UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

____________________________________

FORM 10-K

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2023

-OR-

☐ TRANSITION REPORT FILED PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-12291

THE AES CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	54-1163725
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

4300 Wilson Boulevard
Arlington,	Virginia	22203
(Address of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code: (703) 522-1315

Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, par value $0.01 per share	AES	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  ☒    No  ☐

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  ☐    No  ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ Non-accelerated filer ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐    

Indicate by check mark whether any of those error corrections are restatement that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  ☐     No  ☒

The aggregate market value of the voting and non-voting common equity held by non-affiliates on June 30, 2023, the last business day of the Registrant's most recently completed second fiscal quarter (based on the closing sale price of $20.73 of the Registrant's Common Stock, as reported by the New York Stock Exchange on such date) was approximately $13.88 billion.

The number of shares outstanding of Registrant's Common Stock, par value $0.01 per share, on February 22, 2024 was 710,287,083.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of Registrant's Proxy Statement for its 2024 annual meeting of stockholders are incorporated by reference in Parts II and III

The AES Corporation Fiscal Year 2023 Form 10-K

Table of Contents

Glossary of Terms	1
PART I	3
ITEM 1. BUSINESS	4
ITEM 1A. RISK FACTORS	54
ITEM 1B. UNRESOLVED STAFF COMMENTS	71
ITEM 1C. CYBERSECURITY	71
ITEM 2. PROPERTIES	73
ITEM 3. LEGAL PROCEEDINGS	73
ITEM 4. MINE SAFETY DISCLOSURES	76
PART II	77
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	77
ITEM 6. [RESERVED]	78
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	79
Executive Summary	79
Review of Consolidated Results of Operations	80
SBU Performance Analysis	86
Key Trends and Uncertainties	92
Capital Resources and Liquidity	97
Critical Accounting Policies and Estimates	106
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	110
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	114
Consolidated Balance Sheets	119
Consolidated Statements of Operations	120
Consolidated Statements of Comprehensive Income (Loss)	121
Consolidated Statements of Changes in Equity	122
Consolidated Statements of Cash Flows	123
Note 1 - General and Summary of Significant Accounting Policies	125
Note 2 - Inventory	137
Note 3 - Property, Plant and Equipment	137
Note 4 - Asset Retirement Obligations	138
Note 5 - Fair Value	139
Note 6 - Derivative Instruments and Hedging Activities	145
Note 7 - Financing Receivables	146
Note 8 - Investments in and Advances to Affiliates	147
Note 9 - Goodwill and Other Intangible Assets	149
Note 10 - Regulatory Assets and Liabilities	151
Note 11 - Debt	152
Note 12 - Commitments	156
Note 13 - Contingencies	156
Note 14 - Leases	157
Note 15 - Benefit Plans	159
Note 16 - Redeemable Stock of Subsidiaries	163
Note 17 - Equity	164
Note 18 - Segments and Geographic Information	169
Note 19 - Share-Based Compensation	172
Note 20 - Revenue	173
Note 21 - Other Income and Expense	174
Note 22 - Asset Impairment Expense	175
Note 23 - Income Taxes	178
Note 24 - Held-for-Sale and Dispositions	182
Note 25 - Acquisitions	183
Note 26 - Earnings Per Share	187
Note 27 - Risks and Uncertainties	188
Note 28 - Related Party Transactions	190
Note 29 - Subsequent Events	190
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	191
ITEM 9A. CONTROLS AND PROCEDURES	191
ITEM 9B. OTHER INFORMATION	193
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS	193
PART III	194
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	194
ITEM 11. EXECUTIVE COMPENSATION	194
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	194
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS, AND DIRECTOR INDEPENDENCE	195
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES	195
PART IV - ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE	196
SIGNATURES	198

1 | 2023 Annual Report

Glossary of Terms

The following is a list of frequently used terms and abbreviations that appear in the text of this report and have the definitions indicated below:

