AES CORP

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

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 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.

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

Consolidated Revenue and Operating Margin

Three Months Ended September 30, 2024

Revenue

Consolidated Revenue — Revenue decreased $145 million, or 4%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, driven by:

•$238 million at Energy Infrastructure driven by the end of commercial operations at Warrior Run in the second quarter of 2024, lower regulated contract sales and prices, and the impact of the depreciation of the Argentine peso.

This unfavorable impact was partially offset by increases of:

•$81 million at Utilities mainly driven by an increase in transmission and distribution revenues due to higher rates as a result of the 2024 Base Rate Order and higher demand due to favorable weather; and

•$18 million at Renewables mainly driven by new projects in service, and the impact of better hydrology in Panama; partially offset by the impact of record-breaking drought conditions and outages in Colombia and the depreciation of the Brazilian real.

Operating Margin

Consolidated Operating Margin — Operating margin decreased $196 million, or 21%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, driven by:

•$149 million at Energy Infrastructure mainly driven by the end of commercial operations at Warrior Run in the second quarter of 2024, higher energy margin from our hedged merchant Southland facilities in the prior year that are contracted primarily for capacity in the current year, lower thermal dispatch, and higher outages; partially offset by favorable LNG transactions and lower fixed costs; and

•$43 million at Renewables mainly driven by outages due to a flooding incident and record-breaking drought conditions in Colombia, as well as the depreciation of the Brazilian real; partially offset by higher generation due to better hydrology in Panama, new businesses operating in our portfolio, and unrealized derivative gains.

These unfavorable impacts were partially offset by an increase of $5 million at Utilities mainly driven by an increase in transmission and rider revenues, higher retail rates as a result of the 2024 Base Rate Order, and higher

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

demand due to the impact of weather; partially offset by the prior year deferral of power purchase costs associated with the approval of ESP 4, and higher fixed costs.

Nine Months Ended September 30, 2024

Revenue

Consolidated Revenue — Revenue decreased $384 million, or 4%, for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, driven by:

•$533 million at Energy Infrastructure primarily driven by lower regulated contract sales and prices, lower CO 2 purchases passed through due to lower production, the impact of the depreciation of the Argentine peso, higher revenues from our hedged merchant Southland facilities in the prior year that are contracted primarily for capacity in the current year, and lower generation due to higher outages; partially offset by higher revenues due to a PPA termination agreement; and

•$74 million at New Energy Technologies mainly driven by the sale of the Fallbrook project in March 2023.

These unfavorable impacts were partially offset by increases of:

•$197 million at Renewables mainly driven by new projects in service, unrealized derivative gains, and the appreciation of the Colombian peso; partially offset by higher outages and record-breaking drought conditions in Colombia, and the depreciation of the Brazilian real; and

•$27 million at Utilities mainly driven by an increase in transmission and distribution revenues due to higher rates, and higher demand due to favorable weather; partially offset by lower Fuel Adjustment Charge rider revenue.

Operating Margin

Consolidated Operating Margin — Operating margin decreased $116 million, or 6%, for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, driven by:

•$105 million at Renewables driven by higher fixed costs, lower wind and solar availability, and record-breaking drought conditions and outage due to a flooding incident in Colombia; partially offset by unrealized derivative gains; and

•$94 million at Energy Infrastructure mainly driven by higher outages, higher energy margin from our hedged merchant Southland facilities in the prior year that are contracted primarily for capacity in the current year,

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

impact of the selldown of Amman East and IPP4 in Jordan, and lower thermal dispatch; partially offset by higher revenues due to a PPA termination agreement and lower fixed costs.

These unfavorable impacts were partially offset by an increase of $90 million at Utilities mainly driven by increases in transmission and rider revenues due to higher TDSIC, ECCRA and DIR, higher demand due to favorable weather, and higher retail rates as a result of the 2024 Base Rate Order; partially offset by the prior year deferral of power purchase costs associated with the approval of ESP 4, and higher fixed 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 $7 million, or 11%, to $57 million for the three months ended September 30, 2024, compared to $64 million for the three months ended September 30, 2023, primarily due to higher capitalization of business development costs, partially offset by higher people costs.

General and administrative expenses increased $7 million, or 4%, to $198 million for the nine months ended September 30, 2024, compared to $191 million for the nine months ended September 30, 2023, primarily due to increased business development activity and higher people costs.

Interest expense

Interest expense increased $53 million, or 16%, to $379 million for the three months ended September 30, 2024, compared to $326 million for the three months ended September 30, 2023. This increase is primarily due to new debt issued at the Renewables and Utilities SBUs, and a higher weighted average interest rate and debt balance at the Parent Company; partially offset by an increase in capitalized interest.

Interest expense increased $159 million, or 16%, to $1,125 million for the nine months ended September 30, 2024, compared to $966 million for the nine months ended September 30, 2023. This increase is primarily due to the drivers above.

Interest capitalized during development and construction increased $15 million to $164 million for the three months ended September 30, 2024, compared to $149 million for the three months ended September 30, 2023, primarily due to more projects in development at the Renewables SBU, higher debt balances, and higher interest rates.

Interest capitalized during development and construction increased $95 million to $491 million for the nine months ended September 30, 2024, compared to $396 million for the nine months ended September 30, 2023, primarily due to the drivers above.

Interest income

Interest income decreased $25 million, or 17%, to $119 million for the three months ended September 30, 2024, compared to $144 million for the three months ended September 30, 2023, primarily due to lower short-term investments at the Energy Infrastructure and Renewables SBUs, partially offset by interest recognized on the Stabilization Fund receivables in Chile.

Interest income decreased $86 million, or 22%, to $312 million for the nine months ended September 30, 2024, compared to $398 million for the nine months ended September 30, 2023, primarily due to the drivers above.

Loss on extinguishment of debt

Loss on extinguishment of debt was $11 million for the nine months ended September 30, 2024 primarily due to a prepayment at AES Andes. See Note 8—Debt included in Item 1.—Financial Statements of this Form 10-Q for further information.

Other income and expense

Other income increased $52 million to $64 million for the three months ended September 30, 2024, compared to $12 million for the three months ended September 30, 2023, mainly due to gains on remeasurement of contingent consideration at AES Clean Energy and an indexation adjustment of Stabilization Fund receivables at AES Andes.

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Other income increased $84 million to $120 million for the nine months ended September 30, 2024, compared to $36 million for the nine months ended September 30, 2023, mainly due to gains on remeasurement of contingent consideration at AES Clean Energy, an indexation adjustment of Stabilization Fund receivables at AES Andes, 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 $19 million to $31 million for the three months ended September 30, 2024, compared to $12 million for the three months ended September 30, 2023, primarily driven by losses on remeasurement of contingent consideration at AES Clean Energy.

Other expense increased $115 million to $153 million for the nine months ended September 30, 2024, compared to $38 million for the nine months ended September 30, 2023, primarily driven by losses on commencement of sales-type leases at AES Renewable Holdings, legal expenses and other direct costs related to the troubled debt restructuring at Puerto Rico, and losses on remeasurement of contingent consideration at AES Clean Energy.

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

Gain (loss) on disposal and sale of business interests

Loss on disposal and sale of business interests was $1 million for the three months ended September 30, 2024, with no material drivers.

Gain on disposal and sale of business interests was $43 million for the nine months ended September 30, 2024, compared to a loss of $4 million for nine months ended September 30, 2023, driven by the gain on dilution of AES’ ownership interest in Uplight as a result of the AutoGrid acquisition, partially offset by the loss on the selldown of Amman East and IPP4 in Jordan, which is now accounted for as an equity method investment. See Note 7—Investments in and Advances to Affiliates and Note 18—Held-for-Sale and Dispositionsfor further information.

Asset impairment expense

Asset impairment expense decreased $79 million to $79 million for the three months ended September 30, 2024, compared to $158 million for the three months ended September 30, 2023. This decrease was due to prior year impairments of $77 million and $59 million at TEG and TEP, respectively, in Mexico due to a reduction in expected cash flows after expiration of the current PPAs, and a $14 million impairment at Amman East and IPP4 in Jordan due to the delay in closing the sale transaction. This was partially offset by current quarter impairments of $60 million and $11 million at AES Brasil and Mong Duong, respectively, due to subsequent impairment analyses after meeting held-for-sale criteria.

Asset impairment expense increased $3 million to $355 million for the nine months ended September 30, 2024, compared to $352 million for the nine months ended September 30, 2023. This increase was primarily due to current year impairments of $277 million and $54 million at AES Brasil and Mong Duong, respectively, after meeting held-for-sale criteria. This was partially offset by prior year impairments of $77 million and $59 million at TEG and TEP, respectively, $137 million associated with the commitment to accelerate the retirement of the Norgener coal-fired plant in Chile, $43 million at Amman East and IPP4 in Jordan due to the delay in closing the sale transaction, and $18 million at five project companies at AES Renewable Holdings associated with the buyout of tax equity partners.

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

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

Foreign currency transaction gains (losses)

(1)Includes losses of $15 million and gains of $15 million on foreign currency derivative contracts for the three months ended September 30, 2024 and 2023, respectively, and gains of $94 million and losses of $23 million on foreign currency derivative contracts for the nine months ended September 30, 2024 and 2023, respectively.

The Company recognized net foreign currency transaction losses of $28 million for the three months ended September 30, 2024, primarily driven by unrealized losses on swaps and options denominated in the Brazilian real and unrealized losses due to the depreciation of the Chilean peso.

The Company recognized net foreign currency transaction gains of $2 million for the nine months ended September 30, 2024, primarily driven by unrealized gains on swaps and options denominated in the Brazilian real; partially offset by unrealized losses due to the depreciation of the Chilean peso.

The Company recognized net foreign currency transaction losses of $100 million for the three months ended September 30, 2023, primarily driven by the depreciation of the Argentine peso and unrealized losses related to an intercompany loan denominated in the Colombian peso.

The Company recognized net foreign currency transaction losses of $209 million for the nine months ended September 30, 2023, primarily driven by the depreciation of the Argentine peso and unrealized losses related to an intercompany loan denominated in the Colombian peso; partially offset by unrealized gains on debt in Brazil.

Income tax expense

Income tax expense decreased $6 million, or 6%, to $103 million for the three months ended September 30, 2024, compared to $109 million for the three months ended September 30, 2023. The Company’s effective tax rates were 31% and 26% for the three months ended September 30, 2024 and 2023, respectively. This increase in the effective tax rate was impacted by tax expense resulting from allocations of losses to tax equity investors on renewables projects. Partially offsetting these impacts was the current quarter benefit associated with ITCs.

Income tax expense decreased $127 million, or 71%, to $52 million for the nine months ended September 30, 2024, compared to $179 million for the nine months ended September 30, 2023. The Company’s effective tax rates were 10% and 26% for the nine months ended September 30, 2024 and 2023, respectively. This decrease in the effective tax rate was largely due to the current year benefits associated with ITCs, the AES Brasil held-for-sale reclassification, and the restructuring of a foreign holding company. These drivers were partially offset by current year tax expense resulting from allocations of losses to tax equity investors on renewables projects. Further, the prior year effective tax rate was benefited by inflationary and foreign currency impacts at certain Argentine businesses, partially offset by the recognition of valuation allowance against certain Argentine deferred tax assets.

See Note 18—Held-for-Sale and Dispositions in Item 1.—Financial Statements of this Form 10-Q for further information on AES Brasil.

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

Net equity in losses of affiliates

Net equity in losses of affiliates decreased $5 million to $9 million for the three months ended September 30, 2024, compared to $14 million for the three months ended September 30, 2023. This decrease was primarily driven by higher earnings from sPower, primarily due to contributions from new projects that came online.

Net equity in losses of affiliates decreased $22 million to $21 million for the nine months ended September 30, 2024, compared to $43 million for the nine months ended September 30, 2023. This decrease was primarily driven by a decrease in losses from Fluence, mainly attributable to improved margins on a new product line, and higher earnings from sPower, primarily due to contributions from new projects that came online, partially offset by a

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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 loss attributable to noncontrolling interests and redeemable stock of subsidiaries increased $352 million to a $292 million loss for the three months ended September 30, 2024, compared to income of $60 million for the three months ended September 30, 2023. This increase was primarily due to:

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

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

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

•Better hydrology resulting in higher generation in Panama.

Net loss attributable to noncontrolling interests and redeemable stock of subsidiaries increased $788 million to a $670 million loss for the nine months ended September 30, 2024, compared to income of $118 million for the nine months ended September 30, 2023. This increase was primarily due to:

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

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

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

•Better hydrology resulting in higher generation in Panama.

Net income (loss) attributable to The AES Corporation

Net income attributable to The AES Corporation increased $271 million to $502 million for the three months ended September 30, 2024, compared to $231 million for the three months ended September 30, 2023. This increase was primarily due to:

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

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

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

•Lower contributions from the Energy Infrastructure SBU primarily due to the end of commercial operations at Warrior Run in the second quarter of 2024 and higher energy margin from our hedged merchant Southland facilities in the prior year that are contracted primarily for capacity in the current year;

•Lower margins at the Renewables SBU driven by record-breaking drought conditions and partial outage due to a flooding incident in Colombia; and

•Higher interest expense mainly from new debt at the Renewables and Utilities SBUs.

Net income attributable to The AES Corporation increased $776 million to $1,119 million for the nine months ended September 30, 2024, compared to $343 million for the nine months ended September 30, 2023. This increase was primarily due to:

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

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

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

•Higher revenues under a PPA termination agreement in the Energy Infrastructure SBU;

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•Lower income tax expense; and

•Higher earnings from the Utilities SBU.

•The impact of selldowns, higher energy margin from our hedged merchant Southland facilities in the prior year that are contracted primarily for capacity in the current year, and higher outages at the Energy Infrastructure SBU;

•Lower margins at the Renewables SBU driven by record-breaking drought conditions and partial outage due to a flooding incident in Colombia;

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

•Higher interest expense and lower interest income in the current year.