AES CORP

Review of Consolidated Results of Operations (Unaudited)

40 | The AES Corporation | June 30, 2024 Form 10-Q

Components of Revenue, Cost of Sales, and Operating Margin —Revenue includes revenue earned from the sale of energy from our utilities and the production and sale of energy from our generation plants, which are classified as regulated and non-regulated, respectively, on the Condensed Consolidated Statements of Operations. Revenue also includes the gains or losses on derivatives associated with the sale of electricity.

Cost of sales includes costs incurred directly by the businesses in the ordinary course of business. Examples include electricity and fuel purchases, operations and maintenance costs, depreciation and amortization expenses, bad debt expense and recoveries, and general administrative and support costs (including employee-related costs directly associated with the operations of the business). Cost of sales also includes the gains or losses on derivatives associated with the purchase of electricity or fuel.

Operating margin is defined as revenue less cost of sales.

Consolidated Revenue and Operating Margin

Three Months Ended June 30, 2024

Revenue

Consolidated Revenue — Revenue decreased $85 million, or 3%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023, driven by:

•$185 million at Energy Infrastructure driven by lower regulated contract sales and prices, lower CO 2 purchases passed through due to lower production, the impact of the depreciation of the Argentine peso, and unrealized derivative losses; partially offset by higher revenues due to a PPA termination agreement.

This unfavorable impact was partially offset by increases of:

•$55 million at Renewables mainly driven by new projects in service, the impact of the appreciation of the Colombian peso, and the impact of better hydrology; partially offset by the impact of outages; and

•$44 million at Utilities mainly driven by an increase in transmission and distribution revenues due to higher rates and higher demand due to favorable weather; partially offset by lower Fuel Adjustment Charge rider revenue.

Operating Margin

Consolidated Operating Margin — Operating margin increased $55 million, or 11%, for the three months ended

41 | The AES Corporation | June 30, 2024 Form 10-Q

June 30, 2024, compared to the three months ended June 30, 2023, driven by:

•$70 million at Utilities mainly driven by higher demand due to favorable weather, increases in transmission and rider revenues due to higher TDSIC, ECCRA and DIR, and higher rates as a result of the 2024 Base Rate Order; and

•$26 million at Energy Infrastructure mainly driven by higher revenues due to a PPA termination agreement; partially offset by unrealized derivative losses as part of our commercial hedging strategy, higher outages, and impact of the selldown of Amman East and IPP4 in Jordan.

These favorable impacts were partially offset by decreases of:

•$27 million at Renewables mainly driven by outages due to a flooding incident in Colombia; partially offset by higher generation due to better hydrology in Panama and unrealized derivative gains; and

•$14 million at Corporate and Other primarily driven by higher people, IT, and other costs.

Six Months Ended June 30, 2024

Revenue

Consolidated Revenue — Revenue decreased $239 million, or 4%, for the six months ended June 30, 2024, compared to the six months ended June 30, 2023, driven by:

•$295 million at Energy Infrastructure primarily driven by lower regulated contract sales and prices, lower CO 2 purchases passed through due to lower production, the impact of the depreciation of the Argentine peso, unrealized derivative losses, and lower generation due to higher outages; partially offset by higher revenues due to a PPA termination agreement;

•$75 million at New Energy Technologies mainly driven by the sale of the Fallbrook project in March 2023; and

•$54 million at Utilities mainly driven by lower Fuel Adjustment Charge rider revenue; partially offset by an increase in transmission and distribution revenues due to higher rates, and higher demand due to favorable weather.

These unfavorable impacts were partially offset by an increase of $179 million at Renewables mainly driven by new projects in service, higher spot prices, and the appreciation of the Colombian peso; partially offset by higher outages.

42 | The AES Corporation | June 30, 2024 Form 10-Q

Operating Margin

Consolidated Operating Margin — Operating margin increased $80 million, or 7%, for the six months ended June 30, 2024, compared to the six months ended June 30, 2023, driven by:

•$85 million at Utilities mainly driven by higher demand due to favorable weather, increases in transmission and rider revenues due to higher TDSIC, ECCRA and DIR, and higher retail rates as a result of the 2024 Base Rate Order; and

•$55 million at Energy Infrastructure mainly driven by higher revenues due to a PPA termination agreement; partially offset by higher outages, lower LNG transactions, unrealized derivative losses, and impact of the selldown of Amman East and IPP4 in Jordan.

