AES

commercial arrangements, significantly mitigate our exposure to changes in electricity and, as applicable, fuel prices, currency fluctuations, and changes in interest rates

199 45 % General and administrative expenses (55) (77) 22 -29 % Interest expense (353) (342) (11) 3 % Interest income 65 69 (4) -6 % Loss on extinguishment of debt (8) (8) — — % Other expense (58) (52) (6) 12 % Other income 12 7 5 71 % Loss on disposal and sale of business interests — (1) 1 -100 % Asset impairment expense (12) (49) 37 -76 % Foreign currency transaction gains (losses) 11 (10) 21 NM Inc

General and administrative expenses (241) (288) 47 -16 % Interest expense (1,407) (1,485) 78 -5 % Interest income 287 381 (94) -25 % Loss on extinguishment of debt (26) (17) (9) 53 % Other expense (458) (175) (283) NM Other income 67 156 (89) -57 % Gain on disposal and sale of business interests 58 351 (293) -83 % Asset impairment expense (224) (374) 150 -40 % Foreign currency transaction gains (loss

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

order to refinance existing debt and finance capital expenditures, acquisitions, investments, and other corporate purposes

We may not be adequately hedged against our exposure to changes in commodity prices or interest rates

credit ratings of The AES Corporation and its subsidiaries were to be downgraded, our ability to raise capital on favorable terms could be impaired and our borrowing costs could increase

commercial arrangements, significantly mitigate our exposure to changes in electricity and, as applicable, fuel prices, currency fluctuations, and changes in interest rates

We may not be adequately hedged against our exposure to changes in commodity prices or interest rates

order to refinance existing debt and finance capital expenditures, acquisitions, investments, and other corporate purposes

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

We expect the tariffs on imports from China will increase overall costs for materials and parts that are imported to build and maintain renewable energy plants for the U

We expect the tariffs on imports from China will increase overall costs for materials and parts that are imported to build and maintain renewable energy plants for the U

Key performance drivers for utilities include the regulated rate of return and tariff, seasonality, weather variations, economic activity, and reliability of service

energy generation projects, including investment tax credits, production tax credits, accelerated depreciation, renewable portfolio standards, feed-in-tariffs, and similar programs, REC mechanisms and compliance programs, and tax exemptions

maintains tariffs under Section 301 of the Trade Act of 1974 (“Section 301”) on certain Chinese made lithium-ion batteries and related components utilized for energy storage systems, with such tariffs currently set at 25% effective January 1, 2026 (an increase from

a global safeguard tariff (currently 14% ad valorem) on solar cells and modules pursuant to the Section 201 Safeguard Action on crystalline silicon photovoltaic products, which became effective in February 2018

energy generation projects, including investment tax credits, production tax credits, accelerated depreciation, renewable portfolio standards, feed-in-tariffs, and similar programs, REC mechanisms and compliance programs, and tax exemptions

a global safeguard tariff (currently 14% ad valorem) on solar cells and modules pursuant to the Section 201 Safeguard Action on crystalline silicon photovoltaic products, which became effective in February 2018

Key performance drivers for utilities include the regulated rate of return and tariff, seasonality, weather variations, economic activity, and reliability of service

maintains tariffs under Section 301 of the Trade Act of 1974 (“Section 301”) on certain Chinese made lithium-ion batteries and related components utilized for energy storage systems, with such tariffs currently set at 25% effective January 1, 2026 (an increase from

• 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

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

• increased volatility in foreign exchange and commodity markets

Run coal plant PPA and lower net derivative gains, higher day-one losses on the commencement of sales-type leases at AES Clean Energy, and higher unrealized foreign currency losses

Run coal plant PPA and lower net derivative gains, higher day-one losses on the commencement of sales-type leases at AES Clean Energy, and higher unrealized foreign currency losses

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

• 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

• increased volatility in foreign exchange and commodity markets

El Niño) is unknown and therefore the impacts could vary from those described above, and may include impacts to our businesses beyond hydrology, including with respect to power generation from other renewable sources of energy and demand. Even if rainfall and water inflows remain in line with historical averages, in some cases, market prices and generation above or below the average could present due to a variety of factors related to demand, market dynamics, or regulatory impacts. Impacts may be material to our

centers, and we expect these relationships to expand as the rapid adoption of generative artificial intelligence drives significant growth in data center electricity demand

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, transmission and distribution 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-ter

