AES CORP

Review of Consolidated Results of Operations (Unaudited)

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

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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, 2025

Revenue

Consolidated Revenue — Revenue decreased $87 million, or 3%, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, driven by:

•$156 million at Energy Infrastructure driven by $232 million of prior year revenue related to the AES Andes portfolio, which is reported in the Renewables SBU beginning in 2025 following the sale and expiration of certain coal-related assets and contracts; $64 million of prior year revenues from the monetization of the Warrior Run coal plant PPA, and $40 million due to prior year unrealized and realized derivative gains; partially offset by $65 million higher fuel prices and transportation costs passed through to the offtaker, $60 million higher CO 2 purchases passed through due to higher production, $23 million of higher LNG sales and terminal fees, and $13 million due to higher availability in 2025; and

•$14 million at Corporate, Other and Eliminations mainly driven by higher eliminations of inter-segment revenue.

This unfavorable impact was partially offset by increases of:

•$58 million at Utilities mainly driven by an $87 million increase in transmission, distribution, and rider revenues mainly due to higher rates; partially offset by an $11 million decrease due to lower Fuel Adjustment Charge rider revenue and a $9 million decrease due to lower retail demand; and

•$25 million at Renewables mainly driven by a $216 million increase due to the results of AES Andes moving to Renewables in 2025 as described above, net of a current year decrease in regulated contract sales, and $72 million due to new projects in service; partially offset by $169 million impact from the sale of AES Brasil, a $43 million negative impact related to changes in mark-to-market of energy derivatives, and $39 million net lower spot sales and prices, mainly at Colombia.

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Operating Margin

Consolidated Operating Margin — Operating margin decreased $100 million, or 18%, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, driven by:

•$82 million at Energy Infrastructure mainly driven by $64 million higher prior year revenues from the monetization of the Warrior Run coal plant PPA, $43 million due to prior year unrealized derivative gains as part of our commercial hedging strategy, and $22 million of lower generation due to dispatch; partially offset by an increase of $39 million driven by higher availability in 2025 due to lower maintenance;

•$20 million at Utilities primarily driven by a $13 million increase in depreciation expense from additional assets placed in service, a $9 million decrease due to the impact of planned outages, and $8 million resulting from lower demand due to the impact of weather; partially offset by an increase of $13 million due to higher retail rates as a result of the 2024 Base Rate Order; and

•$15 million at Renewables mainly driven by a $52 million impact from the sale of AES Brasil and a $43 million negative impact related to changes in mark-to-market of energy derivatives; partially offset by a $32 million positive impact from new businesses, a $25 million increase related to higher generation in Colombia as a result of increased availability and lower spot prices on energy purchases, and $17 million impact of lower fixed costs, including lower people costs after restructuring.

These unfavorable impacts were partially offset by an increase of $19 million at Corporate, Other and Eliminations mainly driven by higher premiums earned by AES’ self-insurance company and higher charge-outs of IT and other costs to the businesses.

Six Months Ended June 30, 2025

Revenue

Consolidated Revenue — Revenue decreased $246 million, or 4%, for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, driven by:

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•$445 million at Energy Infrastructure primarily driven by $471 million of prior year revenue related to the AES Andes portfolio, which is reported in the Renewables SBU beginning in 2025 following the sale and expiration of certain coal-related assets and contracts; $171 million of prior year revenues from the monetization of the Warrior Run coal plant PPA, and $126 million due to prior year unrealized and realized derivative gains; partially offset by $142 million higher CO 2 purchases passed through due to higher production, $96 million higher fuel prices and transportation costs passed through to the offtaker, $37 million of higher LNG sales and terminal fees, and $35 million impact of foreign currency, primarily appreciation of the Mexican peso; and

•$43 million at Corporate, Other and Eliminations mainly driven by higher eliminations of inter-segment revenue.

These unfavorable impacts were partially offset by increases of:

•$194 million at Utilities mainly driven by a $205 million increase in transmission, distribution, rider, and wholesale revenues mainly due to higher rates, and $20 million due to higher net retail demand mainly driven by favorable weather; partially offset by $32 million of lower Fuel Adjustment Charge rider revenue; and

•$48 million at Renewables mainly driven by $419 million increase due to the results of AES Andes moving to Renewables in 2025 as described above, net of a current year decrease in regulated contract sales, and $122 million due to new projects in service; partially offset by $339 million impact from the sale of AES Brasil, $89 million due to net lower spot sales and prices, mainly at Colombia, and a $44 million negative impact related to changes in mark-to-market of energy derivatives.