These favorable impacts were partially offset by a decrease of $62 million at Renewables driven by higher fixed costs, worse hydrology and lower wind and solar availability, and outages due to a flooding incident in Colombia; partially offset by unrealized derivative gains.

See Item 2.—Management’s Discussion and Analysis of Financial Condition and Results of Operations—SBU Performance Analysis of this Form 10-Q for additional discussion and analysis of operating results for each SBU.

Consolidated Results of Operations — Other

General and administrative expenses

General and administrative expenses decreased $6 million, or 8%, to $66 million for the three months ended June 30, 2024, compared to $72 million for the three months ended June 30, 2023, primarily due to lower people costs and professional fees, partially offset by increased business development activity.

General and administrative expenses increased $14 million, or 11%, to $141 million for the six months ended June 30, 2024, compared to $127 million for the six months ended June 30, 2023, primarily due to increased business development activity, partially offset by lower people costs and professional fees.

Interest expense

Interest expense increased $79 million, or 25%, to $389 million for the three months ended June 30, 2024, compared to $310 million for the three months ended June 30, 2023. This increase is primarily due to new debt issued at the Renewables and Utilities SBUs, and a higher weighted average interest rate and debt balance at the Parent Company; partially offset by an increase in capitalized interest.

Interest expense increased $106 million, or 17%, to $746 million for the six months ended June 30, 2024, compared to $640 million for the six months ended June 30, 2023. This increase is primarily due to the drivers above.

Interest capitalized during development and construction increased $34 million to $170 million for the three months ended June 30, 2024, compared to $136 million for the three months ended June 30, 2023, primarily due to more projects in development at the Renewables SBU and higher interest rates.

Interest capitalized during development and construction increased $80 million to $327 million for the six months ended June 30, 2024, compared to $247 million for the six months ended June 30, 2023, primarily due to the drivers above.

43 | The AES Corporation | June 30, 2024 Form 10-Q

Interest income

Interest income decreased $43 million, or 33%, to $88 million for the three months ended June 30, 2024, compared to $131 million for the three months ended June 30, 2023, primarily due to lower short-term investments at the Energy Infrastructure and Renewables SBUs.

Interest income decreased $61 million, or 24%, to $193 million for the six months ended June 30, 2024, compared to $254 million for the six months ended June 30, 2023, primarily due to the drivers above.

Loss on extinguishment of debt

Loss on extinguishment of debt was $9 million and $10 million for the three and six months ended June 30, 2024, respectively, primarily due to a prepayment at AES Andes. See Note 8—Debt included in Item 1.—Financial Statements of this Form 10-Q for further information.

Other income and expense

Other income increased $7 million to $21 million for the three months ended June 30, 2024, compared to $14 million for the three months ended June 30, 2023, with no material drivers.

Other income increased $32 million to $56 million for the six months ended June 30, 2024, compared to $24 million for the six months ended June 30, 2023, mainly due to gains on remeasurement of contingent consideration at AES Clean Energy, a gain on commencement of a sales-type lease on land, and insurance proceeds primarily associated with property damage at AES Andes.

Other expense increased $72 million to $84 million for the three months ended June 30, 2024, compared to $12 million for the three months ended June 30, 2023, primarily driven by losses on commencement of sales-type leases at AES Renewable Holdings.

Other expense increased $96 million to $122 million for the six months ended June 30, 2024, compared to $26 million for the six months ended June 30, 2023, primarily driven by losses on commencement of sales-type leases at AES Renewable Holdings, legal expenses and other direct costs related to the troubled debt restructuring at Puerto Rico, and a valuation allowance on receivables previously classified as held-for-sale at Warrior Run.

See Note 15—Other Income and Expense included in Item 1.—Financial Statements of this Form 10-Q for further information.