PPA counterparties for delay or relief from payment obligations or other adjustments, including claims based on force majeure or other legal grounds; • decline in spot electricity prices; • the destabilization of the markets and decline in business activity negatively impacting our customer growth in our service territories at our utilities; 59 | 2025 Annual Report • negative impacts on the health of our essential personnel and on our operations as a result of implementing stay-at-home, quarantine, curfew

on interest expense deductions. Any impact may change as U.S. Treasury and Internal Revenue Service (“IRS”) issue additional guidance, which may be material. The U.S. Inflation Reduction Act of 2022 (the “IRA”) included provisions that benefited the U.S. clean energy industry, including increases, extensions, direct transfers, and/or new tax credits for onshore and offshore wind, solar, storage, and hydrogen projects. We account for U.S. renewables projects according to U.S. GAAP, which, when partnering

on interest expense deductions. Any impact may change as U.S. Treasury and Internal Revenue Service (“IRS”) issue additional guidance, which may be material. The U.S. Inflation Reduction Act of 2022 (the “IRA”) included provisions that benefited the U.S. clean energy industry, including increases, extensions, direct transfers, and/or new tax credits for onshore and offshore wind, solar, storage, and hydrogen projects. We account for U.S. renewables projects according to U.S. GAAP, which, when partnering

non-recourse debt. In some non-recourse financings, the Parent Company has explicitly agreed, in the form of guarantees, indemnities, letters of credit, letter of credit reimbursement agreements and agreements to pay, to undertake certain limited obligations and contingent liabilities, most of which will only be effective or will be terminated upon the occurrence of future events. In the case 68 | 2025 Annual Report of our U.S. renewables projects involving tax equity investors or purchasers of tax credits, we

of these facilities is determined. Tax credits associated with the development of U.S. renewables projects can be substantial and have increased with the adoption of the Inflation Reduction Act ("IRA"). In 2025, AES recognized $1.5 billion related to the monetization of tax attributes to tax equity investors and transferability tax credit buyers relating to U.S. renewables projects, $166 million of which relates to solar projects owned by our utility at AES Indiana. The financial results of U.S. renewables asse

1— General and Summary of Significant Accounting Policies included in Item 8.— Financial Statements and Supplementary Data of this Form 10- 114 | 2025 Annual Report K. Credit Losses — The Company uses a forward-looking "expected loss" model to recognize allowances for credit losses on trade and other receivables, held-to-maturity debt securities, loans, and other instruments. For available-for-sale debt securities with unrealized losses, the Company continues to measure impairments of available-for-sale sec

We have sought to reduce counterparty credit risk under our long-term contracts by entering into power sales contracts with utilities or other customers of strong credit quality and by obtaining guarantees from certain sovereign governments of the customer's obligations; however, many of our customers do not have or have not maintained, investment-grade credit ratings. Our generation businesses cannot always obtain government guarantees and if they do, the government may not have an investment grade cred

assets. Our future success will depend, in part, on our ability to anticipate and successfully adapt to technological changes, to offer services and products that meet customer demands and evolving industry standards. Technological changes that could impact our businesses include: • technologies that change the utilization of electric generation, transmission and distribution assets, including the expanded cost-effective utilization of distributed generation (e.g., rooftop solar and community solar projects

assets. Our future success will depend, in part, on our ability to anticipate and successfully adapt to technological changes, to offer services and products that meet customer demands and evolving industry standards. Technological changes that could impact our businesses include: • technologies that change the utilization of electric generation, transmission and distribution assets, including the expanded cost-effective utilization of distributed generation (e.g., rooftop solar and community solar projects

• our ability to remediate any future material weakness; • 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 in Item 1A.— Risk Factors of this Form 10-Q, Item 1A.— Risk Factors and Item 7.— Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2025 Form 10-K and subsequent filings with the SEC, should not b

• a deterioration in our ability to ensure business continuity, including increased cybersecurity attacks related to a work-from-home environment

mandated energy efficiency measures, demand side management requirements, and economic and demographic conditions, such as population changes, job and income growth, housing starts, new business formation and the overall level of economic activity. A lack of growth, or a decline, in the number of customers or in customer demand for electricity may cause us to not realize the anticipated benefits from significant investments and expenditures and have a material adverse effect on our business, financial condi

mandated energy efficiency measures, demand side management requirements, and economic and demographic conditions, such as population changes, job and income growth, housing starts, new business formation and the overall level of economic activity. A lack of growth, or a decline, in the number of customers or in customer demand for electricity may cause us to not realize the anticipated benefits from significant investments and expenditures and have a material adverse effect on our business, financial condi

factors related to demand, market dynamics, or regulatory impacts. Impacts may be material to our results of operations. Macroeconomic and Political The macroeconomic and political environments in some countries where our subsidiaries conduct business have changed. This could result in significant impacts to tax laws and environmental and energy policies. Additionally, we operate in multiple countries and as such are subject to volatility in exchange rates at the subsidiary level. U.S. Tax Law Reform and U.S. Re

