777		(310)
Less: Comprehensive loss attributable to noncontrolling interests and redeemable stock of subsidiaries	30		73		230		200
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE AES CORPORATION	$	519	$	(74)	$	1,007	$	(110)

See Notes to Condensed Consolidated Financial Statements.

6 | The AES Corporation

Condensed Consolidated Statements of Changes in Equity

(Unaudited)


		Six Months Ended June 30, 2026
	Common Stock		Treasury Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interests (1)
		Shares	Amount		Shares	Amount
		(in millions)
Balance at January 1, 2026		859.8	$	9	147.6	$	(1,793)	$	5,904	$	641	$	(698)	$	5,042
Net income (loss)		—	—		—	—		—		487		—		(211)
Foreign currency translation adjustments and reclassification to earnings, net of income tax		—	—		—	—		—		—		2		—
Change in fair value of derivatives and reclassification to earnings, net of income tax		—	—		—	—		—		—		(1)		12


Total other comprehensive income (loss)		—	—		—	—		—		—		1		12




Distributions to noncontrolling interests		—	—		—	—		—		—		—		(225)
Acquisitions of noncontrolling interests		—	—		—	—		(1)		—		1		(29)
Contributions from noncontrolling interests		—	—		—	—		—		—		—		226
Sales to noncontrolling interests		—	—		—	—		(1)		—		—		120
Issuance of preferred shares in subsidiaries		—	—		—	—		—		—		—		1


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

Issuance and exercise of stock-based compensation benefit plans, net of income tax		—	—		(0.9)	12		(17)		—		—		—
Balance at March 31, 2026		859.8	$	9	146.7	$	(1,781)	$	5,885	$	1,003	$	(696)	$	4,936
Net income (loss)		—	—		—	—		—		426		—		(3)
Foreign currency translation adjustments and reclassification to earnings, net of income tax		—	—		—	—		—		—		11		—
Change in fair value of derivatives and reclassification to earnings, net of income tax		—	—		—	—		—		—		82		9


Total other comprehensive income (loss)		—	—		—	—		—		—		93		9





Distributions to noncontrolling interests		—	—		—	—		—		—		—		(616)

Contributions from noncontrolling interests		—	—		—	—		—		—		—		335
Sales to noncontrolling interests		—	—		—	—		(5)		—		—		—
Issuance of preferred shares in subsidiaries		—	—		—	—		—		—		—		169



Issuance and exercise of stock-based compensation benefit plans, net of income tax		—	—		—	—		8		—		—		—
Balance at June 30, 2026		859.8	$	9	146.7	$	(1,781)	$	5,888	$	1,429	$	(603)	$	4,830

7 | The AES Corporation


		Six Months Ended June 30, 2025
	Common Stock		Treasury Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interests (1)
		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 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

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

(2) Related to the reclassification of the AES Indiana Pike County BESS tax equity partnership and certain tax equity partnerships at AES Clean Energy 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 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,
	2026		2025

	(in millions)
OPERATING ACTIVITIES:
Net income (loss)	$	662	$	(223)
Adjustments to net income (loss):
Depreciation, amortization, and accretion of AROs	867		691
Emissions allowance expense	94		178
Loss on realized/unrealized derivatives	23		71
Loss on commencement of sales-type leases	44		208
Gain on disposal and sale of business interests	(209)		(69)

Impairment expense (reversals)	42		(95)
Loss (gain) on realized/unrealized foreign currency	(4)		24





Deferred income tax expense, net of tax credit transfers allocated to AES	26		149
Tax credit transfers allocated to noncontrolling interests	496		212
Other	101		220
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable	(206)		26
(Increase) decrease in inventory	(36)		(29)
(Increase) decrease in prepaid expenses and other current assets	578		198
(Increase) decrease in other assets	81		75
Increase (decrease) in accounts payable and other current liabilities	(34)		(116)
Increase (decrease) in income tax payables, net, and other tax payables	(264)		(82)

Increase (decrease) in other liabilities	(14)		83
Net cash provided by operating activities	2,247		1,521
INVESTING ACTIVITIES:
Capital expenditures	(3,409)		(2,586)
Acquisitions of business interests, net of cash and restricted cash acquired	(21)		(112)
Proceeds from the sale of business interests, net of cash and restricted cash sold	233		5

Sale of short-term investments	129		52
Purchase of short-term investments	(1)		(36)




Purchase of emissions allowances	(223)		(234)

Other investing	29		29
Net cash used in investing activities	(3,263)		(2,882)
FINANCING ACTIVITIES:
Borrowings under the revolving credit facilities	2,826		2,128
Repayments under the revolving credit facilities	(1,982)		(2,398)
Commercial paper borrowings (repayments), net	(79)		67
Issuance of recourse debt	1,800		800
Repayments of recourse debt	(1,300)		(774)
Issuance of non-recourse debt	1,424		2,332
Repayments of non-recourse debt	(720)		(1,490)
Payments for financing fees	(65)		(49)
Purchases under supplier financing arrangements	669		567
Repayments of obligations under supplier financing arrangements	(448)		(862)
Distributions to noncontrolling interests	(1,238)		(338)

Contributions from noncontrolling interests	128		274
Sales to noncontrolling interests	306		1,138
Issuance of preferred shares in subsidiaries	282		452

Dividends paid on AES common stock	(251)		(250)
Payments for financed capital expenditures	(58)		(21)


Other financing	(53)		(114)
Net cash provided by financing activities	1,241		1,462
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(4)		(5)
Decrease in cash, cash equivalents, and restricted cash of held-for-sale businesses	—		66
Total increase in cash, cash equivalents, and restricted cash	221		162
Cash, cash equivalents and restricted cash, beginning	2,162		2,039
Cash, cash equivalents and restricted cash, ending	$	2,383	$	2,201

9 | The AES Corporation

Condensed Consolidated Statements of Cash Flows (continued)

(Unaudited)


	Six Months Ended June 30,
	2026		2025

	(in millions)
SUPPLEMENTAL DISCLOSURES:
Cash payments for interest, net of amounts capitalized	$	620	$	598
Cash payments for income taxes, net of refunds	200		134
SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:








Accruals for capital expenditures	761		611
Noncash contributions from noncontrolling interests related to tax credit transfers	496		212
Noncash recognition of new operating and financing leases (see Note 10)	120		78
Noncash distributions to noncontrolling interests	69		45

Initial recognition of contingent consideration for acquisitions	16		11
Receivable for proceeds from sale of Dominican Republic Renewables (see Note 18)	—		100
Noncash contributions from noncontrolling interests	—		42

See Notes to Condensed Consolidated Financial Statements.

10 | Notes to Condensed Consolidated Financial Statements | June 30, 2026 and 2025

Notes to Condensed Consolidated Financial Statements

For the Three and Six Months Ended June 30, 2026 and 2025

(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.

The condensed consolidated financial statements of the Company include the accounts of The AES Corporation and its controlled subsidiaries. Furthermore, VIEs in which the Company has an ownership interest and is the primary beneficiary, thus controlling the VIE, have been consolidated. Intercompany transactions and balances are eliminated in consolidation. 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.

Consolidated VIEs — At June 30, 2026, the Company consolidates a number of entities that have been identified as VIEs under ASC 810, Consolidation. These entities are primarily limited liability entities or partnership arrangements with third-party investors structured to develop, construct, and operate power generation facilities and related assets. These entities were generally determined to have insufficient equity to finance their activities during development and construction without additional subordinated financial support. The Company also has tax equity arrangements entered into with third parties in order to monetize certain tax credits associated with renewables facilities. These tax equity partnerships meet the definition of a VIE as the holders of the membership interests, as a group, lack the characteristics of a controlling financial interest, including substantive kickout rights. Under these arrangements, the third-party investors are allocated earnings, tax attributes, and distributable cash in accordance with the respective limited liability company agreements. The assets of these tax equity partnerships are generally restricted from transfer under the terms of their limited liability company agreements. The third-party investor’s ownership interest is recorded as either Redeemable stock of subsidiaries or Noncontrolling interests in the Condensed Consolidated Balance Sheets based on applicable guidance. See Note 11—Redeemable Stock of Subsidiaries and Note 12—Equity for further information.

Determining whether the Company is the primary beneficiary of a VIE requires judgment, including an assessment of contractual rights, operational responsibilities, and exposure to variability in returns. AES is considered the primary beneficiary of these VIEs when it has the power to direct the activities that most significantly affect their economic performance, such as construction, budgeting, operations, and maintenance, and it has the obligation to absorb expected losses and the right to receive benefits through its variable interests. As of June 30, 2026, certain consolidated VIEs have arrangements which may require the Company to contribute additional equity totaling $3.1 billion. Such contributions are generally contingent upon the underlying asset achieving specific project milestones. Certain consolidated VIEs are financed with non-recourse project‑level debt. Creditors of these VIEs have no recourse to the Company beyond the VIE’s assets. See Note 8—Obligations for further information.