Gain (loss) on disposal and sale of business interests

Gain on disposal and sale of business interests was $1 million for the three months ended June 30, 2024, compared to a loss of $4 million for the three months ended June 30, 2023, with no material drivers.

Gain on disposal and sale of business interests was $44 million for the six months ended June 30, 2024, compared to a loss of $4 million for six months ended June 30, 2023, driven by the gain on dilution of AES’ ownership interest in Uplight as a result of the AutoGrid acquisition, partially offset by the loss on the selldown of Amman East and IPP4 in Jordan, which is now accounted for as an equity method investment. See Note 7—Investments in and Advances to Affiliates and Note 18—Held-for-Sale and Dispositionsfor further information.

Asset impairment expense

Asset impairment expense increased $56 million to $230 million for the three months ended June 30, 2024, compared to $174 million for the three months ended June 30, 2023. This increase was primarily the result of a $217 million impairment at AES Brasil upon meeting held-for-sale criteria. This was partially offset by prior year impairments of $137 million associated with the commitment to accelerate the retirement of the Norgener coal-fired plant in Chile, $18 million at five project companies at AES Renewable Holdings associated with the buyout of tax equity partners, and $15 million at Amman East and IPP4 in Jordan due to the delay in closing the sale transaction.

Asset impairment expense increased $82 million to $276 million for the six months ended June 30, 2024, compared to $194 million for the six months ended June 30, 2023. This increase was primarily the result of a $217 million impairment at AES Brasil upon meeting held-for-sale criteria and a $43 million impairment at Mong Duong due to the carrying value exceeding the expected sales proceeds. This was partially offset by prior year impairments of $137 million at Norgener, $29 million at Amman East and IPP4 in Jordan, and $18 million at AES Renewable Holdings, due to the drivers discussed above.

See Note 16—Asset Impairment Expense included in Item 1.—Financial Statements of this Form 10-Q for further information.

44 | The AES Corporation | June 30, 2024 Form 10-Q

Foreign currency transaction gains (losses)

(1)Includes gains of $90 million and losses of $31 million on foreign currency derivative contracts for the three months ended June 30, 2024 and 2023, respectively, and gains of $109 million and losses of $39 million on foreign currency derivative contracts for the six months ended June 30, 2024 and 2023, respectively.

The Company recognized net foreign currency transaction gains of $38 million for the three months ended June 30, 2024, primarily driven by unrealized gains on swaps and options denominated in the Brazilian real.

The Company recognized net foreign currency transaction gains of $30 million for the six months ended June 30, 2024, primarily driven by unrealized gains on swaps and options denominated in the Brazilian real; partially offset by realized losses on receivables denominated in the Chilean peso.

The Company recognized net foreign currency transaction losses of $67 million for the three months ended June 30, 2023, primarily driven by the depreciation of the Argentine peso and unrealized losses related to an intercompany loan denominated in the Colombian peso.

The Company recognized net foreign currency transaction losses of $109 million for the six months ended June 30, 2023, primarily driven by the depreciation of the Argentine peso and unrealized losses related to an intercompany loan denominated in the Colombian peso; partially offset by unrealized gains on debt in Brazil.

Income tax benefit (expense)

Income tax benefit was $35 million for the three months ended June 30, 2024, compared to $2 million for the three months ended June 30, 2023. The Company’s effective tax rates were 45% and (50)% for the three months ended June 30, 2024 and 2023, respectively. This net change in the effective tax rate was largely due to the current year benefits associated with U.S. investment tax credits (“ITCs”). Further, the effective tax rates were impacted by the AES Brasil held-for-sale reclassification in 2024 and the asset impairment of the Norgener coal-fired plant in Chile in 2023.

Income tax benefit was $51 million for the six months ended June 30, 2024, compared to $70 million of income tax expense for the six months ended June 30, 2023. The Company’s effective tax rates were (26)% and 26% for the six months ended June 30, 2024 and 2023, respectively. This net change in the effective tax rate was largely due to the current year benefits associated with U.S. investment tax credits (“ITCs”), the AES Brasil held-for-sale reclassification, as well as the restructuring of a foreign holding company in the first quarter of 2024.