ACED	AES Clean Energy Development, LLC
Adjusted EBITDA	Adjusted earnings before interest income and expense, taxes, depreciation and amortization, a non-GAAP measure of operating performance
Adjusted EBITDA with Tax Attributes	Adjusted earnings before interest income and expense, taxes, depreciation and amortization, adding back the pre-tax effect of Production Tax Credits, Investment Tax Credits and depreciation tax expense allocated to tax equity investors, a non-GAAP measure
Adjusted EPS	Adjusted Earnings Per Share, a non-GAAP measure
Adjusted PTC	Adjusted Pre-tax Contribution, a non-GAAP measure of operating performance
AES	The Parent Company and its subsidiaries and affiliates
AES Andes	AES Andes S.A., formerly AES Gener
AES Brasil	AES Brasil Operações S.A., formerly branded as AES Tietê
AES Indiana	Indianapolis Power & Light Company, formerly branded as IPL. AES Indiana is wholly-owned by IPALCO
AES Ohio	The Dayton Power & Light Company, formerly branded as DP&L. AES Ohio is wholly-owned by DPL
AES Renewable Holdings	AES Renewable Holdings, LLC, formerly branded as AES Distributed Energy
AFUDC	Allowance for Funds Used During Construction
AIMCo	Alberta Investment Management Corporation
ANEEL	Brazilian National Electric Energy Agency
AOCL	Accumulated Other Comprehensive Loss
ARO	Asset Retirement Obligations
ASC	Accounting Standards Codification
BACT	Best Available Control Technology
BESS	Battery energy storage system
BOT	Build, Operate and Transfer
CAA	U.S. Clean Air Act
CAMMESA	Wholesale Electric Market Administrator in Argentina
CCEE	Brazilian Chamber of Electric Energy Commercialization
CCGT	Combined Cycle Gas Turbine
CCR	Coal Combustion Residuals, which includes bottom ash, fly ash and air pollution control wastes generated at coal-fired generation plant sites
CDPQ	La Caisse de dépôt et placement du Quebéc
CECL	Current Expected Credit Loss
CEO	Chief Executive Officer
CFE	Federal Electricity Commission in Mexico
CFO	Chief Financial Officer
CO2	Carbon Dioxide
COD	Commercial Operation Date
CPI	U.S. Consumer Price Index
CSAPR	U.S. Cross-State Air Pollution Rule
CWA	U.S. Clean Water Act
DG Comp	Directorate-General for Competition of the European Commission
DOJ	U.S. Department of Justice
DPL	DPL Inc.
DPP	Dominican Power Partners
EBITDA	Earnings before interest income and expense, taxes, depreciation and amortization, a non-GAAP measure of operating performance
EPA	U.S. Environmental Protection Agency
EPC	Engineering, Procurement, and Construction
ERCOT	Electric Reliability Council of Texas
ESP	Electric Security Plan
EU	European Union
EURIBOR	Euro Inter Bank Offered Rate
EVN	Electricity of Vietnam
FERC	U.S. Federal Energy Regulatory Commission
Fluence	Fluence Energy, Inc and its subsidiaries, including Fluence Energy, LLC, which was previously our joint venture with Siemens AG (Nasdaq: FLNC)
FONINVEMEM	Fund for the Investment Needed to Increase the Supply of Electricity in the Wholesale Market in Argentina

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FPA	U.S. Federal Power Act
GAAP	Generally Accepted Accounting Principles in the United States
GHG	Greenhouse Gas
GILTI	Global Intangible Low Taxed Income
GSF	Generation Scaling Factor
GW	Gigawatts
GWh	Gigawatt Hours
HLBV	Hypothetical Liquidation Book Value
IPALCO	IPALCO Enterprises, Inc.
IPP	Independent Power Producers
ISO	Independent System Operator
ITC	Investment Tax Credit
IURC	Indiana Utility Regulatory Commission
LIBOR	London Inter Bank Offered Rate
LNG	Liquefied Natural Gas
MISO	Midcontinent Independent System Operator, Inc.
MMBtu	Million British Thermal Units
MRE	Energy Reallocation Mechanism
MW	Megawatts
MWh	Megawatt Hours
NAAQS	U.S. National Ambient Air Quality Standards
NCI	Noncontrolling Interest
NEK	Natsionalna Elektricheska Kompania (state-owned electricity public supplier in Bulgaria)
NERC	North American Electric Reliability Corporation
NM	Not Meaningful
NOV	Notice of Violation
NOX	Nitrogen Dioxide
NPDES	National Pollutant Discharge Elimination System
NSPS	New Source Performance Standards
O&M	Operations and Maintenance
ONS	National System Operator in Brazil
OTC Policy	Statewide Water Quality Control Policy on the Use of Coastal and Estuarine Waters for Power Plant Cooling
OVEC	Ohio Valley Electric Corporation, an electric generating company in which AES Ohio has a 4.9% interest
Parent Company	The AES Corporation
PCU	Performance Cash Units
Pet Coke	Petroleum Coke
PJM	PJM Interconnection, LLC
PM	Particulate Matter
PPA	Power Purchase Agreement
PREPA	Puerto Rico Electric Power Authority
PSU	Performance Stock Unit
PUCO	The Public Utilities Commission of Ohio
PURPA	U.S. Public Utility Regulatory Policies Act
QF	Qualifying Facility
RSU	Restricted Stock Unit
RTO	Regional Transmission Organization
SADI	Argentine Interconnected System
SBU	Strategic Business Unit
SEC	U.S. Securities and Exchange Commission
SEN	Sistema Electrico Nacional in Chile
SIN	National Interconnected System in Colombia
SIP	State Implementation Plan
SO2	Sulfur Dioxide
SWRCB	California State Water Resources Board
TCJA	Tax Cuts and Jobs Act
TDSIC	Transmission, Distribution, and Storage System Improvement Charge
U.S.	United States
USD	United States Dollar
VAT	Value Added Tax
VIE	Variable Interest Entity
Vinacomin	Vietnam National Coal-Mineral Industries Holding Corporation Ltd.