Unconsolidated VIEs — The Company has noncontrolling interests in VIEs accounted for under the equity method. These entities include partnerships in which the limited partners do not have substantive rights over the significant activities of these entities, as well as renewable energy project joint ventures that have insufficient equity to finance their activities during development and construction without additional subordinated financial support. AES is not the primary beneficiary because it does not have a controlling financial interest in these entities, as it does not have the power to direct the activities that most significantly impact these VIEs' performance; therefore, AES does not consolidate any of these entities. AES’ investment in these entities totaled approximately $148 million and $127 million as of June 30, 2026 and December 31, 2025, respectively, which are included in Investments in and advances to affiliates on the Condensed Consolidated Balance Sheets. See Note 7—Investments In and Advances to Affiliates for further information. AES' maximum exposure to loss is limited to its current investments in these entities.

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, 2026 are not necessarily indicative of expected results for

11 | Notes to Condensed Consolidated Financial Statements | June 30, 2026 and 2025

the year ending December 31, 2026. The accompanying condensed consolidated financial statements are unaudited and should be read in conjunction with the 2025 audited consolidated financial statements and notes thereto, which are included in the 2025 Form 10-K filed with the SEC on March 2, 2026 (the “2025 Form 10-K”).

Proposed Merger — On March 1, 2026, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among the Company, Horizon Parent, L.P., a Delaware limited partnership (“Parent”), and Horizon Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Parent (“Merger Sub”). Pursuant to the Merger Agreement, Merger Sub will merge with and into the Company (the “Merger”), with the Company continuing as the surviving corporation in the Merger. Parent is controlled by investment vehicles affiliated with one or more funds, accounts or other entities managed or advised by Global Infrastructure Management, LLC and the EQT Infrastructure VI fund.

At the effective time of the Merger, each share of the Company’s common stock outstanding immediately before the effective time (other than (i) shares of Company common stock held by any holder who properly exercises and perfects appraisal rights under Delaware law in respect of such shares and (ii) any shares of Company common stock held in the treasury of the Company or owned, directly or indirectly, by Parent or Merger Sub) will be converted automatically into the right to receive $15.00 in cash, without interest, per share.

The Board of Directors of the Company has unanimously approved the Merger Agreement, including the Merger and the other transactions contemplated thereby, and the Board of Directors of the Company has resolved to recommend that the Company stockholders approve the Merger and adopt the Merger Agreement.

The Merger Agreement includes certain representations, warranties, and covenants. Among other things, the Company has agreed (subject to certain exceptions) to conduct its business in the ordinary course consistent with past practice and not to take specified actions prior to closing without Parent’s consent. The Company is also required to hold a special meeting of its stockholders to seek approval of the Merger and, subject to certain exceptions, it has agreed not to solicit or engage in discussions or negotiations regarding alternative business combination proposals and not to withdraw or modify the Board’s recommendation in favor of the Merger.

In addition, subject to the terms of the Merger Agreement, the Company, Parent, and Merger Sub are required to use reasonable best efforts to obtain all required regulatory approvals, including certain regulatory approvals from the PUCO, the New York Public Service Commission, the FERC, and the Committee on Foreign Investment in the United States, and the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), as well as the receipt of certain approvals under the applicable laws of certain foreign countries, so long as such approval does not result in a Burdensome Condition (as defined in the Merger Agreement).

Consummation of the Merger is subject to various closing conditions, including: (1) approval of the stockholders of the Company, (2) receipt of the specified regulatory approvals without the imposition of a Burdensome Condition, (3) absence of any law or order prohibiting the consummation of the Merger, (4) subject to materiality qualifiers, the accuracy of each party’s representations and warranties, (5) each party’s compliance in all material respects with its obligations and covenants under the Merger Agreement, and (6) the absence of a material adverse effect with respect to the Company and its subsidiaries. Approval by the stockholders of the Company was obtained on June 26, 2026. At 11:59 p.m. Eastern Time on June 22, 2026, the waiting period under the HSR Act expired with respect to the Merger. The completion of the Merger is not conditioned on receipt of financing by Parent.

The Merger Agreement contains certain termination rights for both the Company and Parent, including if the Merger is not consummated by June 1, 2027 (subject to extension for an additional two successive three-month periods if all of the conditions to closing, other than the conditions related to obtaining regulatory approvals, have been satisfied). The Merger Agreement also provides for certain termination rights for each of the Company and Parent, and provides that, upon termination of the Merger Agreement under certain specified circumstances, Parent would be required to pay a termination fee of $100 million or approximately $588 million (depending on the specific circumstances of termination) to the Company, and under other specified circumstances, the Company would be required to pay Parent a termination fee of approximately $321 million.

12 | Notes to Condensed Consolidated Financial Statements | June 30, 2026 and 2025

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, 2026		December 31, 2025
Cash and cash equivalents	$	1,800	$	1,382
Restricted cash (1)	530		691
Debt service reserves and other deposits (2)	53		89
Cash, Cash Equivalents, and Restricted Cash	$	2,383	$	2,162

(1)Includes approximately $330 million and $451 million of cash maintained in accordance with certain covenants of non-recourse debt agreements and $159 million and $153 million of cash held as collateral to cover potential liabilities for current and future insurance claims being assumed by AGIC, AES' captive insurance company, as of June 30, 2026 and December 31, 2025, respectively. See Note 8 —Obligations for further information.

(2)Includes approximately $40 million and $80 million of cash maintained in accordance with certain covenants of non-recourse debt agreements as of June 30, 2026 and December 31, 2025, respectively. See Note 8 —Obligations for further information.

Tax Credit Transferability — Historically, the Company has financed renewables projects with investments from tax equity investors who are allocated certain tax benefits associated with renewables projects (e.g., investment tax credits) through partnership agreements. The U.S Inflation Reduction Act of 2022 (the “IRA”) allows the owners of renewable energy projects to directly transfer ITCs to unrelated tax credit buyers. This provides the Company with the flexibility to obtain financing on any particular project with (i) the transfer of tax credits or (ii) investments from tax equity investors who are allocated tax benefits. The Company may also elect to retain the tax credit and use it to reduce its tax liability.

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 Company applies the flow-through method to account for its investment tax credits. 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. In many cases, ITCs are generated at partnerships which are non-tax paying entities for U.S. federal income tax purposes. These entities cannot utilize tax credits, but rather allocate credits to their partners, who report their share of the partnership credits on their individual tax returns. Once a project is placed in service, any portion of the tax credit to be transferred which is allocated to a noncontrolling interest holder is recorded as a noncash deemed contribution within Noncontrolling interests or Redeemable stock of subsidiaries, as applicable, on the Condensed Consolidated Balance Sheets as this represents an increase in the partners’ capital account. To the extent any of the expected transfer proceeds are contractually obligated to be distributed to the noncontrolling interest holder, the Company records a corresponding noncash deemed distribution within Noncontrolling interests or Redeemable stock of subsidiaries, as applicable. The receipt of cash from the transfer of tax credits, inclusive of the portion allocated to noncontrolling interest holders, is treated as an operating cash inflow on the Condensed Consolidated Statements of Cash Flows. Proceeds from the transfer of tax credits are excluded from the supplemental disclosure of Cash payments for income taxes, net of refunds.

During the six months ended June 30, 2026, the Company executed agreements for $535 million to transfer ITCs directly to a third party at a discount. Of this amount, $39 million was allocated to AES and will be recognized ratably as an income tax benefit throughout the year and $496 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 $466 million during the six months ended June 30, 2026 and recorded a receivable of $69 million in Other current assets and a corresponding payable in Accrued and other liabilities on the Condensed Consolidated Balance Sheets as of June 30, 2026, since the Company is contractually obligated to distribute the amount to the noncontrolling interest holders. In addition, during the six months ended June 30, 2026, we received and distributed cash proceeds of $448 million to noncontrolling interest holders related to a tax credit transfer agreement executed in 2025.

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 recognized ratably as an 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 received the remaining $45 million in

13 | Notes to Condensed Consolidated Financial Statements | June 30, 2026 and 2025

September 2025. 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 executed in 2024.

New Accounting Pronouncements Adopted in 2026 — The Company assessed all accounting pronouncements adopted in 2026 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
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.	This ASU only affects disclosures, which will be provided when the amendment becomes effective.
2025-06: Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software	The amendments in this Update remove all references to prescriptive and sequential software development stages (referred to as “project stages”) throughout Subtopic 350-40. Therefore, an entity is required to start capitalizing software costs when both of the following occur: 1. Management has authorized and committed to funding the software project. 2. It is probable that the project will be completed and the software will be used to perform the function intended. In evaluating the probable-to-complete recognition threshold, an entity is required to consider whether there is significant uncertainty associated with the development activities of the software. The two factors to consider in determining whether there is significant development uncertainty are whether: 1. The software being developed has technological innovations or novel, unique, or unproven functions or features, and the uncertainty related to those technological innovations, functions, or features, if identified, has not been resolved through coding and testing. 2. The entity has determined what it needs the software to do (for example, functions or features), including whether the entity has identified or continues to substantially revise the software’s significant performance requirements.	The amendments in this Update are effective for fiscal years beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period.	The Company is currently evaluating the impact of adopting the standard on its consolidated financial statements.