See Note 16—Asset Impairment Expense included in Item 1.—Financial Statements of this Form 10-Q for details of the Norgener asset impairment and Note 18—Held-for-Sale and Dispositions for further information on AES Brasil.

Our effective tax rate reflects the tax effect of significant operations outside the U.S., which are generally taxed at rates different than the U.S. statutory rate of 21%. Furthermore, our foreign earnings may be subjected to incremental U.S. taxation under the GILTI rules. A future proportionate change in the composition of income before income taxes from foreign and domestic tax jurisdictions could impact our periodic effective tax rate.

Net equity in earnings (losses) of affiliates

Net equity in earnings of affiliates increased $28 million to $3 million for the three months ended June 30, 2024, compared to losses of $25 million for the three months ended June 30, 2023. This increase was primarily driven by a decrease in losses from Fluence, mainly attributable to improved margins on a new product line, and higher earnings from sPower, primarily due to contributions from new projects that came online, partially offset by a decrease in earnings from Mesa La Paz, primarily due to the prior year termination of derivative positions due to a contract amendment.

Net equity in losses of affiliates decreased $17 million to $12 million for the six months ended June 30, 2024, compared to $29 million for the six months ended June 30, 2023, primarily due to the drivers above.

45 | The AES Corporation | June 30, 2024 Form 10-Q

See Note 7—Investments in and Advances to Affiliates included in Item 1.—Financial Statements of this Form 10-Q for further information.

Net income (loss) attributable to noncontrolling interests and redeemable stock of subsidiaries

Net income attributable to noncontrolling interests and redeemable stock of subsidiaries decreased $244 million to a $224 million loss for the three months ended June 30, 2024, compared to income of $20 million for the three months ended June 30, 2023. This decrease was primarily due to:

•Higher allocation of losses to tax equity investors on renewables projects placed in service and;

•Held-for-sale impairment at Brazil.

These decreases were partially offset by:

•Selldowns of business interests resulting in larger shares of income attributable to minority shareholders at the Energy Infrastructure SBU.

Net income attributable to noncontrolling interests and redeemable stock of subsidiaries decreased $436 million to a $378 million loss for the six months ended June 30, 2024, compared to income of $58 million for the six months ended June 30, 2023. This decrease was primarily due to:

•Higher allocation of losses to tax equity investors on renewables projects placed in service; and

•Held-for-sale impairments at Brazil and Mong Duong.

These decreases were partially offset by:

•Selldowns of business interests resulting in larger shares of income attributable to minority shareholders at the Energy Infrastructure SBU.

Net income (loss) attributable to The AES Corporation

Net income attributable to The AES Corporation increased $224 million to $185 million for the three months ended June 30, 2024, compared to a net loss of $39 million for the three months ended June 30, 2023. This increase was primarily due to:

•Higher contributions from renewables projects placed in service in the current year;

•Higher earnings from the Energy Infrastructure SBU due to the PPA termination agreement at Warrior Run;

•Unrealized foreign currency losses at the Energy Infrastructure SBU in the prior year;

•Higher earnings from the Utilities SBU; and

•Lower long-lived asset impairments in the current year.

These increases were partially offset by:

•Higher outages at the Energy Infrastructure SBU;

•Losses on commencement of sales-type leases at AES Renewable Holdings; and

•Lower interest income in the current year.

Net income attributable to The AES Corporation increased $505 million to $617 million for the six months ended June 30, 2024, compared to $112 million for the six months ended June 30, 2023. This increase was primarily due to:

•Higher contributions from renewables projects placed in service in the current year;

•Higher earnings from the Energy Infrastructure SBU due to the PPA termination agreement at Warrior Run;

•Unrealized foreign currency losses at the Energy Infrastructure SBU in the prior year;

•Higher earnings from the Utilities SBU;

•Lower income tax expense; and

•Gain on dilution of our interest in Uplight.

These increases were partially offset by:

•Lower LNG transactions and higher outages at the Energy Infrastructure SBU;

46 | The AES Corporation | June 30, 2024 Form 10-Q

•Losses on commencement of sales-type leases at AES Renewable Holdings; and

•Lower interest income in the current year.