3 | 2023 Annual Report

PART I

In this Annual Report the terms “AES,” “the Company,” “us,” or “we” refer to The AES Corporation and all of its subsidiaries and affiliates, collectively. The terms “The AES Corporation” and “Parent Company” refer only to the parent, publicly held holding company, The AES Corporation, excluding its subsidiaries and affiliates.

Forward-Looking Information and Risk Factor Summary

In this filing we make statements concerning our expectations, beliefs, plans, objectives, goals, strategies, and future events or performance. Such statements are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Although we believe that these forward-looking statements and the underlying assumptions are reasonable, we cannot assure you that they will prove to be correct.

Forward-looking statements involve a number of risks and uncertainties, and there are factors that could cause actual results to differ materially from those expressed or implied in our forward-looking statements. Some of those factors (in addition to others described elsewhere in this report and in subsequent securities filings) include:

•the economic climate, particularly the state of the economy in the areas in which we operate, which impacts demand for electricity in many of our key markets, including the fact that the global economy faces considerable uncertainty for the foreseeable future, which further increases many of the risks discussed in this Form 10-K;

•changes in the price of electricity at which our generation businesses sell into the wholesale market and our utility businesses purchase to distribute to their customers, and the success of our risk management practices, such as our ability to hedge our exposure to such market price risk;

•changes in the prices and availability of coal, gas and other fuels (including our ability to have fuel transported to our facilities) and the success of our risk management practices, such as our ability to hedge our exposure to such market price risk, and our ability to meet credit support requirements for fuel and power supply contracts;

•changes in and access to the financial markets, particularly changes affecting the availability and cost of capital in order to refinance existing debt and finance capital expenditures, acquisitions, investments and other corporate purposes;

•changes in inflation, demand for power, interest rates and foreign currency exchange rates, including our ability to hedge our interest rate and foreign currency risk;

•our ability to fulfill our obligations, manage liquidity and comply with covenants under our recourse and non-recourse debt, including our ability to manage our significant liquidity needs and to comply with covenants under our revolving credit facility and other existing financing obligations;

•our ability to receive funds from our subsidiaries by way of dividends, fees, interest, loans or otherwise;

•changes in our or any of our subsidiaries' corporate credit ratings or the ratings of our or any of our subsidiaries' debt securities or preferred stock, and changes in the rating agencies' ratings criteria;

•our ability to purchase and sell assets at attractive prices and on other attractive terms;

•our ability to compete in markets where we do business;

•our ability to operate power generation, distribution and transmission facilities, including managing availability, outages and equipment failures;

•our ability to manage our operational and maintenance costs and the performance and reliability of our generating plants, including our ability to reduce unscheduled down times;

•our ability to enter into long-term contracts, which limit volatility in our results of operations and cash flow, such as PPAs, fuel supply, and other agreements and to manage counterparty credit risks in these agreements;

•variations in weather, especially mild winters and cooler summers in the areas in which we operate, the occurrence of difficult hydrological conditions for our hydropower plants, as well as hurricanes and other storms and disasters, wildfires and low levels of wind or sunlight for our wind and solar facilities;

•pandemics, or the future outbreak of any other highly infectious or contagious disease;

•the performance of our contracts by our contract counterparties, including suppliers or customers;

•severe weather and natural disasters;

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•our ability to manage global supply chain disruptions;

•our ability to raise sufficient capital to fund development projects or to successfully execute our development projects;

•the success of our initiatives in renewable energy projects and energy storage projects;

•the availability of government incentives or policies that support the development of renewable energy generation projects;

•our ability to execute on our strategies or achieve expectations related to environmental, social, and governance matters;

•our ability to keep up with advances in technology;

•changes in number of customers or in customer usage;

•the operations of our joint ventures and equity method investments that we do not control;

•our ability to achieve reasonable rate treatment in our utility businesses;

•changes in laws, rules and regulations affecting our international businesses, particularly in developing countries;

•changes in laws, rules and regulations affecting our utilities businesses, including, but not limited to, regulations which may affect competition, the ability to recover net utility assets and other potential stranded costs by our utilities;