14 | Notes to Condensed Consolidated Financial Statements | June 30, 2026 and 2025



2025-07: Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract	Issue 1: Derivatives Scope Refinements The amendments in this Update exclude from derivative accounting non-exchange-traded contracts with underlyings that are based on operations or activities specific to one of the parties to the contract. Issue 2: Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract The amendments in this Update clarify that an entity should apply the guidance in Topic 606, including the guidance on noncash consideration to a contract with share-based noncash consideration (for example, shares, share options, or other equity instruments) from a customer for the transfer of goods or services.	The amendments in this Update are effective for fiscal years beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. Early adoption is permitted.	The Company is currently evaluating the impact of adopting the standard on its consolidated financial statements.
2025-09: Hedge Accounting Improvements	Issue 1: Similar Risk Assessment for Cash Flow Hedges The amendments in this Update permit grouping forecasted transactions in a cash flow hedge based on similar risk exposures, subject to initial and ongoing risk assessments. Issue 2: Hedging Forecasted Interest Payments on Choose‑Your‑Rate Debt The amendments in this Update provide a model to facilitate the application of cash flow hedge accounting for forecasted interest payments on variable‑rate debt that permits borrowers to change the interest rate index and reset frequency (“choose‑your‑rate” debt). Issue 3: Cash Flow Hedges of Nonfinancial Forecasted Transactions The amendments in this Update expand hedge accounting for forecasted purchases and sales of nonfinancial assets by allowing hedging of eligible price components and subcomponents, subject to specific criteria. Issue 4: Net Written Options as Hedging Instruments The amendments in this Update eliminate the requirement to apply the net written option test to compound derivatives consisting of a swap and a written option that are designated as hedging instruments in cash flow or fair value hedges of interest rate risk. Issue 5: Foreign‑Currency‑Denominated Debt Used in Dual Hedges The amendments in this Update eliminate recognition and presentation mismatches in dual hedge strategies by excluding fair value hedge basis adjustments from net investment hedge effectiveness assessments and requiring related foreign exchange gains and losses to be recognized in earnings.	The amendments in this Update are effective for annual reporting periods beginning after December 15, 2026, and interim periods within those annual reporting periods, and should be applied prospectively for all hedging relationships that exist at the date of adoption.	The Company is currently evaluating the impact of adopting the standard on its consolidated financial statements.
2025-11: Interim Reporting (Topic 270)—Narrow-Scope Improvements	The amendments in this Update clarify interim disclosure requirements and the applicability of Topic 270 by organizing existing GAAP interim disclosure requirements into a single framework and clarifying when additional disclosures are required for material events occurring after the most recent annual reporting period.	The amendments in this Update are effective for fiscal years beginning after December 15, 2027, and interim reporting periods within those annual reporting periods.	This ASU only affects disclosures, which will be provided when the amendment becomes effective.
2025-12: Codification Improvements	The amendments in this Update include 33 issues that represent changes to the Codification that clarify, correct errors, or make minor improvements, making the Codification easier to understand and apply. The amendments in this Update are varied in nature and may affect the application of guidance in cases in which the original guidance may have been unclear.	The amendments in this Update are effective for fiscal years beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. Early adoption is permitted on an issue-by-issue basis as of the beginning of an annual reporting period.	The Company is currently evaluating the impact of adopting the standard on its consolidated financial statements.

15 | Notes to Condensed Consolidated Financial Statements | June 30, 2026 and 2025



2026-01: Equity (Topic 505): Initial Measurement of Paid-in-Kind Dividends on Equity-Classified Preferred Stock	The amendments in this Update require that paid-in-kind dividends on equity-classified preferred stock be initially measured on the basis of the paid-in-kind dividend rate stated in the preferred stock agreement.	The amendments in this Update are effective for fiscal years beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. Early adoption is permitted.	The Company is currently evaluating the impact of adopting the standard on its consolidated financial statements.
2026-02: Environmental Credits and Environmental Credit Obligations (Topic 818)	The amendments in this Update improve GAAP by providing specific authoritative guidance for environmental credit obligations.	The amendments in this Update are effective for fiscal years beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted.	The Company is currently evaluating the impact of adopting the standard on its consolidated financial statements.

INVENTORY

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


	June 30, 2026		December 31, 2025
Spare parts and supplies	$	403	$	392
Fuel and other raw materials	215		220

Total	$	618	$	612

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 2025 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:

16 | Notes to Condensed Consolidated Financial Statements | June 30, 2026 and 2025


	June 30, 2026								December 31, 2025
	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	$	—	$	3	$	—	$	3
Government debt securities	—		2		—		2		—		—		—		—
Total debt securities	—		4		—		4		—		3		—		3
EQUITY SECURITIES:
Mutual funds	60		—		—		60		57		—		—		57
Common stock	—		—		—		—		1		—		—		1

Total equity securities	60		—		—		60		58		—		—		58
DERIVATIVES:
Interest rate derivatives	—		277		—		277		—		279		—		279

Foreign currency derivatives	—		7		—		7		—		24		—		24
Commodity derivatives	100		70		13		183		109		72		5		186
Total derivatives — assets	100		354		13		467		109		375		5		489
TOTAL ASSETS	$	160	$	358	$	13	$	531	$	167	$	378	$	5	$	550
Liabilities
Contingent consideration (1)	$	—	$	—	$	205	$	205	$	—	$	—	$	205	$	205
DERIVATIVES:
Interest rate derivatives	—		39		—		39		—		59		—		59

Foreign currency derivatives	—		36		—		36		—		28		—		28
Commodity derivatives	84		24		38		146		110		42		45		197
Total derivatives — liabilities	84		99		38		221		110		129		45		284
TOTAL LIABILITIES (1)	$	84	$	99	$	243	$	426	$	110	$	129	$	250	$	489

(1)Includes $6 million of contingent consideration reported in Current held-for-sale liabilities on the Condensed Consolidated Balance Sheets related to the JK Projects as of June 30, 2026.

As of June 30, 2026, all available-for-sale debt securities had stated maturities within one year. For the three and six months ended June 30, 2026, 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 sale 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):


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Gross proceeds from sale of available-for-sale securities	$	1	$	1	$	2	$	4

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. Upward adjustments resulting from observable price changes are recorded in Other income and impairments and downward adjustments are recorded in Other expense. As of both December 31, 2025 and June 30, 2026, the carrying amount of equity securities accounted for using the measurement alternative was $19 million, inclusive of $22 million of cumulative upward adjustments recorded in Other income in prior years and a $48 million downward adjustment recorded in Other expense in June 2025 to reflect observable price changes for our investment in 5B Holdings Ptd. Ltd. ("5B").

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, 2026 and 2025 (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.

17 | Notes to Condensed Consolidated Financial Statements | June 30, 2026 and 2025


	Derivative Assets and Liabilities
Three Months Ended June 30, 2026	Interest Rate		Foreign Currency		Commodity		Contingent Consideration		Total
Balance at April 1, 2026	$	—	$	—	$	(27)	$	(209)	$	(236)
Total realized and unrealized gains (losses):
Included in earnings	—		—		—		4		4


Included in regulatory liabilities	—		—		7		—		7
Acquisitions	—		—		—		(16)		(16)
Settlements	—		—		(5)		16		11


Balance at June 30, 2026	$	—	$	—	$	(25)	$	(205)	$	(230)
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	$	—	$	—	$	—	$	4	$	4

	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 liabilities	—		—		5		—		5
Acquisitions	—		—		—		(11)		(11)
Settlements	—		(10)		(1)		20		9

Transfers of assets (liabilities), 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
Six Months Ended June 30, 2026	Interest Rate		Foreign Currency		Commodity		Contingent Consideration		Total
Balance at January 1, 2026	$	—	$	—	$	(40)	$	(205)	$	(245)
Total realized and unrealized gains (losses):
Included in earnings	—		—		—		(2)		(2)
Included in other comprehensive income — derivative activity	—		—		14		—		14

Included in regulatory liabilities	—		—		7		—		7
Acquisitions	—		—		—		(16)		(16)
Settlements	—		—		(6)		18		12


Balance at June 30, 2026	$	—	$	—	$	(25)	$	(205)	$	(230)
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	$	—	$	—	$	—	$	(2)	$	(2)

	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 liabilities	—		—		5		—		5
Acquisitions	—		—		—		(11)		(11)
Settlements	—		(20)		(2)		30		8
Transfers of assets (liabilities), net into Level 3	—		—		(1)		—		(1)
Transfers of assets (liabilities), net out of Level 3	1		—		—		—		1
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	$	—	$	(12)	$	—	$	(18)	$	(30)

18 | Notes to Condensed Consolidated Financial Statements | June 30, 2026 and 2025

The following table summarizes the significant unobservable inputs used for Level 3 derivative assets (liabilities) as of June 30, 2026 (in millions, except range amounts):


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





Commodity:
CAISO energy swap	$	(28)	Forward CAISO energy prices per MWH from 2032 through 2038	$4.21 to $132.82 ($51.18)
MISO energy swap	(3)		Forward MISO energy prices per MWH from 2032 through 2040	$23.54 to $95.62 ($48.42)
Other	6
Total	$	(25)

For the CAISO and MISO energy swaps, increases (decreases) in the estimates above would decrease (increase) the value of the derivatives.

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.

