Redeemable Stock of Subsidiaries

12 Months Ended

Dec. 31, 2024

REDEEMABLE STOCK OF SUBSIDIARIES

The following table is a reconciliation of changes in redeemable stock of subsidiaries (in millions):


December 31,	2024		2023		2022
Balance at the beginning of the period	$	1,464	$	1,321	$	1,257
Net loss	(86)		(59)		(87)
Other comprehensive income	73		1		40

Reclassification of redeemable stock of subsidiaries to noncontrolling interests	(736)		—		—
Disposition of business interests	(18)		—		—
Distributions to holders of redeemable stock of subsidiaries	(61)		(62)		(64)
Acquisitions of redeemable stock of subsidiaries	—		—		(60)
Contributions from holders of redeemable stock of subsidiaries	105		163		67
Sales of redeemable stock of subsidiaries	197		100		168
Balance at the end of the period	$	938	$	1,464	$	1,321

The following table summarizes the Company's redeemable stock of subsidiaries balances as of the periods indicated (in millions):


December 31,	2024		2023
IPALCO common stock	$	835	$	773
AES Clean Energy tax equity partnerships	65		129
AES Indiana Pike County BESS tax equity partnership	38		—
AES Clean Energy Development common stock	—		544
Potengi common and preferred stock	—		18
Total redeemable stock of subsidiaries	$	938	$	1,464

AES Clean Energy Tax Equity Partnerships — The majority of solar projects in the U.S. have been financed with tax equity structures, in which tax equity investors receive a portion of the economic attributes of the facilities, including tax attributes, that vary over the life of the projects. The substance of such arrangements is that of a preferred structure, whereby tax equity investors are granted preferential returns in the form of significant earnings and tax allocations from the partnership, until a specified internal rate of return is achieved.

In some cases, these agreements contain certain partnership rights, though not currently in effect, that may enable the tax equity investor to exit in the future. As a result, the noncontrolling ownership interest is considered temporary equity. Some of these tax equity partnership agreements have redemption features dependent upon the passage of time, therefore the noncontrolling ownership interests are probable of becoming redeemable. As of December 31, 2024, the carrying values of these noncontrolling ownership interests exceeded the redemption values, therefore no adjustments to the carrying values were necessary. Certain other tax equity partnership agreements have redemption features contingent upon the underlying assets achieving agreed-upon project milestones. The Company has concluded it is probable that these projects will reach the specified milestones, therefore the noncontrolling ownership interests are not probable of becoming redeemable and subsequent adjustments to the carrying value were not required.

In 2024, 2023, and 2022, AES Clean Energy, through multiple transactions, sold noncontrolling interests in project companies to tax equity investors, resulting in increases to Redeemable stock of subsidiaries of $159 million,$100 million, and $157 million, respectively. During 2024, certain renewables development projects with redemption features were placed in service, resulting in the expiration of the redemption features. As a result, noncontrolling ownership interests of $159 million were reclassified from Redeemable stock of subsidiaries to Noncontrolling interests on the Consolidated Balance Sheets. AES Clean Energy is reported in the Renewables SBU reportable segment.

Pike County BESS — In December 2024, AES Indiana sold a noncontrolling interest in the Pike County energy storage project to a tax equity investor, resulting in a $38 million increase to Redeemable stock of subsidiaries. The redemption feature of the tax equity partnership agreement is contingent upon the underlying assets being placed in service by a guaranteed date. The Company has concluded it is probable that the project will be placed in service by the guaranteed date, therefore the noncontrolling ownership interest is not probable of becoming redeemable and subsequent adjustments to the carrying value were not required. AES Indiana is reported in the Utilities SBU reportable segment.

IPALCO — In December 2022 and during 2024, CDPQ made equity capital contributions of $77 million and $68 million, respectively, to IPALCO as part of capital calls primarily to raise proceeds for AES Indiana's TDSIC and replacement generation project and for funding needs related to AES Indiana’s capital expenditure program. The Company and CDPQ made capital contributions on a proportional share basis, therefore the contributions did not change the Company’s ownership interest in IPALCO. The Company has concluded that the likelihood of an event that would allow CDPQ to redeem its interest under the terms of the shareholder agreement is remote, but would require redemption at fair value. Therefore, the noncontrolling ownership interest is not probable of becoming redeemable and subsequent adjustments to the carrying value were not required. IPALCO is reported in the Utilities SBU reportable segment.

AES Clean Energy Development — As part of the formation of AES Clean Energy Development in February 2021, the noncontrolling interest partner received certain partnership rights that would enable them to exit in the future. As a result, the noncontrolling ownership interest was considered temporary equity. In May 2024, these redemption features expired without being exercised and the noncontrolling ownership interest of $577 million was reclassified from Redeemable stock of subsidiaries to Noncontrolling interests on the Consolidated Balance Sheets. AES Clean Energy Development is reported in the Renewables SBU reportable segment.

Potengi — In March 2022, Tucano Holding I (“Tucano”), a subsidiary of AES Brasil, issued new shares in the Potengi wind development project. BRF S.A. (“BRF”) acquired shares representing 24% of the equity in the project for $12 million, reducing the Company’s indirect ownership interest in Potengi to 35.5%. As the Company maintained control after the transaction, Potengi continued to be consolidated by the Company. As part of the transaction, BRF was given an option to sell its entire ownership interest at the conclusion of the PPA term and therefore the noncontrolling ownership interest was considered temporary equity.

In October 2024, the Company completed the sale of its 47.3% controlling interest in AES Brasil, which included the Potengi wind development project. See Note 25—Held-for-Sale and Dispositions for further information. Prior to its sale, Potengi was reported in the Renewables SBU reportable segment.

AES Indiana Preferred Stock — In December 2022, AES Indiana redeemed all of its outstanding preferred shares for $60 million. The preferred shares were retired upon redemption as there is no intention for the shares to be reissued. AES Indiana is reported in the Utilities SBU reportable segment.