•changes in law resulting from new local, state, federal or international energy legislation and changes in political or regulatory oversight or incentives affecting our wind business and solar projects, our other renewables projects and our initiatives in GHG reductions and energy storage, including government policies or tax incentives;

•changes in environmental laws, including requirements for reduced emissions, GHG legislation, regulation, and/or treaties and CCR regulation and remediation;

•changes in tax laws, including U.S. tax reform, and challenges to our tax positions;

•the effects of litigation and government and regulatory investigations;

•the performance of our acquisitions;

•our ability to maintain adequate insurance;

•decreases in the value of pension plan assets, increases in pension plan expenses, and our ability to fund defined benefit pension and other postretirement plans at our subsidiaries;

•losses on the sale or write-down of assets due to impairment events or changes in management intent with regard to either holding or selling certain assets;

•changes in accounting standards, corporate governance and securities law requirements;

•our ability to maintain effective internal controls over financial reporting;

•our ability to attract and retain talented directors, management and other personnel;

•cyber-attacks and information security breaches; and

•data privacy.

These factors, in addition to others described elsewhere in this Form 10-K, including those described under Item 1A.—Risk Factors and in subsequent securities filings, should not be construed as a comprehensive listing of factors that could cause results to vary from our forward-looking information.

We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. If one or more forward-looking statements are updated, no inference should be drawn that additional updates will be made with respect to those or other forward-looking statements.

ITEM 1. BUSINESS

Item 1.—Business is an outline of our strategy and our businesses by SBU, including key financial drivers. Additional items that may have an impact on our businesses are discussed in Item 1A.—Risk Factors and Item 3.—Legal Proceedings.

5 | 2023 Annual Report

Executive Summary

Incorporated in 1981, AES is a global energy company accelerating the future of energy. Together with our many stakeholders, we are improving lives by delivering the greener, smarter energy solutions the world needs. Our diverse workforce is committed to continuous innovation and operational excellence, while partnering with our customers on their strategic energy transitions and continuing to meet their energy needs today.

Our Strategy

AES remains an industry leader in developing and operating the innovative solutions that enable the transition to zero and low-carbon sources of energy. We continue to see an enormous opportunity from the once-in-a-lifetime transformation of the electricity sector driven by decarbonization, electrification, and digitalization.

The focus of our strategy is to partner with large corporations that are transitioning to carbon-free sources of electricity. One example of our successful execution is our collaboration with large technology companies. Specifically, demand from data centers in the U.S. is expected to nearly double in the next three years. Our well-established relationships with these customers, combined with our proven track record of delivering our projects, positions us well to take advantage of this opportunity.

In 2023, we signed long-term contracts for 5.6 GW of renewables, bringing our backlog of projects — those with signed contracts, but which are not yet in operation — to 12.3 GW. Our backlog serves as the core component of future growth. As a result, we have been consistently rated by Bloomberg New Energy Finance as one of the top two largest sellers globally of renewable power to corporate customers, with a focus on large technology/data center providers.

We are a leader in developing green hydrogen. We are partnering with Air Products to develop, build, own, and operate the largest green hydrogen production facility in the United States. We are also participating in two green hydrogen hubs in the United States, which were awarded up to $2.4 billion of grant funding from the U.S. Department of Energy.

With our utilities, we are working with a broad range of stakeholders to transition to lower carbon forms of energy. At AES Indiana, for example, we are working to retire its remaining coal generation by the end of 2025, while adding new renewables and natural gas to the grid.

We are also developing and incubating new technologies that add value today and will drive our business in

6 | 2023 Annual Report

the future. We understand that the energy industry is changing rapidly, and aim to proactively seek solutions that will give us a continued competitive advantage. At the core of our innovation strategy is AES Next, our business and technology incubator. AES Next works to identify new and innovative technologies and business opportunities that provide or support leading-edge greener energy solutions.

2023 Strategic Highlights

•We signed 5.6 GW of renewables and energy storage under long-term PPAs.

•We completed the construction of 3.5 GW.

•Our backlog, which includes projects with signed contracts, but which are not yet operational, is now 12.3 GW, consisting of:

◦5.1 GW under construction; and

◦7.2 GW with signed PPAs, but that are not yet under construction.

•AES Indiana reached a unanimous settlement agreement for its first rate case since 2018, and expects to receive approval from the IURC by the middle of 2024.

•AES Ohio received approval from the PUCO for its Electric Security Plan (ESP4), providing the regulatory foundation necessary to enable future investments.

•We exited or announced the sale or closure of 2.1 GW of coal generation in Vietnam, the U.S., and Chile.

•We signed agreements for three-year extensions of 1.4 GW of gas generation at the Southland legacy units in Southern California. These extensions will help meet the State of California's grid reliability needs while supporting its decarbonization goals.