Nonrecurring Measurements

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
















	Measurement Date		Carrying Amount (1)		Fair Value
Six Months Ended June 30, 2025		Level 1		Level 2		Level 3		Pre-tax Loss




Held-for-sale businesses: (2)


Mong Duong (3)	3/31/2025		383		—		371		—	17

(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.

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 $38 million and $117 million of pre-tax asset impairment expense related to AES Clean Energy Development Projects during the six months ended June 30, 2026 and 2025, respectively. See Note 16—Asset Impairment Expense for further information.

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

19 | Notes to Condensed Consolidated Financial Statements | June 30, 2026 and 2025

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.

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

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


		June 30, 2026
		Carrying Amount		Fair Value
		Total		Level 1		Level 2		Level 3
Assets:	Financing receivables (1)	$	807	$	807	$	—	$	—	$	807
Liabilities:	Non-recourse debt	25,222		26,335		—		23,294		3,041
	Recourse debt	6,100		5,087		—		5,087		—


		December 31, 2025
		Carrying Amount		Fair Value
		Total		Level 1		Level 2		Level 3
Assets:	Financing receivables (1)	$	855	$	955	$	—	$	—	$	955
Liabilities:	Non-recourse debt	23,178		23,749		—		20,448		3,301
	Recourse debt	5,984		5,003		—		5,003		—

(1)For both periods presented, amounts primarily relate to the Mong Duong loan receivable, payment deferrals granted to mining customers as part of our green blend agreements in Chile, and the sale of the Redondo Beach land. These are included in Loan receivable and Other noncurrent assets in the accompanying Condensed Consolidated Balance Sheets. See Note 5—Financing Receivables for further information.

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

For further information on the Company’s derivative and hedge accounting policies, see Note 1—General and Summary of Significant Accounting Policies—Derivatives and Hedging Activities of Item 8.—Financial Statements and Supplementary Data in the 2025 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, 2026, 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	$	10,266	2058

Foreign currency:

Chilean peso	199		2028

Colombian peso	187		2028
Euro	91		2028


Commodity Derivatives	Maximum Notional	Latest Maturity (2)
Natural Gas (in MMBtu)	73	2029
Power (in MWhs) (2)	37	2040

(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, 2026						December 31, 2025
Assets	Designated		Not Designated		Total		Designated		Not Designated		Total
Interest rate derivatives	$	277	$	—	$	277	$	279	$	—	$	279

Foreign currency derivatives	6		1		7		11		13		24
Commodity derivatives	7		176		183		4		182		186
Total assets	$	290	$	177	$	467	$	294	$	195	$	489
Liabilities
Interest rate derivatives	$	39	$	—	$	39	$	59	$	—	$	59

Foreign currency derivatives	—		36		36		4		24		28
Commodity derivatives	35		111		146		46		151		197
Total liabilities	$	74	$	147	$	221	$	109	$	175	$	284

20 | Notes to Condensed Consolidated Financial Statements | June 30, 2026 and 2025


	June 30, 2026				December 31, 2025
Fair Value	Assets		Liabilities		Assets		Liabilities
Current	$	255	$	112	$	261	$	154
Noncurrent	212		109		228		130
Total	$	467	$	221	$	489	$	284

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


	Three Months Ended June 30,						Six Months Ended June 30,
2026			2025			2026			2025
Cash flow hedges
Gains (losses) recognized in AOCL
Interest rate derivatives	$	85		$	(19)		$	77		$	(185)

Foreign currency derivatives	31			3			30			7
Commodity derivatives	(2)			(30)			18			—
Total	$	114		$	(46)		$	125		$	(178)
Gains (losses) reclassified from AOCL into earnings
Interest rate derivatives — Interest expense	$	(1)		$	(6)		$	(4)		$	9

Foreign currency derivatives — Foreign currency transaction gains (losses)	1			2			3			5
Commodity derivatives — Cost of sales—Non-Regulated	3			1			3			3
Total	$	3		$	(3)		$	2		$	17








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

Not designated as hedging instruments:

Foreign currency derivatives — Foreign currency transaction gains (losses)	$	(7)		$	(7)		$	(6)		$	(9)
Commodity derivatives — Revenue—Non-Regulated	41			(62)			74			(39)
Commodity derivatives — Cost of sales—Non-Regulated	—			(9)			8			(14)
Total	$	34		$	(78)		$	76		$	(62)

Reclassifications from AOCL to earnings are forecasted to increase pre-tax income from continuing operations by $30 million for the twelve months ended June 30, 2027, primarily related to foreign currency 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, 2026						December 31, 2025
	Gross Receivable		Allowance		Net Receivable		Gross Receivable		Allowance		Net Receivable
Vietnam	$	728	$	18	$	710	$	774	$	19	$	755
Chile	58		—		58		61		—		61
U.S.	54		22		32		51		19		32


Other	7		—		7		7		—		7
Total	$	847	$	40	$	807	$	893	$	38	$	855

Vietnam — AES has recorded loan receivables of $806 million as of June 30, 2026 pertaining to our Mong Duong plant in Vietnam. During the six months ended June 30, 2026 and June 30, 2025, the Company collected $57 million and $59 million, respectively. The plant was constructed under a BOT 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 $96 million was classified in Other current assets, and $710 million in Loan receivable on the Condensed Consolidated Balance Sheet as of June 30, 2026. See Note 14—Revenue and Note 18—Held-for-Sale and Dispositions for further information.

Chile — AES Andes has recorded non-current receivables pertaining to payment deferrals granted to mining customers as part of our green blend agreements.

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, 2027.

21 | Notes to Condensed Consolidated Financial Statements | June 30, 2026 and 2025

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, 2026	Accounts Receivable		Financing Receivables		Other (1)		Total






CECL reserve balance at beginning of period	$	39	$	38	$	6	$	83
Current period provision	21		3		—		24
Write-offs charged against allowance	(23)		—		—		(23)
Recoveries collected	—		(1)		—		(1)

CECL reserve balance at end of period	$	37	$	40	$	6	$	83


Six Months Ended June 30, 2025	Accounts Receivable		Financing Receivables		Other (1)		Total






CECL reserve balance at beginning of period	$	52	$	15	$	29	$	96
Reclassification from held-for-sale to held and used	—		21		(21)		—
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	$	37	$	7	$	98

(1)Primarily relates to credit losses allowance on Argentina receivables as of June 30, 2026 and June 30, 2025.

Following the implementation of customer billing system upgrades at our utilities in 2023 and 2024, a temporary pause in customer disconnections, certain collections efforts, and write-off processes contributed to increased provisions and allowance for credit losses throughout 2025. AES Indiana and AES Ohio reinstituted customer disconnections and write-off processes in March and June 2025, respectively. The resumption of these activities resulted in increased write-offs.

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 (1)				Majority-Owned Unconsolidated Subsidiaries
Six Months Ended June 30,	2026		2025		2026		2025
Revenue	$	1,520	$	1,220	$	—	$	—
Operating income (loss)	35		3		—		(1)
Net loss	(174)		(165)		—		(1)
Net loss attributable to affiliates	(174)		(170)		—		(1)

(1)The summarized financial information of Uplight is not included in the table above for the six months ended June 30, 2026 as the equity method of accounting was suspended during the fourth quarter of 2025.

Fluence — In May 2026, the Company redeemed 10,066,414 common units of Fluence Energy, LLC. Fluence Energy, Inc. settled this redemption through the issuance of an equivalent number of shares of its Class A common stock. In conjunction with this redemption, the Company executed a public sale of the Class A shares, resulting in net proceeds of $207 million after expenses, and a pre-tax gain on sale of $186 million, recorded in Gain on disposal and sale of business interests. As a result of this transaction, AES' ownership interest decreased from 28% to 22%. As the Company still does not control but has significant influence over Fluence after the transaction, it continues to be accounted for as an equity method investment. Fluence is reported in the New Energy Technologies SBU reportable segment.

JK Projects — In May 2026, the Company completed the contribution of two of the Jemeiwaa Ka’I wind projects (“JK Projects”), JK1 and JK2, to a trust, receiving proceeds of $25 million. After closing the transaction, the Company retained 51% ownership in the trust, which is accounted for as an equity method investment. The Company recorded its retained interest in the trust at fair value of $27 million. See Note 18—Held-for-Sale and Dispositions for further information. The JK Projects are reported in the Renewables SBU reportable segment.

22 | Notes to Condensed Consolidated Financial Statements | June 30, 2026 and 2025

El Salvador — In April 2026, the Company acquired the remaining 50% ownership interests in Bosforo and Cuscatlan for a total of $44 million. The transactions were accounted for as asset acquisitions as the projects did not meet the definition of a business. Prior to the transactions, the Company’s investments in Bosforo and Cuscatlan were accounted for under the equity method; however, as a result of the transactions, both are now consolidated by AES. Bosforo and Cuscatlan are reported in the Utilities SBU reportable segment.

Uplight — In March 2026, the Company entered into an agreement to sell its 25% ownership interest and convertible note in Uplight for up to $40 million, including $10 million at closing and up to an additional $30 million contingent upon specified events. The transaction is expected to close in the second half of 2026. Uplight 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 June 30, 2026 and December 31, 2025, the fair value is 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, 2026 and December 31, 2025, other long-term liabilities included $43 million and $44 million, respectively, related to this debt agreement. Barry is reported in the Energy Infrastructure SBU reportable segment.