Operating Margin

Consolidated Operating Margin — Operating margin decreased $278 million, or 24%, for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, driven by:

•$287 million at Energy Infrastructure mainly driven by $160 million higher prior year revenues from the monetization of the Warrior Run coal plant PPA, $114 million due to prior year unrealized derivative gains as part of our commercial hedging strategy, $22 million of prior year operating margin related to the AES Andes portfolio, which is reported in the Renewables SBU beginning in 2025 following the sale and expiration of certain coal-related assets and contracts, $19 million of one-time costs due to restructuring, and $17 million due to the prior year selldown of Amman East and IPP4 in Jordan; partially offset by $54 million driven by higher availability in 2025 due to lower maintenance; and

•$5 million at Renewables mainly driven by an $84 million impact from the sale of AES Brasil, a $43 million negative impact related to changes in mark-to-market of energy derivatives, a $19 million increase in fixed costs primarily related to an accelerated growth plan, and $17 million of one-time costs due to restructuring. These negative impacts were partially offset by a $67 million positive impact from new businesses, $36 million increase related to higher generation in Panama as a result of better hydrological conditions during the first quarter of 2025, $25 million increase in Colombia due to increased availability and lower spot prices on energy purchases, and $22 million impact of the results of AES Andes moving to Renewables in 2025, as described above.

These unfavorable impacts were partially offset by an increase of $15 million at Utilities mainly driven by $83 million due to higher retail rates as a result of the 2024 Base Rate Order, higher transmission and rider revenues, and higher demand due to the impact of weather; partially offset by a $22 million increase in depreciation expense from additional assets placed in service, a $17 million impact of planned outages, $15 million higher credit losses,

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and a $15 million increase in fixed cost driven by higher property taxes and higher software costs.

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 $17 million, or 26%, to $49 million for the three months ended June 30, 2025, compared to $66 million for the three months ended June 30, 2024, primarily reflecting a $21 million decrease in business development costs driven by the Company’s restructuring program, partially offset by $5 million in higher professional fees.

General and administrative expenses decreased $15 million, or 11%, to $126 million for the six months ended June 30, 2025, compared to $141 million for the six months ended June 30, 2024, primarily reflecting a $22 million decrease in business development costs driven by the company’s restructuring program, partially offset by $9 million of one-time restructuring-related charges.

Interest expense

Interest expense decreased $37 million, or 10%, to $352 million for the three months ended June 30, 2025, compared to $389 million for the three months ended June 30, 2024. This decrease is primarily due to a $63 million impact from the sale of AES Brasil in October 2024; partially offset by lower capitalized interest at the Renewables SBU due to fewer projects under construction, and a higher weighted average interest rate and debt balance at the Parent Company.

Interest expense decreased $52 million, or 7%, to $694 million for the six months ended June 30, 2025, compared to $746 million for the six months ended June 30, 2024. This decrease is primarily due to a $124 million impact from the sale of AES Brasil in October 2024 and lower debt balances at the Energy Infrastructure SBU; partially offset by lower capitalized interest at the Renewables SBU due to fewer projects under construction, and a higher weighted average interest rate and debt balance at the Parent Company.

Interest income

Interest income decreased $18 million, or 20%, to $70 million for the three months ended June 30, 2025, compared to $88 million for the three months ended June 30, 2024, primarily due to a $15 million impact from the sale of AES Brasil in October 2024.

Interest income decreased $54 million, or 28%, to $139 million for the six months ended June 30, 2025, compared to $193 million for the six months ended June 30, 2024, primarily due to a $28 million impact from the sale of AES Brasil in October 2024, and an $18 million decrease at Argentina due to lower short-term investments at lower rates.