•Awarded up to $2.4 billion of grant funding by the U.S. Department of Energy for two green hydrogen hubs with AES participation.

•We secured $1.1 billion in asset sale proceeds, to accelerate our portfolio transformation, outpacing our target of $400 to $600 million.

Overview

Generation

We currently own and/or operate a generation portfolio of 34,596 MW, including generation from our integrated utility, AES Indiana. Our generation fleet is diversified by technologies and fuel type. See discussion below under Fuel Costs.

Performance drivers of our generation businesses include types of electricity sales agreements, plant reliability and flexibility, availability of generation capacity to meet contracted sales, fuel costs, seasonality, weather variations, economic activity, fixed-cost management, and competition. The financial performance of our renewables business is also impacted by our ability to complete construction projects and earn U.S. renewable tax credits.

Contract Sales — Most of our generation businesses sell electricity under medium- or long-term contracts in either regulated or competitive markets ("contract sales") or under short-term agreements in competitive markets ("short-term sales"). Our medium-term contract sales have terms of two to five years, while our long-term contracts have terms of more than five years.

Contracts requiring fuel to generate energy, such as natural gas or coal, are structured to recover variable costs, including fuel and variable O&M costs, either through direct or indexation-based contractual pass-throughs or tolling arrangements. When the contract does not include a fuel pass-through, we typically hedge fuel costs or enter into fuel or energy supply agreements for a similar contract period (see discussion below under Fuel Costs). These contracts also help us to fund a significant portion of the total capital cost of the project through long-term non-recourse project-level financing.

Certain contracts include capacity payments that cover projected fixed costs of the plant, including fixed O&M expenses, debt service, and a return on capital invested. In addition, most of our contracts require that the majority of the capacity payments be denominated in the currency matching our fixed costs. In some U.S. markets, the capacity payment is only for the resource adequacy or reliability benefits from the generating facility, allowing us to separately monetize the electricity produced by the facility through either contract sales or short-term sales.

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Contracts that do not have significant fuel cost or do not contain a capacity payment are structured based on long-term prices and may also include negotiated pass-through costs, allowing us to recover expected fixed and variable costs as well as provide a return on investment.

Many of these contracts are intended to reduce exposure to the volatility of fuel and electricity prices by linking the business's revenues and costs. We generally structure our business to eliminate or reduce foreign exchange risk by matching the currency of revenue and expenses, including fixed costs and debt. Our project debt may consist of both fixed and floating rate debt for which we typically hedge a significant portion of our exposure. Some of our contracted businesses also receive a regulated market-based capacity payment, which is discussed in more detail in the Short-Term Sales section below.

Thus, these contracts, or other related commercial arrangements, significantly mitigate our exposure to changes in electricity and, as applicable, fuel prices, currency fluctuations and changes in interest rates. In addition, these contracts generally provide or account for a recovery of our fixed operating expenses and a return on our investment, as long as we operate the plant to the reliability, availability, and efficiency standards required in the contract or otherwise.

Short-Term Sales — Our generation businesses also sell power and ancillary services under short-term contracts with average terms of less than two years, including spot sales, directly in the short-term market or at regulated prices. The short-term markets are typically administered by a system operator to coordinate dispatch. Short-term markets generally operate on merit order dispatch, where the least expensive generation facilities, based upon variable cost or bid price, are dispatched first and the most expensive facilities are dispatched last. The short-term price is typically set at the marginal cost of energy or bid price (the cost of the last plant required to meet system demand). As a result, the cash flows and earnings associated with these businesses are more sensitive to fluctuations in the market price for electricity. In addition, many of these wholesale markets include markets for ancillary services to support the reliable operation of the transmission system. Across our portfolio, we provide a wide array of ancillary services, including voltage support, frequency regulation and spinning reserves.

Many of the short-term markets in which we operate include regulated capacity markets. These capacity markets are intended to provide additional revenue based upon availability without reliance on the energy margin from the merit order dispatch. Capacity markets are typically priced based on the cost of a new entrant and the system capacity relative to the desired level of reserve margin (generation available in excess of peak demand). Our generating facilities selling in the short-term markets typically receive capacity payments based on their availability in the market.

Plant Reliability and Flexibility — Our contract and short-term sales provide incentives to our generation plants to optimally manage availability, operating efficiency and flexibility. Capacity payments under contract sales are frequently tied to meeting minimum standards. In short-term sales and in certain contract sales, our plants must be reliable and flexible to capture peak market prices and to maximize market-based revenues. In addition, our flexibility allows us to capture ancillary service revenue while meeting local market needs.

Fuel Costs — For our thermal generation plants, fuel is a significant component of our total cost of generation. For contract sales, we often enter into fuel supply agreements to match the contract period, or we may financially hedge our fuel costs. Some of our contracts include indexation for fuels. In those cases, we seek to match our fuel supply agreements to the indexation. For certain projects, we have tolling arrangements where the power offtaker is responsible for the supply and cost of fuel to our plants.