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. 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.

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 Notes due 2029 and 2033 — In June 2026, the Company issued $600 million aggregate principal of 5.20% senior notes due in 2029 and $400 million aggregate principal of 5.75% senior notes due in 2033. The Company used the net proceeds from this offering to repay existing indebtedness, including its senior unsecured term loan of $500 million due in December 2026, and for general corporate purposes.

Senior Notes due 2028 and 2032 — In March 2026, the Company entered into supplemental indentures with respect to its Senior Notes due 2028 and its Senior Notes due 2032 (together, the “Notes”). The supplemental indentures amend the indentures governing each series to provide that the Merger will not constitute a “Change of Control” under those indentures. The amendments will become operative only upon the consummation of the Merger and the payment of the consent fee with respect to each series of the Notes.

Senior Unsecured Term Loan due December 2026 — In October 2025, the Company executed a $300 million senior unsecured term loan agreement, maturing in December 2026. In March 2026, the Company and the lender executed an amendment providing lender consent to the consummation of the Merger. As of June 30, 2026, AES had $300 million in outstanding drawings under the loan agreement.

Senior Unsecured Term Loan due December 2026 — In June 2025, the Company executed a $500 million senior unsecured term loan agreement, maturing in June 2026. In November 2025, the Company executed an amendment extending the maturity date of the loan agreement to December 2026. In March 2026, the Company

23 | Notes to Condensed Consolidated Financial Statements | June 30, 2026 and 2025

and the lender executed an amendment providing lender consent to the consummation of the Merger. In June 2026, AES used the net proceeds of its senior notes issuance to fully repay this term loan.

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.

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. During the six months ended June 30, 2026, the Company borrowed approximately $32.1 billion and repaid approximately $32.1 billion under the commercial paper program, with average daily outstanding borrowings of $891 million. As of June 30, 2026, the Company had no outstanding borrowings under the commercial paper program.

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. In March 2026, the Company executed amendments to each facility. Collectively, these amendments modify certain change of control provisions to permit direct or indirect ownership of the Company by Global Infrastructure Management, LLC, EQT Fund Management S.à r.l., Qatar Investment Authority, and certain investment vehicles affiliated with any of the foregoing or with funds, accounts, or other entities managed, advised, or controlled by any of the foregoing. As of June 30, 2026, AES had no outstanding borrowings 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, are secured solely by the capital stock, physical assets, contracts, and cash flows of one of our subsidiaries, and the Parent Company is not otherwise liable for such debt. Non-recourse debt balances on the Condensed Consolidated Balance Sheet includes $2 billion of current and $11.7 billion of noncurrent non-recourse debt related to VIEs as of June 30, 2026.

During the six months ended June 30, 2026, the Company’s following subsidiaries had significant debt issuances (in millions):


Subsidiary	Issuances (1)
AES Clean Energy	$	689
AES Pacifico Chile	407

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

AES Pacifico Chile — During the years ended December 31, 2025 and 2024, several renewables development projects owned by AES Pacifico Chile executed project financing agreements with aggregate commitments of up to $1.7 billion to support the development and construction of wind and solar plants. As of June 30, 2026, there were $1.3 billion in borrowings under the agreements, maturing in 2029 and 2030.

Marahu — The Marahu project is currently constructing the Salinas and Jobos renewables projects in Puerto Rico, including both solar and energy storage facilities. In July 2025, the Marahu project executed a tax credit transfer bridge loan agreement for total commitments of $230 million, at interest rates of SOFR plus a margin of 1.25% to 2.25%, maturing in April 2027. As of June 30, 2026, there was $212 million in borrowings under the agreement.

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, 2026, there was $877 million, inclusive of paid-in-kind interest, in outstanding borrowings, maturing in 2049.

24 | Notes to Condensed Consolidated Financial Statements | June 30, 2026 and 2025

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.

AES Clean Energy — In May 2026, Four Horizons Seller, LLC and Four Horizons 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 $2.2 billion. As of June 30, 2026, there were $513 million in borrowings maturing in 2029.

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, 2026, there were $1.4 billion in borrowings maturing in 2026 and 2027.

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. As of June 30, 2026, the aggregate principal outstanding for the Co-Issuers was $3.3 billion. As a result of repayment of notes in 2026, AES Clean Energy Development and AES Renewable Holdings recorded, in aggregate, a decrease in liabilities of $34 million, resulting in an aggregate carrying amount of notes at consolidated subsidiaries of $2.5 billion as of June 30, 2026.

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 up to $4 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, an increase in liabilities of $841 million in 2026, resulting in total commitments used under the revolving credit facilities, as of June 30, 2026, of $2.5 billion at consolidated subsidiaries. As of June 30, 2026, the aggregate commitments used under the revolving credit facilities for the Co-Borrowers was $2.6 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. 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 senior secured bonds and preferred shares interest. The financial restructuring was accounted for as a troubled debt restructuring in accordance with ASC 470-60, “Troubled Debt Restructurings by Debtors” as AES Puerto Rico was experiencing financial difficulties and the lenders granted a concession. No gain was recognized as a result of this transaction. As of June 30, 2026, 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.

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, 2026 and December 31, 2025, approximately $370 million and $531 million, respectively, of restricted cash was maintained in accordance with certain covenants of the non-recourse debt agreements. Of these amounts, $330 million and $451 million, respectively, were included within Restricted cash and $40 million and $80 million, respectively, were included within Debt service reserves and other deposits in the accompanying Condensed Consolidated Balance Sheets. As of June 30, 2026 and December 31, 2025, approximately $159 million and $153 million, respectively, of the restricted cash balances were for collateral held to cover potential liability for

25 | Notes to Condensed Consolidated Financial Statements | June 30, 2026 and 2025

current and future insurance claims being assumed by AGIC, AES' captive insurance company. Of total restricted cash and debt service reserves of $583 million, $260 million related to VIEs as of June 30, 2026.

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 $2 billion at June 30, 2026.

The following table summarizes the Company’s subsidiary non-recourse debt in default (in millions) as of June 30, 2026. 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


AES Ilumina (Puerto Rico)	Covenant	$	19	$	33


Mount Olive Solar (AES Clean Energy Development) (1)	Covenant	—		1
Total		$	19

(1) Debt in default at Mount Olive Solar is less than $1 million.

The above defaults are not payment defaults, but are instead technical defaults triggered by failure to comply with covenants or other requirements contained in the non-recourse debt documents of the applicable subsidiary.

The AES Corporation’s recourse debt agreements include cross-default clauses that will trigger if a subsidiary provides 20% or more of the Parent Company’s total cash distributions from businesses for the four most recently completed fiscal quarters and has an outstanding principal in excess of $200 million in default. As of June 30, 2026, the Company’s subsidiaries had no defaults which resulted in a cross-default under the recourse debt of the Parent Company. In the event the Parent Company is not in compliance with the financial covenants of its revolving credit facility, restricted payments will be limited to regular quarterly shareholder dividends at the then-prevailing rate. Payment defaults and bankruptcy defaults would preclude the making of any restricted payments.

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 $826 million as of June 30, 2026. These agreements ranged from less than $1 million to $63 million with a weighted average interest rate of 6.37%. Of the amounts outstanding under supplier financing arrangements as of June 30, 2026, $684 million were guaranteed, including $103 million guaranteed by the Parent Company and $581 million guaranteed by subsidiaries.

The Company had total outstanding balances of $616 million as of December 31, 2025. These agreements ranged from less than $1 million to $51 million with a weighted average interest rate of 6.72%. Of the amounts outstanding under supplier financing arrangements as of December 31, 2025, $391 million were guaranteed, including $204 million guaranteed by the Parent Company and $187 million guaranteed by subsidiaries.

COMMITMENTS AND CONTINGENCIES

Guarantees, Letters of Credit, and Surety Bonds — In connection with certain project financings (including tax equity transactions), acquisitions and dispositions, power purchases, EPC contracts, tax credit transfers, and other agreements, the Parent Company and its 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. In the normal course of business, the Parent Company and its subsidiaries have entered into various agreements, mainly guarantees and letters of credit, to provide financial or performance assurance to third parties on behalf of AES businesses. It is unlikely that the Parent Company or its subsidiaries would be required to perform or otherwise incur any material losses associated with guarantees of subsidiaries' or affiliates' obligations. 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 expects to fulfill within the normal course of business. Our tax equity and tax credit transfer guarantees typically consist of standard indemnifications of tax equity partners or tax credit purchasers in the event that an adverse determination arises due to a recapture event, tax controversy, or any breach by the AES project company of the representations in the

26 | Notes to Condensed Consolidated Financial Statements | June 30, 2026 and 2025

shared equity agreement. The expiration dates of these guarantees vary from less than 1 year to no more than 25 years.

The following table summarizes the Parent Company’s consolidated contingent contractual obligations as of June 30, 2026. 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.