Loss on extinguishment of debt

Loss on extinguishment of debt decreased $4 million, or 44%, to $5 million for the three months ended June 30, 2025, compared to $9 million for the three months ended June 30, 2024, primarily due to a prior year loss of $8 million due to a prepayment at AES Andes, partially offset by a $5 million current year loss related to a revolver amendment at AES Clean Energy.

Loss on extinguishment of debt increased $3 million, or 30%, to $13 million for the six months ended June 30, 2025, compared to $10 million for the six months ended June 30, 2024 primarily driven by a $5 million loss due to prepayment of senior notes at Mercury Chile and a $5 million loss related to a revolver amendment at AES Clean Energy, offset by an $8 million prior year loss due to prepayment at AES Andes.

See Note 8—Obligations included in Item 1.—Financial Statements of this Form 10-Q for further information.

Other income and expense

Other income increased $10 million, or 48%, to $31 million for the three months ended June 30, 2025, compared to $21 million for the three months ended June 30, 2024, mainly due to a $22 million increase in gains on remeasurement of contingent consideration at AES Clean Energy.

Other income decreased $18 million, or 32%, to $38 million for the six months ended June 30, 2025, compared to $56 million for the six months ended June 30, 2024, mainly due to the prior year impacts of a $5 million gain on

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commencement of a sales-type lease on land, $5 million in insurance proceeds primarily related to property damage at AES Andes, and a $5 million gain on contract termination, as well as a $5 million decrease in AFUDC in the current year; partially offset by a $12 million increase in gains on remeasurement of contingent consideration at AES Clean Energy.

Other expense increased $211 million to $295 million for the three months ended June 30, 2025, compared to $84 million for the three months ended June 30, 2024, mainly due to a $127 million increase in losses on commencement of sales-type leases at AES Clean Energy and AES Renewable Holdings, and a $48 million loss on remeasurement of our investment in 5B, accounted for using the measurement alternative.

Other expense increased $225 million to $347 million for the six months ended June 30, 2025, compared to $122 million for the six months ended June 30, 2024, mainly due to an increase of $136 million in losses on commencement of sales-type leases at AES Clean Energy and AES Renewable Holdings, a $48 million loss on remeasurement of our investment in 5B, accounted for using the measurement alternative, and a $36 million increase in losses on remeasurement of contingent consideration primarily on projects acquired at AES Clean Energy; partially offset by a $20 million loss recognized in the prior year related to legal expenses and other direct costs associated with the troubled debt restructuring at AES Puerto Rico.

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

Gain on disposal and sale of business interests

Gain on disposal and sale of business interests increased $69 million to $70 million for the three months ended June 30, 2025 compared to $1 million for the three months ended June 30, 2024. This was primarily due to a $70 million gain on the selldown of Dominican Republic Renewables, which is now accounted for as an equity method investment.

Gain on disposal and sale of business interests increased $25 million, or 57%, to $69 million for the six months ended June 30, 2025 compared to $44 million for six months ended June 30, 2024. This was primarily due to a $70 million gain on the selldown of Dominican Republic Renewables and a $10 million loss in the prior year on the selldown of Amman East and IPP4 in Jordan, which are now accounted for as equity method investments. This was partially offset by a $52 million gain in the prior year on dilution of AES’ ownership interest in Uplight as a result of the AutoGrid acquisition.

See Note 7—Investments in and Advances to Affiliates and Note 18—Held-for-Sale and Dispositionsfor further information.

Asset impairment reversals (expense)

Asset impairment expense decreased $192 million to a $154 million asset impairment reversal for the three months ended June 30, 2025, compared to a $38 million expense for the three months ended June 30, 2024. This decrease was primarily the result of a $243 million increase in the carrying value of the Mong Duong asset group due to the derecognition of a valuation allowance on the loan receivable accounted for under ASC 310 and the elimination of net estimated costs to sell upon reclassifying Mong Duong from held-for-sale to held and used; and prior year impairment expense of $25 million at AES Brasil associated with the held-for-sale classification. This was partially offset by higher impairment expense of $79 million at AES Clean Energy Development due to the write-off of project development intangibles and capitalized development costs for projects that were determined to be no longer viable, including $51 million in the current quarter due to the right sizing of our development company as part of the restructuring program initiated in February 2025.