In short-term sales, we sell power at market prices that are generally reflective of the market cost of fuel at the time, and thus procure fuel supply on a short-term basis, generally designed to match up with our market sales profile. Since fuel price is often the primary determinant for power prices, the economics of projects with short-term sales are often subject to volatility of relative fuel prices. For further information regarding commodity price risk please see Item 7A.—Quantitative and Qualitative Disclosures about Market Risk in this Form 10-K.

53% of the capacity of our generation plants are renewables, including hydro, solar, wind, energy storage, biomass and landfill gas, which do not have significant fuel costs.

27% of the capacity of our generation plants are fueled by natural gas. With the exception of our plants in the Dominican Republic and Panama, where we import LNG to utilize in the local market, we use gas from local suppliers in each market.

18% of the capacity of our generation fleet is coal-fired. In the U.S., most of our coal-fired plants are supplied from domestic coal. At our non-U.S. generation plants, and at our plant in Puerto Rico, we source coal from a mix of

8 | 2023 Annual Report

sources from the international market and in the local jurisdictions. To the extent possible, we utilize our global sourcing program to maximize the purchasing power of our fuel procurement.

2% of the capacity of our generation fleet utilizes pet coke or oil for fuel. We source oil and diesel locally at prices linked to international markets. We largely source pet coke from Mexico and the U.S.

Seasonality, Weather Variations and Economic Activity — Our generation businesses are affected by seasonal weather patterns and, therefore, operating margin is not generated evenly throughout the year. Additionally, weather variations, including temperature, solar and wind resources, and hydrological conditions, may also have an impact on generation output at our renewable generation facilities. In competitive markets for power, local economic activity can also have an impact on power demand and short-term prices for power.

Fixed-Cost Management — In our businesses with long-term contracts, the majority of the fixed O&M costs are recovered through the capacity payment or were otherwise factored in as a component of the long-term contract price. However, for all generation businesses, managing fixed costs and reducing them over time is a driver of business performance.

Competition — For our businesses with medium- or long-term contracts, there is limited market competition impacting prices during the term of the contract. For short-term sales, plant dispatch and the price of electricity are determined by market competition and local dispatch and reliability rules.

Utilities

Our utility businesses consist of AES Indiana and AES Ohio in the U.S., and four utilities in El Salvador. AES' six utility businesses distribute power to 2.6 million customers and AES' two utilities in the U.S. also include generation capacity totaling 3,500 MW.

AES Indiana, our fully integrated regulated utility, and AES Ohio, our transmission and distribution regulated utility, each operate as the sole distributors of electricity within their respective jurisdictions. AES Indiana owns and operates all of the facilities necessary to generate, transmit and distribute electricity. AES Ohio owns and operates all of the facilities necessary to transmit and distribute electricity. Our distribution business in El Salvador faces limited competition due to significant barriers to enter the market. According to El Salvador's regulation, large regulated customers have the option of becoming unregulated users and requesting service directly from generation or commercialization agents.

In general, our utilities sell electricity directly to end-users, such as homes and businesses, and bill customers directly. Key performance drivers for utilities include the regulated rate of return and tariff, seasonality, weather variations, economic activity and reliability of service. Revenue from utilities is classified as regulated on the Consolidated Statements of Operations.

Regulated Rate of Return and Tariff — In exchange for the right to sell or distribute electricity in a service territory, our utility businesses are subject to government regulation. This regulation sets the framework for the prices ("tariffs") that our utilities are allowed to charge customers for electricity and establishes service standards that we are required to meet.

Our utilities are generally permitted to earn a regulated rate of return on assets, determined by the regulator based on the utility's allowed regulatory asset base, capital structure and cost of capital. The asset base on which the utility is permitted a return is determined by the regulator, within the framework of applicable local laws, and is based on the amount of assets that are considered used and useful in serving customers. Both the allowed return and the asset base are important components of the utility's earning power. The allowed rate of return and operating expenses deemed reasonable by the regulator are recovered through the regulated tariff that the utility charges to its customers.

The tariff may be reviewed and reset by the regulator from time to time depending on local regulations, or the utility may seek a change in its tariffs. The tariff is generally based upon usage level and may include a pass-through of costs that are not controlled by the utility, such as the costs of fuel (in the case of integrated utilities) and/or the costs of purchased energy, to the customer. Components of the tariff that are directly passed through to the customer are usually adjusted through a summary regulatory process or an existing formula-based mechanism. In some regulatory regimes, customers with demand above an established level are unregulated and can choose to contract directly with the utility or with other retail energy suppliers and pay non-bypassable fees, which are fees to the distribution company for use of its distribution system.

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The regulated tariff generally recognizes that our utility businesses should recover certain operating and fixed costs, as well as manage uncollectible amounts, quality of service and technical and non-technical losses. Utilities, therefore, need to manage costs to the levels reflected in the tariff, or risk non-recovery of costs or diminished returns.

Seasonality, Weather Variations, and Economic Activity — Our utility businesses are generally affected by seasonal weather patterns and, therefore, operating margin is not generated evenly throughout the year. Additionally, weather variations may also have an impact based on the number of customers, temperature variances from normal conditions, and customers' historic usage levels and patterns. Retail sales, after adjustments for weather variations, are also affected by changes in local economic activity, energy efficiency and distributed generation initiatives, as well as the number of retail customers.

Reliability of Service — Our utility businesses must meet certain reliability standards, such as duration and frequency of outages. Those standards may be explicit, with defined performance incentives or penalties, or implicit, where the utility must operate to meet customer and/or regulator expectations.

Development and Construction

We develop and construct new generation facilities. For our utility business, new plants may be built or existing plants retrofitted in response to customer needs or to comply with regulatory developments. The projects are developed subject to regulatory approval that permits recovery of our capital cost and a return on our investment. For our generation businesses, our priority for development is in key growth markets, where we can leverage our global scale and synergies with our existing businesses by adding renewable energy. We make the decision to invest in new projects by evaluating the strategic fit, financial profile, projected returns and risk for the investment and against alternative uses of capital, including corporate debt repayment.

In most cases, we enter into long-term contracts for output from new facilities prior to commencing construction. To limit required equity contributions from The AES Corporation, we also seek non-recourse project debt financing and other sources of capital, including partners, when it is commercially attractive. We typically contract with a third party to manage construction, although our construction management team supervises the construction work and tracks progress against the project's budget, schedule, and the required safety, efficiency and productivity standards.

Segments

The segment reporting structure uses the Company's management reporting structure as its foundation to reflect how the Company manages the businesses internally and is mainly organized by technology.

We are organized into four technology-oriented SBUs: Renewables (solar, wind, energy storage, and hydro generation facilities); Utilities (AES Indiana, AES Ohio, and AES El Salvador regulated utilities and their generation facilities); Energy Infrastructure (natural gas, LNG, coal, pet coke, diesel, and oil generation facilities, and our businesses in Chile); and New Energy Technologies (green hydrogen initiatives and investments in Fluence, Uplight, and 5B) — which are led by our SBU Presidents.

We have two lines of business: generation and utilities. Our Renewables, Utilities, and Energy Infrastructure SBUs participate in our first business line, generation, 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 second business line, utilities, 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.

We measure the operating performance of our SBUs using Adjusted EBITDA, a non-GAAP measure. The Adjusted EBITDA by SBU for the year ended December 31, 2023 is shown below. The percentages for Adjusted EBITDA are the contribution by each SBU to the gross metric, i.e., the total Adjusted EBITDA by SBU, before deductions for Corporate. Our New Energy Technologies SBU generated losses for the year ended December 31, 2023. See Item 7.—Management's Discussion and Analysis of Financial Condition and Results of Operations—SBU Performance Analysis of this Form 10-K for reconciliation and definitions of Adjusted EBITDA.

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For financial reporting purposes, the Company's corporate activities are reported within "Corporate and Other" because they do not require separate disclosure. See Item 7.—Management's Discussion and Analysis of Financial Condition and Results of Operations and Note 18—Segment and Geographic Information included in Item 8.—Financial Statements and Supplementary Data of this Form 10-K for further discussion of the Company's segment structure.

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(1) Non-GAAP measure. See Item 7.—Management’s Discussion and Analysis of Financial Condition and Results of Operations—SBU Performance Analysis—Non-GAAP Measures for reconciliation and definition.

Renewables

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Our Renewables SBU is the highest growth segment for AES, adding 4.9 GW to our contracted backlog during 2023, including 1.2 GW with large technology companies.

Specifically, demand from data centers in the U.S. is expected to nearly double in the next three years as generative artificial intelligence use-cases expand. Our well-established relationships with these customers, combined with our proven track record of delivering our projects, positions us well to take advantage of this opportunity.

The Renewables SBU has generation facilities in ten countries — the United States, Brazil, Argentina, Colombia, Mexico, Panama, Bulgaria, the Dominican Republic, Jordan, and the Netherlands.