Parent Company Contingent Contractual Obligations	Maximum Exposure (in millions)		Number of Agreements	Maximum Exposure Range for Each Agreement (in millions)
Guarantees and commitments (1)	$	4,368	24	< $1 — 894
Letters of credit under the unsecured credit facilities	174		9	< $1 — 60
Letters of credit under bilateral agreements	159		8	< $1 — 64
Letters of credit under the revolving credit facility	9		15	< $1 — 4


Total	$	4,710	56

(1)Excludes payment obligation and commercial transaction arrangements entered into by the Parent Company on behalf of its consolidated subsidiaries, which relate to the Company's own future performance.

The following table summarizes our subsidiaries’ consolidated contingent contractual obligations as of June 30, 2026. These contingent contractual obligations are issued at the subsidiary level and are non-recourse to the Parent Company. Amounts presented in the following table represent our subsidiaries' 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.


Subsidiary Contingent Contractual Obligations	Maximum Exposure (in millions)		Number of Agreements	Maximum Exposure Range for Each Agreement (in millions)
Guarantees and commitments	$	3,265	43	< $1 — 512
Letters of credit under subsidiary credit facilities	2,060		383	< $1 — 85
Surety bonds	73		101	< $1 — 10
Total	$	5,398	527

Contingencies

Environmental — The Company periodically reviews its obligations as they relate to compliance with environmental laws, including site restoration and remediation. As of both June 30, 2026 and December 31, 2025, the Company recognized liabilities of $1 million for projected environmental remediation costs. 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, 2026. 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 the 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 $16 million and $22 million as of June 30, 2026 and December 31, 2025, 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, 2026. 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

27 | Notes to Condensed Consolidated Financial Statements | June 30, 2026 and 2025

(including but not limited to tax disputes in Brazil and El Salvador); 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 $96 million and $170 million. Included in this range is a reasonably possible legal contingency for environmental remediation costs related to Sul, a business the Company disposed of in 2016, estimated to be approximately R$15 million to R$60 million ($3 million to $12 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	2026		2025		2026		2025
Non-variable lease revenue	$	49	$	81	$	134	$	157
Variable lease revenue	28		28		45		43
Total lease revenue	$	77	$	109	$	179	$	200

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, 2026		December 31, 2025
Gross assets	$	1,901	$	1,923
Less: Accumulated depreciation	(253)		(231)
Net assets	$	1,648	$	1,692

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, 2026. 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, 2026 for the remainder of 2026 through 2030 and thereafter (in millions):


	Future Cash Receipts for
	Sales-Type Leases		Operating Leases
2026	$	32	$	38
2027	63		64
2028	63		1
2029	63		1
2030	63		—
Thereafter	946		—
Total	$	1,230	$	104
Less: Imputed interest	(634)
Present value of total lease receipts	$	596

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 enters into PPAs for the full output of the facility which 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. Losses recognized on the commencement of sales-type leases primarily relate to 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, which reduces the lease receivable to an amount below the carrying value of the associated lease asset, resulting in a pre-tax loss on commencement.

28 | Notes to Condensed Consolidated Financial Statements | June 30, 2026 and 2025

The following table presents variable lease revenue, interest income, and 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	2026		2025		2026		2025
Variable lease revenue	$	1	$	—	$	1	$	1
Interest income	6		6		15		12
Net losses on commencement of sales-type leases (1)	—		(199)		(44)		(208)

(1)Gains and losses are recognized in Other income and Other expense, respectively, in the Condensed Consolidated Statements 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.

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,
	2026		2025		2026		2025
Balance at the beginning of the period	$	2,895	$	899	$	2,824	$	938
Net income (loss)	(36)		3		(37)		33

Adjustments to redemption value of redeemable stock of subsidiaries	—		10		—		10
Reclassification of redeemable stock of subsidiaries to noncontrolling interests	—		(18)		—		(56)

Distributions to holders of redeemable stock of subsidiaries	(64)		(10)		(103)		(41)
Acquisitions of redeemable stock of subsidiaries	—		—		(1)		—
Contributions from holders of redeemable stock of subsidiaries	63		168		63		168
Sales of redeemable stock of subsidiaries	194		687		194		687
Issuance of preferred shares in subsidiaries	—		440		112		440
Balance at the end of the period	$	3,052	$	2,179	$	3,052	$	2,179

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


	June 30, 2026		December 31, 2025
IPALCO common stock	$	1,006	$	1,003
AES Ohio common stock	644		595
AES Global Insurance preferred stock	448		472
AES Clean Energy tax equity partnerships	273		228
Bellefield 2 Equity Holdings preferred stock	262		249
Desarrollos Renovables preferred stock	210		78
AES DevCo HoldCo preferred stock	209		199
Total redeemable stock of subsidiaries	$	3,052	$	2,824

Desarrollos Renovables — In March 2026, AES Pacifico and Global Infrastructure Management, LLC (“GIP”) executed an extension of the renewables partnership originally established in the third quarter of 2025. Under the extension, AES Pacifico contributed the Cristales, Pampas, and Atacama Solar renewables projects to Desarrollos Renovables, and GIP contributed an additional $112 million to maintain its 49% ownership interest, resulting in an increase to Redeemable stock of subsidiaries. AES Pacifico retained a 51% ownership interest in Desarrollos Renovables. The agreement contains certain redemption features that expire upon certain agreed-upon project milestones being achieved. While not currently in effect, the redemption features are not solely in AES’ control. As a result, the noncontrolling ownership interest is considered temporary equity. 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. Desarrollos Renovables is reported in the Renewables SBU reportable segment.

29 | Notes to Condensed Consolidated Financial Statements | June 30, 2026 and 2025

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, which 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, which 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, 2026, 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 that expire upon certain agreed-upon project milestones being achieved. 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, 2026 and 2025, 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 $194 million and $149 million, respectively, net of transaction costs.

During the six months ended June 30, 2025, 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 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 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, 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. As of June 30, 2026, the redemption value of the noncontrolling ownership interest of $448 million equaled the carrying value; as such, no adjustment to the carrying value was necessary. 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

30 | Notes to Condensed Consolidated Financial Statements | June 30, 2026 and 2025

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.

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, 2026, 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 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.

EQUITY

Equity Transactions with Noncontrolling Interests

Marahu — In June 2026, the Company sold a preferred membership interest in CleanFlex Puerto Rico Partners, LLC (“Marahu”) to TotalEnergies (“Total”), resulting in a $169 million increase to NCI. Marahu is a holding company over the Jobos and Salinas renewables development projects in Puerto Rico, and is 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.

In February 2026, AES Andes acquired all of the outstanding preferred shares in Cochrane for $29 million, increasing AES’ effective ownership in Cochrane to 99.6%. Cochrane is reported in the Energy Infrastructure SBU reportable segment.

AES Indiana Petersburg Energy Center — In February 2026, AES Indiana sold additional noncontrolling interests in the Petersburg Energy Center project to the tax equity investor, resulting in a $120 million increase to NCI. AES Indiana 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, which 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, 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. AES Clean Energy Development and AES Renewable Holdings are reported in the Renewables SBU reportable segment.

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 sold additional noncontrolling interests to the tax equity investor, resulting in a $150 million increase to NCI. AES Indiana is reported in the Utilities SBU reportable segment.

31 | Notes to Condensed Consolidated Financial Statements | June 30, 2026 and 2025

Chile Renovables — In December 2023, Chile Renovables issued $275 million of preferred shares to Global Infrastructure Management, LLC (“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 these transactions, Chile Renovables continues to be consolidated by the Company within 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,
	2026		2025
Net income attributable to The AES Corporation	$	913	$	(49)
Transfers (to) from noncontrolling interest:
Increase (decrease) in The AES Corporation's paid-in capital for sale of subsidiary shares	(6)		184
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	(1)		(26)
Net transfers (to) from noncontrolling interest	(7)		(30)
Change from net income attributable to The AES Corporation and transfers (to) from noncontrolling interests	$	906	$	(79)

(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, 2026 (in millions):


	Foreign currency translation adjustments, net		Change in fair value of derivatives, net		Pension adjustments, net		Change in fair value option liabilities, net		Total
Balance at the beginning of the period	$	(1,168)	$	483	$	(16)	$	3	$	(698)
Other comprehensive income before reclassifications	13		88		—		—		101
Amount reclassified to earnings	—		(7)		—		—		(7)
Other comprehensive income	13		81		—		—		94
Reclassification from NCI due to share repurchases	—		1		—		—		1
Balance at the end of the period	$	(1,155)	$	565	$	(16)	$	3	$	(603)

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,
	2026		2025			2026			2025





Change in fair value of derivatives, net
		Non-regulated revenue		$	4		$	—		$	5	$	—
		Non-regulated cost of sales		(2)			1			(4)		2
		Interest expense		—			(6)			(2)		10


		Foreign currency transaction losses		1			2			3		5
		Income (loss) from continuing operations before taxes and equity in earnings of affiliates		3			(3)			2		17
		Income tax benefit (expense)		(1)			(6)			(2)		(12)


		Net income (loss)		2			(9)			—		5
		Less: Net loss attributable to noncontrolling interests and redeemable stock of subsidiaries		1			3			7		4
		Net income (loss) attributable to The AES Corporation		$	3		$	(6)		$	7	$	9

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 2026 for dividends declared in December 2025 and February 2026.