Our generation fleet is diversified by technologies and fuel type

impairments of long-lived assets may include, but are not limited to, adverse changes in the regulatory environment, unfavorable changes in power prices or fuel costs, increased competition due to additional capacity in the grid, technological advancements, declining trends in demand, evolving industry expectations to transition away from fossil fuel sources for generation, or an expectation it is more likely tha

impairments of long-lived assets may include, but are not limited to, adverse changes in the regulatory environment, unfavorable changes in power prices or fuel costs, increased competition due to additional capacity in the grid, technological advancements, declining trends in demand, evolving industry expectations to transition away from fossil fuel sources for generation, or an expectation it is more likely tha

These renewable resources have no fuel costs and very low operational costs , while only operating during certain periods of time (daylight) or weather conditions (higher winds)

• variability in energy demand driven by weather

• energy efficiency and demand side resources

impairments of long-lived assets may include, but are not limited to, adverse changes in the regulatory environment, unfavorable changes in power prices or fuel costs, increased competition due to additional capacity in the grid, technological advancements, declining trends in demand, evolving industry expectations to transition away from fossil fuel sources for generation, or an expectation it is more likely tha

In many cases, we also limit our exposure to fluctuations in fuel prices by entering into long-term contracts for fuel with a limited number of suppliers

offset by $317 million due to higher fuel prices and transportation costs passed through to the offtaker, $148 million of higher CO 2 purchases passed through due to higher production, and $28 million due to higher availability

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

Operational Trade Restrictions and Supply Chain — In April 2022, the U

of our contracts by our contract counterparties, including suppliers or customers

circumstances where we rely on a single supplier or a small number of suppliers

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

of our contracts by our contract counterparties, including suppliers or customers

circumstances where we rely on a single supplier or a small number of suppliers

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

• Uncertainty about the effect of the Merger may impair our ability to attract, retain, and motivate key personnel, and could cause customers, suppliers, partners, lenders, and others to seek to change existing business relationships with us

Operational Trade Restrictions and Supply Chain — In April 2022, the U

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

of the source generation which could include renewable sources at near zero pricing or thermal sources subject to fluctuating cost of fuels such as coal, natural gas, or oil derivative fuels in addition to other factors described below

generation facilities), Utilities (AES Indiana, AES Ohio, and AES El Salvador regulated utilities and their generation facilities), Energy Infrastructure (natural gas, LNG, coal, pet coke, diesel, and oil generation facilities), and New Energy Technologies (investments in Fluence, Maximo, the AI Fund, and other new and innovative energy technology businesses)

Energy Infrastructure (natural gas, LNG, coal, pet coke, diesel, and oil generation facilities)

Energy Infrastructure (natural gas, LNG, coal, pet coke, diesel, and oil generation facilities)

generation facilities), Utilities (AES Indiana, AES Ohio, and AES El Salvador regulated utilities and their generation facilities), Energy Infrastructure (natural gas, LNG, coal, pet coke, diesel, and oil generation facilities), and New Energy Technologies (investments in Fluence, Maximo, the AI Fund, and other new and innovative energy technology businesses)

of the source generation which could include renewable sources at near zero pricing or thermal sources subject to fluctuating cost of fuels such as coal, natural gas, or oil derivative fuels in addition to other factors described below

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

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

Across our portfolio, we provide a wide array of ancillary services, including voltage support, frequency regulation, and spinning reserves

— Risk Factors include risks associated with our operations, governmental regulation and laws, our indebtedness and financial condition

— Risk Factors include risks associated with our operations, governmental regulation and laws, our indebtedness and financial condition

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

is subject to various closing conditions, many of which are not within our full control, including: (1) approval of the shareholders of AES; (2) receipt of all required regulatory approvals without the imposition of a Burdensome Condition, as defined in the Merger Agreement; (3) absence of any law or order prohibiting the consummation of the Merger; (4) subject to materiality qualifiers, the accuracy of each party’s representations and warranties; (5) each party’s compliance in all material respects with i

Across our portfolio, we provide a wide array of ancillary services, including voltage support, frequency regulation, and spinning reserves

The Executive Order also directed the Secretary of the Interior to take action to review its regulations, guidance, policies, and practices for any preferential treatment of wind and solar projects and eliminate those preferences within 45 days (the “Interior Action”)

investment tax credits ("ITCs") from its renewable assets. ITCs and production tax credits ("PTCs"), as well as higher credits available for projects that satisfy wage and apprenticeship requirements under the IRA, increased demand for our renewables products in recent years. Also, in 2023, AES Clean Energy began monetizing tax credits under the transferability provisions of the IRA. These tax credit sales reduce our tax rate under U.S. GAAP. AES Clean Energy's contracted and advanced stage development b