Asset impairment expense decreased $189 million to a $105 million asset impairment reversal for the six months ended June 30, 2025, compared to an $84 million expense for the six months ended June 30, 2024. This decrease was primarily the result of a $243 million increase in the carrying value of the Mong Duong asset group due to the derecognition of a valuation allowance on the loan receivable accounted for under ASC 310 and the elimination of net estimated costs to sell upon reclassifying Mong Duong from held-for-sale to held and used; and lower impairment expense of $26 million and $25 million at Mong Duong and AES Brasil, respectively, associated with the held-for-sale classification. This was partially offset by higher impairment expense of $103 million at AES Clean Energy Development due to the write-off of project development intangibles and capitalized development costs for projects that were determined to be no longer viable, including $51 million in the current year due to the right sizing of our development company as part of the restructuring program initiated in February 2025.

See Note 16—Asset Impairment Expense and Note 21—Restructuring included in Item 1.—Financial Statements of this Form 10-Q for further information.

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Foreign currency transaction gains (losses)

(1)Includes losses of $12 million and gains of $90 million on foreign currency derivative contracts for the three months ended June 30, 2025, and 2024, respectively, and losses of $14 million and gains of $109 million on foreign currency derivative contracts for the six months ended June 30, 2025,and 2024, respectively.

The Company recognized net foreign currency transaction losses of $28 million and $38 million for the three and six months ended June 30, 2025, respectively, primarily driven by unrealized losses due to the appreciation of the Chilean peso and unrealized losses on forwards and options in Euros.

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 forwards 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 forwards and options denominated in the Brazilian real; partially offset by realized losses on receivables denominated in the Chilean peso.

Other non-operating expense

Other non-operating expense was $10 million for the three and six months ended June 30, 2025 due to an other-than-temporary impairment of convertible notes at 5B as a result of an observable price change from a transaction between 5B and a third-party. There was no other non-operating expense for the three and six months ended June 30, 2024.

Income tax benefit (expense)

Income tax expense was $167 million for the three months ended June 30, 2025, compared to income tax benefit of $35 million for the three months ended June 30, 2024. The Company’s effective tax rates were 428% and (30)% for the three months ended June 30, 2025 and 2024, respectively. This net change in the effective tax rate was largely due to the benefits associated with U.S. investment tax credits (“ITCs”), the impact of the reclassification of Mong Duong from held-for-sale to held and used in the current year, and by tax expense resulting from allocations of losses to tax equity investors on renewables projects. Further, the prior year effective tax rate was impacted by the AES Brasil held-for-sale reclassification.

Income tax expense was $184 million for the six months ended June 30, 2025, compared to income tax benefit of $51 million for the six months ended June 30, 2024. The Company’s effective tax rates were 1082% and (13)% for the six months ended June 30, 2025 and 2024, respectively. The 2025 effective tax rate was not meaningful due to pretax book income being near breakeven. This net change in the effective tax rate was largely due to the benefits associated with ITCs, the impact of the reclassification of Mong Duong from held-for-sale to held and used, and tax expense resulting from allocations of losses to tax equity investors on renewables projects. Additionally, the 2024 effective tax rate was impacted by the restructuring of a foreign holding company, as well as the AES Brasil held-for-sale reclassification.

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 and incremental foreign taxation under Pillar 2. 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 losses of affiliates increased $25 million to $22 million for the three months ended June 30, 2025, compared to gains of $3 million for the three months ended June 30, 2024. This increase was primarily driven by lower earnings from sPower of $20 million, mainly due to lower contributions from renewables projects that came online; and a $7 million decrease in earnings from Mesa La Paz driven by higher income tax expense at the affiliate.

Net equity in losses of affiliates increased $44 million to $56 million for the six months ended June 30, 2025,

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compared to $12 million for the six months ended June 30, 2024. This increase was primarily driven by lower earnings from sPower of $33 million, mainly due to lower contributions from renewables projects that came online; and an $11 million decrease in earnings from Fluence driven by a decrease in the volume of BESS products fulfilled due to timing of customer schedules.

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

Net loss attributable to noncontrolling interests and redeemable stock of subsidiaries

Net loss attributable to noncontrolling interests and redeemable stock of subsidiaries decreased $68 million to $55 million for the three months ended June 30, 2025, compared to $123 million for the three months ended June 30, 2024. This decrease was primarily due to $123 million at Mong Duong mostly driven by the derecognition of a valuation allowance on a loan receivable accounted for under ASC 310 upon reclassifying Mong Duong from held-for-sale to held and used, $26 million related to the partial sale of Dominican Republic Renewables, and $15 million related to the sale of AES Brasil; partially offset by $50 million due to day-one losses on the commencement of sales-type leases at AES Clean Energy Development and higher allocation of losses to tax equity investors on projects placed in service at AES Renewable Holdings of $49 million.

Net loss attributable to noncontrolling interests and redeemable stock of subsidiaries decreased $103 million to $174 million for the six months ended June 30, 2025, compared to $277 million for the six months ended June 30, 2024. This decrease was primarily due to $133 million at Mong Duong mostly driven by the derecognition of a valuation allowance on the loan receivable accounted for under ASC 310 upon reclassifying Mong Duong from held-for-sale to held and used, $28 million related to the partial sale of Dominican Republic Renewables, $28 million related to the sale of AES Brasil, and a decrease of $16 million at AES Clean Energy and AES Renewable Holdings primarily attributable to lower allocation of losses to tax equity investors on projects placed in service; partially offset by higher allocation of losses to tax equity investors in the Pike County BESS project of $51 million, and $50 million due to day-one losses on the commencement of sales-type leases at AES Clean Energy Development.

Net income (loss) attributable to The AES Corporation

Net income attributable to The AES Corporation decreased $371 million to a $95 million loss for the three months ended June 30, 2025, compared to income of $276 million for the three months ended June 30, 2024. This decrease was primarily due to:

•Higher income tax expense of $216 million due to a higher effective tax rate;

•Day-one losses on the commencement of sales-type leases at AES Clean Energy Development of $149 million;

•Lower margins from the Energy Infrastructure SBU of $81 million primarily due to higher prior year revenues from the monetization of the Warrior Run coal plant PPA and prior year unrealized gains on power swaps;

•Higher impairments at AES Clean Energy of $59 million;

•Foreign currency translation losses of $27 million compared to prior year gains of $36 million primarily related to the depreciation of the Chilean peso and unrealized losses on forwards and options in Euros;

•Higher net equity in losses of affiliates of $25 million primarily related to lower contributions from renewables projects that came online at sPower; and

•Lower margins from the Utilities SBU of $23 million primarily related to higher depreciation due to additional assets placed in service and outages in the current year.

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These decreases were partially offset by:

•Derecognition of a valuation allowance on the loan receivable accounted for under ASC 310 and the elimination of net estimated costs to sell from the measurement of the asset group upon reclassifying Mong Duong from held-for-sale to held and used of $127 million;

•Gain on sale of AES DR Renewables Holdings of $45 million; and

•Higher contributions from renewables projects placed in service in the current year of $28 million and higher margins from the Renewables SBU of $13 million due to prior year outages and increased revenue from projects placed in service.

Net income attributable to The AES Corporation decreased $757 million to a $49 million loss for the six months ended June 30, 2025, compared to income of $708 million for the six months ended June 30, 2024. This decrease was primarily due to:

•Lower margins from the Energy Infrastructure SBU of $272 million, excluding one-time restructuring costs, primarily due to higher prior year revenues from the monetization of the Warrior Run coal plant PPA and prior year unrealized gains on power swaps;

•Higher income tax expense of $231 million due to a higher effective tax rate;

•Higher day-one losses on the commencement of sales-type leases at AES Clean Energy Development of $149 million;

•Foreign currency translation losses of $37 million compared to prior year gains of $29 million primarily related to the depreciation of the Chilean peso and unrealized losses on forwards and options in Euros;

•One-time restructuring costs of $50 million;

•Higher interest expense of $13 million and lower interest income of $23 million in the current year; and

•Higher net equity in losses of affiliates of $44 million primarily related to lower contributions from renewables projects that came online at sPower.

These decreases were partially offset by $127 million related to an increase in the carrying value of the Mong Duong asset group primarily due to the derecognition of a valuation allowance on the loan receivable accounted for under ASC 310 upon reclassifying Mong Duong from held-for-sale to held and used.