On July 9, 2026, the Board of Directors declared a quarterly common stock dividend of $0.17595 per share payable on August 14, 2026 to shareholders of record at the close of business on July 31, 2026.

32 | Notes to Condensed Consolidated Financial Statements | June 30, 2026 and 2025

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 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. In March 2026, the Company announced changes in its internal management structure, including a change in its President. These changes did not result in a change to our Chief Operating Decision Maker or to the Company’s operating or reportable segments.

*•*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, Maximo, the AI Fund, and other new and innovative energy technology businesses.

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

Included in “Corporate and Other” are the results of 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; (f) costs directly associated with a major restructuring program, including, but not limited to, workforce reduction efforts; and (g) costs directly associated with the Merger, including, but not limited to, advisory, legal, and employee-related costs.

The Company has concluded Adjusted EBITDA better reflects the underlying business performance of the Company and is the most relevant measure considered in the Company's internal evaluation of the financial performance of its segments. Additionally, given its large number of businesses and overall complexity, the Company concluded that Adjusted EBITDA is a more transparent measure that better assists investors in determining which businesses have the greatest impact on the Company's results. The Chief Operating Decision Maker uses Adjusted EBITDA to allocate resources and capital for each segment in the annual budget and forecasting process, including making decisions on where to reinvest profits to support segment growth. On a monthly basis, the Chief Operating Decision Maker reviews variances in budget versus actual Adjusted EBITDA and monitors changes in forecasted Adjusted EBITDA to assess the underlying operating performance and analyze risks and opportunities at each segment.

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.

33 | Notes to Condensed Consolidated Financial Statements | June 30, 2026 and 2025

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


	Three Months Ended June 30, 2026
	Renewables SBU		Utilities SBU		Energy Infrastructure SBU		New Energy Technologies SBU		Total
Revenue	$	939	$	1,018	$	1,496	$	—	$	3,453
Corporate and other									39
Eliminations									(70)
Total Revenue									$	3,422
Less:
Total cost of sales excluding depreciation, amortization, and accretion of AROs (1)	501		724		1,153		3
Other segment items (2)	69		77		26		11
Segment Adjusted EBITDA	$	369	$	217	$	317	$	(14)	$	889
Reconciliation to income from continuing operations before taxes:
Corporate and other									(1)
Eliminations									10
Interest expense									(368)
Interest income									65
Depreciation, amortization, and accretion of AROs									(434)
Adjusted for:
Noncontrolling interests and redeemable stock of subsidiaries									199
Income tax expense (benefit), interest expense (income), and depreciation, amortization, and accretion of AROs from equity affiliates									(52)
Interest income recognized under service concession arrangements									(14)
Unrealized derivatives, equity securities, and financial assets and liabilities losses									(27)
Unrealized foreign currency losses									(12)
Disposition/acquisition gains									209
Impairment losses									(24)
Loss on extinguishment of debt and troubled debt restructuring									(12)

Merger costs									(13)
Income from continuing operations before taxes									$	415

(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 — service concession interest income, 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 — business development costs, earnings from equity affiliates, and miscellaneous gains and losses in Other income and Other expense.

34 | Notes to Condensed Consolidated Financial Statements | June 30, 2026 and 2025


	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 (benefit), interest expense (income), 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

(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 — business development costs, earnings from equity affiliates, and miscellaneous gains and losses in Other income and Other expense.

35 | Notes to Condensed Consolidated Financial Statements | June 30, 2026 and 2025


	Six Months Ended June 30, 2026
	Renewables SBU		Utilities SBU		Energy Infrastructure SBU		New Energy Technologies SBU		Total
Revenue	$	1,759	$	2,154	$	2,752	$	—	$	6,665
Corporate and other									68
Eliminations									(131)
Total Revenue									$	6,602
Less:
Total cost of sales excluding depreciation, amortization, and accretion of AROs (1)	978		1,490		2,096		6
Other segment items (2)	143		178		33		29
Segment Adjusted EBITDA	$	638	$	486	$	623	$	(35)	$	1,712
Reconciliation to income from continuing operations before taxes:
Corporate and other									(2)
Eliminations									15
Interest expense									(721)
Interest income									130
Depreciation, amortization, and accretion of AROs									(867)
Adjusted for:
Noncontrolling interests and redeemable stock of subsidiaries									431
Income tax expense (benefit), interest expense (income), and depreciation, amortization, and accretion of AROs from equity affiliates									(85)
Interest income recognized under service concession arrangements									(27)
Unrealized derivatives, equity securities, and financial assets and liabilities losses									(20)
Unrealized foreign currency gains									8
Disposition/acquisition gains									156
Impairment losses									(34)
Loss on extinguishment of debt and troubled debt restructuring									(20)

Merger costs									(27)
Income from continuing operations before taxes									$	649

(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 — business development costs, earnings from equity affiliates, and miscellaneous gains and losses in Other income and Other expense.

36 | Notes to Condensed Consolidated Financial Statements | June 30, 2026 and 2025


	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 (benefit), interest expense (income), 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 — business development costs, earnings from equity affiliates, and miscellaneous gains and losses in Other income and Other expense.

37 | Notes to Condensed Consolidated Financial Statements | June 30, 2026 and 2025

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, 2026		December 31, 2025
Renewables SBU	$	26,452	$	23,945
Utilities SBU	10,000		9,464
Energy Infrastructure SBU	4,567		4,726
New Energy Technologies SBU	26		23

Corporate and Other	34		29
Long-Lived Assets	41,079		38,187
Current assets	6,403		6,502
Investments in and advances to affiliates	885		1,004
Debt service reserves and other deposits	53		89
Goodwill	342		342
Other intangible assets	2,033		2,040
Deferred income taxes	356		397
Loan receivable	710		755
Other noncurrent assets, excluding right-of-use assets for operating leases	2,377		2,452

Total Assets	$	54,238	$	51,768


Depreciation, Amortization, and Accretion of AROs	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2026		2025		2026		2025
Renewables SBU	$	192	$	138	$	373	$	267
Utilities SBU	137		131		273		255
Energy Infrastructure SBU	102		83		214		164
New Energy Technologies SBU	—		1		1		1
Corporate and Other	3		1		6		4
Total	$	434	$	354	$	867	$	691


Capital Expenditures	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2026		2025		2026		2025
Renewables SBU	$	1,272	$	1,086	$	2,683	$	2,056
Utilities SBU	349		232		715		492
Energy Infrastructure SBU	28		25		56		53
New Energy Technologies SBU	2		2		3		3
Corporate and Other	6		1		10		3
Total	$	1,657	$	1,346	$	3,467	$	2,607


Interest Income	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2026		2025		2026		2025
Renewables SBU	$	24	$	20	$	49	$	41
Utilities SBU	3		4		5		6
Energy Infrastructure SBU	34		41		69		82
New Energy Technologies SBU	—		2		—		4
Corporate and Other	4		3		7		6
Total	$	65	$	70	$	130	$	139


Interest Expense	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2026		2025		2026		2025
Renewables SBU	$	140	$	119	$	265	$	250
Utilities SBU	79		77		156		154
Energy Infrastructure SBU	60		76		125		150
New Energy Technologies SBU	—		—		—		—
Corporate and Other	89		80		175		140
Total	$	368	$	352	$	721	$	694

38 | Notes to Condensed Consolidated Financial Statements | June 30, 2026 and 2025


Net Equity in Earnings (Losses) of Affiliates	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2026		2025		2026		2025
Renewables SBU	$	(17)	$	(6)	$	(24)	$	(15)
Utilities SBU	1		2		3		4
Energy Infrastructure SBU	(6)		3		9		7
New Energy Technologies SBU	(9)		(17)		(26)		(44)
Corporate and Other	(3)		(4)		(4)		(8)
Total	$	(34)	$	(22)	$	(42)	$	(56)

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, 2026
	Renewables SBU		Utilities SBU		Energy Infrastructure SBU		New Energy Technologies SBU		Corporate, Other and Eliminations		Total
Non-Regulated Revenue
Revenue from contracts with customers	$	849	$	23	$	1,435	$	—	$	(31)	$	2,276


Other non-regulated revenue (1)	90		—		61		—		—		151
Total non-regulated revenue	939		23		1,496		—		(31)		2,427
Regulated Revenue
Revenue from contracts with customers	—		987		—		—		—		987

Other regulated revenue	—		8		—		—		—		8
Total regulated revenue	—		995		—		—		—		995
Total revenue	$	939	$	1,018	$	1,496	$	—	$	(31)	$	3,422

	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

39 | Notes to Condensed Consolidated Financial Statements | June 30, 2026 and 2025



	Six Months Ended June 30, 2026
	Renewables SBU		Utilities SBU		Energy Infrastructure SBU		New Energy Technologies SBU		Corporate, Other and Eliminations		Total
Non-Regulated Revenue
Revenue from contracts with customers	$	1,603	$	44	$	2,592	$	—	$	(63)	$	4,176


Other non-regulated revenue (1)	156		1		160		—		—		317
Total non-regulated revenue	1,759		45		2,752		—		(63)		4,493
Regulated Revenue
Revenue from contracts with customers	—		2,092		—		—		—		2,092

Other regulated revenue	—		17		—		—		—		17
Total regulated revenue	—		2,109		—		—		—		2,109
Total revenue	$	1,759	$	2,154	$	2,752	$	—	$	(63)	$	6,602

	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

(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 $246 million and $374 million as of June 30, 2026 and December 31, 2025, respectively.