the second quarter of 2026. AES Maritza PPA Review — DG Comp is conducting a preliminary review of whether AES Maritza’s PPA with NEK is compliant with the European Union's State Aid rules. No formal investigation has been launched by DG Comp to date. AES Maritza has previously engaged in discussions with the DG Comp case team and the Government of Bulgaria to attempt to reach a negotiated resolution of the DG Comp’s review (“PPA Discussions”). There are no active PPA Discussions at present, but thos

second quarter of 2026. AES Maritza PPA Review — DG Comp previously opened a preliminary review of whether AES Maritza’s PPA with NEK is compliant with the European Union's State Aid rules. To date, DG Comp has not launched a formal investigation of the PPA, which expires pursuant to its terms on May 8, 2026. AES Maritza previously engaged in discussions with the DG Comp case team and the Government of Bulgaria to attempt to reach a negotiated resolution of the DG Comp’s review (“Discussions”). There

second quarter of 2026. AES Maritza PPA Review — DG Comp previously opened a preliminary review of whether AES Maritza’s PPA with NEK is compliant with the European Union's State Aid rules. To date, DG Comp has not launched a formal investigation of the PPA, which expires pursuant to its terms on May 8, 2026. AES Maritza previously engaged in discussions with the DG Comp case team and the Government of Bulgaria to attempt to reach a negotiated resolution of the DG Comp’s review (“Discussions”). There

investment tax credits ("ITCs") from its renewable assets. ITCs and production tax credits ("PTCs"), as well as higher credits available for projects that satisfy wage and apprenticeship requirements under the IRA, increased demand for our renewables products in recent years. Also, in 2023, AES Clean Energy began monetizing tax credits under the transferability provisions of the IRA. These tax credit sales reduce our tax rate under U.S. GAAP. AES Clean Energy's contracted and advanced stage development b

the second quarter of 2026. AES Maritza PPA Review — DG Comp is conducting a preliminary review of whether AES Maritza’s PPA with NEK is compliant with the European Union's State Aid rules. No formal investigation has been launched by DG Comp to date. AES Maritza has previously engaged in discussions with the DG Comp case team and the Government of Bulgaria to attempt to reach a negotiated resolution of the DG Comp’s review (“PPA Discussions”). There are no active PPA Discussions at present, but thos

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; • our ability to manage global supply chain disruptions; • our ability to raise sufficient capital to fund de

On February 10, 2025, President Trump signed Executive Orders modifying existing tariffs under Section 232 of the Trade Expansion Act of 1962 ("Section 232") on steel and aluminum imports to expand their scope and impose 25% tariffs on both products. The President raised these rates to 50% effective June 4, 2025. At this time, we do not expect the modifications to tariffs on steel and aluminum to have a material impact on our business. On February 1, 2025, President Trump issued an Executive Order declaring a na

On February 10, 2025, President Trump signed Executive Orders modifying existing tariffs under Section 232 of the Trade Expansion Act of 1962 ("Section 232") on steel and aluminum imports to expand their scope and impose 25% tariffs on both products. The President raised these rates to 50% effective June 4, 2025. At this time, we do not expect the modifications to tariffs on steel and aluminum to have a material impact on our business. On February 1, 2025, President Trump issued an Executive Order declaring a na

The global utility scale market, excluding China, will add approximately 3,201 GWh of energy storage capacity between 2024 and 2035, according to the Bloomberg NEF 2H 2025 Energy Storage Market Outlook, published in October 2025

Volatility in economic growth in China could result in lower economic growth and lower demand for electricity in our key markets

Thailand, and Vietnam (“Southeast Asia”) were circumventing antidumping and countervailing duty (“AD/CVD”) orders on solar cells and panels from China

Thailand, and Vietnam (“Southeast Asia”) were circumventing antidumping and countervailing duty (“AD/CVD”) orders on solar cells and panels from China

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 and associated generation attributes unde

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 ot

• availability and effectiveness of transmission facilities owned and operated by third parties; • competition and new entrants; • seasonality, hydrology, and other weather conditions; • illiquid markets; • transmission, transportation constraints, inefficiencies, and/or availability; • renewables source contribution to the supply stack; • increased adoption of distributed generation; • energy efficiency and demand side resources; • available supplies of coal, natural gas, and crude oil and ref

in transmission, distribution, rider, and wholesale revenues mainly due to higher rates, and $93 million due to higher net retail demand mainly driven by favorable weather; and • $296 million at Renewables mainly driven by an $832 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, $232 million due to new projects in service, and $105 million due to development services in the U.S.; partially offse

— Financial Statements of this Form 10-Q and the discussions contained herein should be read in conjunction with our 2025 Form 10-K

| 2025 Annual Report Renewables Our Renewables SBU is well-positioned to take advantage of the growth in data centers driven by the increase in power demand for generative artificial intelligence