Generation — Total operating installed capacity of the Renewables SBU is 16,211 MW. The following table lists our Renewables SBU generation facilities:

Business	Location	Fuel	Gross MW	AES Equity Interest		Year Acquired or Began Operation	Contract Expiration Date	Customer(s)
AES Brasil Operacoes (AES Tietê) (1)	Brazil	Hydro	2,658	47	%	1999	2032	Various
Alicura (9)	Argentina	Hydro	1,050	100	%	2000
Chivor	Colombia	Hydro	1,000	99	%	2000	2024-2039	Various
OpCo A (2)	US-Various	Solar	967	26	%	2017-2019	2028-2046	Various
		Wind	140
New York Wind (OpCo D) (3)	US-NY	Wind	612	75	%	2021		NYISO
AES Renewable Holdings (3)	US-Various	Solar	414	100	%	2015-2023	2029-2042	Utility, Municipality, Education, Non-Profit
		Energy Storage	90
Spotsylvania Solar Energy Center (OpCo B) (2)	US-VA	Solar	485	26	%	2020-2021	2035	Apple, Akami, Etsy, Microsoft
Ventos do Araripe, Caetes & Cassino (Cubico II)	Brazil	Wind	456	47	%	2022	2034-2035	Various, CCEE
Alto Sertão II	Brazil	Wind	386	36	%	2017	2033-2035	Various, CCEE
Cajuina 1	Brazil	Wind	314	36%-47%		2023	2035-2043	Various
Mesa La Paz (2)	Mexico	Wind	306	50	%	2019	2045	Fuentes de Energia Peñoles
McFarland A (4)	US-AZ	Solar	200	75	%	2023	2038	BP
		Energy Storage	100
Cajuina 2	Brazil	Wind	296	36%-47%		2023	2044	Various
OpCo B (2)	US-Various	Solar	260	26	%	2019	2039-2044	Various
Bayano	Panama	Hydro	260	49	%	1999	2030	ENSA, Edemet, Edechi, Other
Chevelon Butte (OpCo D) (3)	US-AZ	Wind	238	75	%	2023	2043	APS
Buffalo Gap II (3)	US-TX	Wind	233	100	%	2007
Baldy Mesa (4)	US-CA	Solar	150	75	%	2023	2043	Amazon
		Energy Storage	75
Changuinola	Panama	Hydro	223	90	%	2011	2030	AES Panama
Great Cove 1&2 (4)	US-PA	Solar	220	75	%	2023	2043	University of Pennsylvania
Raceway 1	US-CA	Solar	125	50	%	2023	2043	Microsoft
		Energy Storage	80
Prevailing Winds (OpCo B) (2)	US-SD	Wind	200	26	%	2020	2050	Prevailing Winds
Oak Ridge (4)	US-LA	Solar	200	75	%	2023	2043	Amazon
Ventus	Brazil	Wind	187	36	%	2020	2034	CCEE
Skipjack (OpCo D) (3)(4)	US-VA	Solar	175	75	%	2022	2036	Exelon Generation Company
Buffalo Gap III (3)	US-TX	Wind	170	100	%	2008
Tucano Phase 2	Brazil	Wind	161	47	%	2023	2036	Anglo American
Mandacaru and Salinas	Brazil	Wind	159	47	%	2021	2033-2034	CCEE
St. Nikola	Bulgaria	Wind	156	89	%	2010	2025	Electricity Security Fund
Tucano Phase 1	Brazil	Wind	155	24	%	2022-2023	2042	Unipar
Guaimbê	Brazil	Solar	150	36	%	2018	2037	CCEE

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Lancaster Area Battery (LAB) (3)(4)	US-CA	Energy Storage	127	75	%	2022	2037	PG&E
Buffalo Gap I (3)	US-TX	Wind	121	100	%	2006
Chiriqui-Esti	Panama	Hydro	120	49	%	2003	2030	ENSA, Edemet, Edechi, Other
Cavalier (4)	US-VA	Solar	116	75	%	2023	2043	Dominion Energy
Delta (4)	US-MS	Wind	104	75	%	2023	2043	Amazon
Cabra Corral	Argentina	Hydro	102	100	%	1995		Various
Southland Energy—Alamitos Energy Center (5)	US-CA	Energy Storage	100	50	%	2021	2041	Southern California Edison
East Line Solar (OpCo B) (2)	US-AZ	Solar	100	26	%	2020	2045	Salt River Project
Central Line (OpCo B) (2)	US-AZ	Solar	100	26	%	2022	2039	Salt River Project Agricultural Improvement & Power District
West Line (OpCo B) (2)	US-AZ	Solar	100	26	%	2022	2047	Salt River Project Agricultural Improvement & Power District
Luna (3)	US-CA	Energy Storage	100	75	%	2022	2037	Clean Power Alliance of Southern California
Vientos Bonaerenses	Argentina	Wind	100	100	%	2020	2024-2040	Various
Vientos Neuquinos	Argentina	Wind