During the six months ended June 30, 2026 and 2025, we recognized revenue of $162 million and $15 million, respectively, that was included in the corresponding contract liability balance at the beginning of the periods.

A significant financing arrangement exists for our Mong Duong plant in Vietnam. The plant was constructed under a BOT 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 June 30, 2026 and December 31, 2025, the loan receivable balance was $806 million and $862 million, respectively. Of these amounts, $96 million and $107 million were classified in Other current assets, and $710 million and $755 million in Loan receivable on the Condensed Consolidated Balance Sheets, respectively.

Remaining Performance Obligations — The transaction price allocated to remaining performance obligations represents future revenue for unsatisfied (or partially unsatisfied) performance obligations at the end of the reporting period. As of June 30, 2026, the aggregate amount of transaction price allocated to remaining performance obligations was $258 million, primarily consisting of fixed consideration in development services contracts in the U.S., of which $120 million has been collected. We expect to recognize revenue of approximately $127 million in the remainder of 2026, $127 million in 2027, 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

40 | Notes to Condensed Consolidated Financial Statements | June 30, 2026 and 2025

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,
		2026		2025		2026		2025
Other Income	Gain on remeasurement of contingent consideration (1)	$	18	$	23	$	20	$	24
	AFUDC (US Utilities)	3		—		5		1
	Dividend income on investments	2		3		4		3
	Gain on sale and disposal of assets	1		1		3		1












	Other income	4		4		8		9
	Total other income	$	28	$	31	$	40	$	38


Other Expense	Loss on commencement of sales-type leases (2)	$	—	$	199	$	44	$	208
	Loss on remeasurement of contingent consideration (1)	14		3		22		42
	Loss on sale and disposal of assets	4		5		5		8
	Legal contingencies and settlements	4		2		4		2
	Non-service pension and other postretirement costs	2		4		2		4
	Loss on remeasurement of investment (3)	—		48		—		48





	Other	3		34		8		35
	Total other expense	$	27	$	295	$	85	$	347

(1) Related to certain remeasurements of contingent consideration, primarily on projects acquired at AES Clean Energy. See Note 3—Fair Value for further information about remeasurement to fair value.

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

(3) For the period ended June 30, 2025, related to the remeasurement of our existing investment in 5B, accounted for using the measurement alternative. See Note 3—Fair Value 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,
	2026		2025		2026		2025


AES Clean Energy Development Projects	$	32	$	86	$	38	$	117
Mong Duong	—		(243)		—		(226)











Other	(2)		3		4		4
Total	$	30	$	(154)	$	42	$	(105)

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 $38 million and $117 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, 2026 and 2025, 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.

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

41 | Notes to Condensed Consolidated Financial Statements | June 30, 2026 and 2025

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 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.

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, 2026 were 6% and (2)%, respectively. The effective tax rates for the three and six months ended June 30, 2025 were 428% and 1,082%, 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 difference between the Company’s effective tax rates for the 2026 and 2025 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.

During the second quarter of 2026, the Company executed a public sale of the Fluence Class A shares, resulting in a pre-tax gain on sale of $186 million. The sale resulted in approximately $42 million of discrete tax expense for both the three and six months ended June 30, 2026. Additionally, the Company recognized discrete tax benefit of approximately $54 million associated with the Fluence sell-down transaction due to release of valuation allowance on U.S. capital losses. See Note 7—Investments in and Advances to Affiliates for additional information regarding the Fluence sell-down transaction.

For the six months ended June 30, 2026, the Company recorded discrete tax benefit of approximately $20 million associated with the merger of Cochrane into AES Andes and discrete tax expense of approximately $37 million resulting from allocations of losses to tax equity investors on renewables projects.

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

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. In May 2026, the Company completed the contribution of two of the JK Projects, JK1 and JK2, to one of the trusts. See Dispositions below and Note 7—Investments in and Advances to Affiliates for further information. As of June 30, 2026, the contribution of the remaining JK Projects has not been completed and they continue to be classified as held-for-sale but do not meet the criteria to be reported as discontinued operations. These projects are expected to be contributed to the trusts in late 2026 or early 2027. Since the fair value less costs to sell exceeded the carrying value of the disposal group, no impairment was recorded. On a consolidated basis, the carrying value of the remaining JK Projects held-for-sale as of June 30, 2026 was $10 million, consisting primarily of intangible assets. The JK Projects are reported in the Renewables SBU reportable segment.

Mong Duong — In November 2023, the Company entered into an agreement to sell its entire 51% ownership interest in Mong Duong 2, a coal-fired plant in Vietnam, and 51% equity interest in Mong Duong Finance Holdings B.V., an SPV accounted for as an equity affiliate (collectively "Mong Duong"). 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 was subject to regulatory approval, and due to delays in closing the transaction and the pending expiration of the agreement, the Company determined the sale was no longer probable and that Mong Duong no longer met the held-for-sale criteria as of May 31, 2025. As a result, Mong Duong was classified as held and used as of June 30, 2026. 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. The agreement expired in November 2025 and the sale did not close. See

42 | Notes to Condensed Consolidated Financial Statements | June 30, 2026 and 2025

Note 16*—Asset Impairment Expense* for further information. Mong Duong is reported in the Energy Infrastructure SBU reportable segment.

Dispositions

JK Projects — In May 2026, the Company completed the contribution of two of the JK Projects, JK1 and JK2, to a trust, receiving proceeds of $25 million. After closing the transaction, the Company retained 51% ownership in the trust, which is accounted for as an equity method investment. The transaction resulted in a pre-tax gain on sale of $24 million reported in Gain on disposal and sale of business interests. See Note 7—Investments in and Advances to Affiliates for further information. The JK Projects are reported in the Renewables SBU reportable segment.

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 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.

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.

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 and stock options. The effect of such potential common stock is computed using the treasury stock method.

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, 2026 and 2025, where income represents the numerator and weighted-average shares represent the denominator.

43 | Notes to Condensed Consolidated Financial Statements | June 30, 2026 and 2025


Three Months Ended June 30,	2026					2025
(in millions, except per share data)	Income		Shares	$ per Share		Loss		Shares	$ per Share

BASIC EARNINGS PER SHARE
Income (loss) from continuing operations attributable to The AES Corporation common stockholders	$	426	713	$	0.60	$	(95)	712	$	(0.13)
Increase in redemption value of redeemable stock of subsidiaries	—			—		(10)		—	(0.02)
Income (loss) available to The AES Corporation common stockholders	$	426	713	$	0.60	$	(105)	712	$	(0.15)

EFFECT OF DILUTIVE SECURITIES


Restricted stock units	—		2	—		—		—	—

DILUTED EARNINGS PER SHARE	$	426	715	$	0.60	$	(105)	712	$	(0.15)


Six Months Ended June 30,	2026					2025
(in millions, except per share data)	Income		Shares	$ per Share		Loss		Shares	$ per Share

BASIC EARNINGS PER SHARE
Income (loss) from continuing operations attributable to The AES Corporation common stockholders	$	913	713	$	1.28	$	(49)	712	$	(0.07)
Increase in redemption value of redeemable stock of subsidiaries	—			—		(10)		—	(0.01)
Income (loss) available to The AES Corporation common stockholders	$	913	713	$	1.28	$	(59)	712	$	(0.08)

EFFECT OF DILUTIVE SECURITIES


Restricted stock units	—		2	—		—		—	—

DILUTED EARNINGS PER SHARE	$	913	715	$	1.28	$	(59)	712	$	(0.08)

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*.

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

Anti-Dilutive Securities — The calculation of diluted earnings per share excluded 3 million outstanding stock awards for both the three and six months ended June 30, 2026, which would be anti-dilutive. 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. 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.

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, 2026, the average cash basis quarterly net income condition was met, and therefore, no shares are included in the calculation of diluted EPS.

44 | Notes to Condensed Consolidated Financial Statements | June 30, 2026 and 2025

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 right-sized our development company to focus on executing on the backlog and pursuing larger but fewer projects to better serve our core customers. No restructuring charges were recognized during the six months ended June 30, 2026. From inception, the cumulative amount of restructuring costs incurred to date as of June 30, 2026 was $54 million.

During the six months ended June 30, 2025, pre-tax restructuring charges related to employee severance costs were $52 million, of which $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.

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.

As of December 31, 2025, $5 million of pre-tax restructuring charges were reflected within Accrued and other liabilities on the Condensed Consolidated Balance Sheets. During the six months ended June 30, 2026, the Company made cash payments of $5 million. As of June 30, 2026, no pre-tax restructuring charges were reflected within Accrued and other liabilities on the Condensed Consolidated Balance Sheets.

45 | The AES Corporation | June 30, 2026 Form 10-Q

Previous: Cover and table of contents · Next: Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS