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.

34 | The AES Corporation | March 31, 2024 Form 10-Q

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

Operating margin is defined as revenue less cost of sales.

Consolidated Revenue and Operating Margin

Three Months Ended March 31, 2024

Revenue

Consolidated Revenue — Revenue decreased $154 million, or 5%, for the three months ended March 31, 2024, compared to the three months ended March 31, 2023, driven by:

•$110 million at Energy Infrastructure driven by lower regulated contract sales and prices, lower CO 2 purchases passed through due to lower production, the impact of the depreciation of the Argentine peso, and lower generation due to higher outages; partially offset by higher revenues due to a PPA termination agreement and realized and unrealized derivative gains;

•$98 million at Utilities mainly driven by lower Fuel Adjustment Charge rider revenue and lower wholesale revenue due to lower rates; partially offset by higher TDSIC rider and transmission revenues, and higher demand due to favorable weather; and

•$74 million at New Energy Technologies mainly driven by the sale of the Fallbrook project in the prior year.

These unfavorable impacts were partially offset by an increase of $124 million at Renewables mainly driven by higher spot sales prices, new projects placed in service, unrealized commodity derivative gains, and the impact of the appreciation of the Colombian peso; partially offset by the impact of the depreciation of the Argentine peso.

Operating Margin

Consolidated Operating Margin — Operating margin increased $25 million, or 4%, for the three months ended March 31, 2024, compared to the three months ended March 31, 2023, driven by:

•$29 million at Energy Infrastructure mainly driven by higher revenues due to a PPA termination agreement

35 | The AES Corporation | March 31, 2024 Form 10-Q

and derivative gains as part of our commercial hedging strategy; partially offset by lower LNG transactions, higher contract generation costs, and higher outages;

•$15 million at Utilities mainly driven by higher demand due to favorable weather, and an increase in transmission and distribution revenues; partially offset by higher fixed costs and depreciation; and

•$14 million at Corporate and Other primarily driven by higher charge-outs of IT and other costs to the businesses and higher premiums earned by the AES self-insurance company.

These favorable impacts were partially offset by a decrease of $35 million at Renewables mainly driven by worse hydrology, lower wind generation, higher energy purchase prices, and higher fixed costs and depreciation related to new projects; partially offset by unrealized derivative gains.

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

Consolidated Results of Operations — Other

General and administrative expenses

General and administrative expenses increased $20 million, or 36%, to $75 million for the three months ended March 31, 2024, compared to $55 million for the three months ended March 31, 2023, primarily due to increased business development activity and higher people costs and professional fees.

Interest expense

Interest expense increased $27 million, or 8%, to $357 million for the three months ended March 31, 2024, compared to $330 million for the three months ended March 31, 2023. This increase is primarily due to a higher weighted average interest rate and debt balance at the Parent Company as well as new debt issued at the Utilities and Renewables SBUs; partially offset by an increase in capitalized interest.

Interest capitalized during development and construction increased $46 million to $157 million for the three months ended March 31, 2024, compared to $111 million for the three months ended March 31, 2023, primarily due to more projects in development at the Renewables SBU and higher interest rates.

Interest income

Interest income decreased $18 million, or 15%, to $105 million for the three months ended March 31, 2024, compared to $123 million for the three months ended March 31, 2023, primarily due to lower short-term investments at the Renewables and Energy Infrastructure SBUs.

Other income and expense

Other income increased $25 million to $35 million for the three months ended March 31, 2024, compared to $10 million for the three months ended March 31, 2023, mainly due to gains on remeasurement of contingent consideration at AES Clean Energy, a gain on commencement of a sales-type lease on land, and insurance proceeds primarily associated with property damage at AES Andes.

Other expense increased $24 million to $38 million for the three months ended March 31, 2024, compared to $14 million for the three months ended March 31, 2023, primarily driven by legal expenses and other direct costs related to the troubled debt restructuring at Puerto Rico, and a valuation allowance on receivables classified as held-for-sale at Warrior Run.

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

Gain on disposal and sale of business interests

Gain on disposal and sale of business interests was $43 million for the three months ended March 31, 2024, driven by the gain on dilution of AES’ ownership interest in Uplight as a result of the AutoGrid acquisition, partially offset by the loss on the selldown of Amman East and IPP4 in Jordan, which is now accounted for as an equity method investment. See Note 7—Investments in and Advances to Affiliates and Note 18—Held-for-Sale and Dispositionsfor further information.

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Asset impairment expense

Asset impairment expense increased $26 million to $46 million for the three months ended March 31, 2024, compared to $20 million for the three months ended March 31, 2023. This increase was the result of a $37 million impairment at Mong Duong, due to the carrying value exceeding the expected sales proceeds, partially offset by impairments in the prior year of Amman East and IPP4 in Jordan due to the delay in closing the sale transaction.

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

Foreign currency transaction losses

(1)Includes gains of $18 million and losses of $8 million on foreign currency derivative contracts for the three months ended March 31, 2024 and 2023, respectively.

The Company recognized net foreign currency transaction losses of $8 million for the three months ended March 31, 2024, primarily driven by realized losses on receivables denominated in the Chilean peso as well as unrealized losses on debt denominated in the Brazilian real.

The Company recognized net foreign currency transaction losses of $42 million for the three months ended March 31, 2023, primarily due to unrealized losses due to depreciating receivables denominated in the Argentine peso and unrealized losses related to an intercompany loan denominated in the Colombian peso.

Income tax benefit (expense)

Income tax benefit was $16 million for the three months ended March 31, 2024, compared to $72 million of income tax expense for the three months ended March 31, 2023. The Company’s effective tax rates were (6)% and 27% for the three months ended March 31, 2024 and 2023, respectively. This net decrease in the effective tax rate was largely due to the current year benefits associated with a restructuring of a foreign holding company, as well as U.S. investment tax credits (“ITCs”).

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

Net equity in losses of affiliates

Net equity in losses of affiliates increased $11 million to $15 million for the three months ended March 31, 2024, compared to $4 million for the three months ended March 31, 2023. This increase was primarily driven by a decrease in earnings from Mesa La Paz, primarily due to the prior year termination of derivative positions due to a contract amendment.

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

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

Net income attributable to noncontrolling interests and redeemable stock of subsidiaries decreased $192 million to a $154 million loss for the three months ended March 31, 2024, compared to income of $38 million for the three months ended March 31, 2023. This decrease was primarily due to:

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

•Lower earnings due to worse hydrology, lower wind generation and increased costs associated with the growth of our business at the Renewables SBU; and

•Held-for-sale impairment at Mong Duong.

37 | The AES Corporation | March 31, 2024 Form 10-Q

These decreases were partially offset by:

•Prior year impairment at Jordan at the Energy Infrastructure SBU.

Net income attributable to The AES Corporation

Net income attributable to The AES Corporation increased $281 million to $432 million for the three months ended March 31, 2024, compared to $151 million for the three months ended March 31, 2023. This increase was primarily due to:

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

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

•Lower income tax expense;

•Gain on dilution of our interest in Uplight; and

•Lower unrealized foreign currency losses at the Energy Infrastructure SBU.

These increases were partially offset by:

•Higher long-lived asset impairments in the current year; and

•Lower LNG transactions, higher contract generation cost, and outages at the Energy Infrastructure SBU.