Financial Statement Presentation (Policies)

9 Months Ended

Sep. 30, 2025

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Consolidation — In this Quarterly Report, the terms “AES,” “the Company,” “us,” or “we” refer to the consolidated entity, including its subsidiaries and affiliates. The terms “The AES Corporation” or “the Parent Company” refer only to the publicly held holding company, The AES Corporation, excluding its subsidiaries and affiliates. Furthermore, VIEs in which the Company has an ownership interest and is the primary beneficiary, thus controlling the VIE, have been consolidated. Certain consolidated VIEs have arrangements which may require the Company to contribute additional equity totaling $1.7 billion. Such contributions are generally contingent upon the underlying asset achieving specific project milestones. Investments in entities where the Company has the ability to exercise significant influence, but not control, are accounted for using the equity method of accounting, except for our investment in Alto Maipo, for which we have elected the fair value option as permitted under ASC 825. All intercompany transactions and balances are eliminated in consolidation.

Basis of Accounting, Policy [Policy Text Block]

nterim Financial Presentation — The accompanying unaudited condensed consolidated financial statements and footnotes have been prepared in accordance with GAAP, as contained in the FASB ASC, for interim financial information and Article 10 of Regulation S-X issued by the SEC. Accordingly, they do not include all the information and footnotes required by GAAP for annual fiscal reporting periods. In the opinion of management, the interim financial information includes all adjustments of a normal recurring nature necessary for a fair presentation of the results of operations, financial position, comprehensive income, changes in equity, and cash flows. The results of operations for the three and nine months ended September 30, 2025 are not necessarily indicative of expected results for the year ending December 31, 2025. The accompanying condensed consolidated financial statements are unaudited and should be read in conjunction with the 2024 audited consolidated financial statements and notes thereto, which are included in the 2024 Form 10-K filed with the SEC on March 11, 2025 (the “2024 Form 10-K”).

Schedule of Cash and Cash Equivalents [Table Text Block]

Cash, Cash Equivalents, and Restricted Cash — The following table provides a summary of cash, cash equivalents, and restricted cash amounts reported on the Condensed Consolidated Balance Sheets that reconcile to the total of such amounts as shown on the Condensed Consolidated Statements of Cash Flows (in millions):


	September 30, 2025		December 31, 2024
Cash and cash equivalents	$	1,758	$	1,524
Restricted cash	689		437
Debt service reserves and other deposits	102		78
Cash, Cash Equivalents, and Restricted Cash	$	2,549	$	2,039

Revision of Prior Period

Revision of Prior Period Condensed Consolidated Financial Statements — In connection with the preparation of our 2024 consolidated financial statements, the Company determined that we used incomplete data in the estimation of the fair value of net assets of AES Brasil which caused an overstatement of the impairment expense recorded in the second and third quarters of 2024. As a result, the Company restated the previously issued unaudited quarterly financial information for the third quarter of 2024 presented in this Form 10-Q. For additional information and quantification of prior period restatement impacts, refer to the 2024 audited consolidated financial statements and notes thereto, which are included in our 2024 Form 10-K.

Investment Tax Credits

Tax Credit Transferability — The U.S Inflation Reduction Act of 2022 (the “IRA”) allows us to directly transfer investment tax credits (“ITCs”) to unrelated tax credit buyers. The Company accounts for tax credits that it will retain or transfer under ASC 740—Income Taxes, as a reduction in income tax expense by either including the expected amount of the tax credit to be claimed or the cash to be received when transferred, respectively, in the calculation of its annual effective tax rate throughout the year the renewables project is placed in service. The estimated tax credits are updated on a quarterly basis, with the year-end calculation including only the tax credits that are associated with projects placed in service, comprising credits claimed or transferred during the year. In assessing realizability for credits to be transferred, the Company includes cash it anticipates receiving in establishing any valuation allowance and establishes a valuation allowance equal to its best estimate of any discount on the transfer. In many cases, ITCs are generated at partnerships which are non-tax paying entities for U.S. federal income tax purposes. These entities cannot utilize tax credits, but rather allocate credits to their partners, who report their share of the partnership credits on their individual tax returns. Once a project is placed in service, any portion of the tax credit to be transferred which is allocated to a noncontrolling interest holder is recorded as a noncash deemed contribution within Noncontrolling interests on the Condensed Consolidated Balance Sheets as this represents an

increase in the partners’ capital account. To the extent any of the transfer proceeds are contractually obligated to be distributed to the noncontrolling interest holder, the Company records a corresponding noncash deemed distribution within Noncontrolling interests. The receipt of cash from the transfer of tax credits, inclusive of the portion allocated to noncontrolling interest holders, is treated as an operating cash inflow on the Condensed Consolidated Statements of Cash Flows.

During the nine months ended September 30, 2025, the Company executed agreements to transfer ITCs directly to third parties for $921 million. Of this amount, $353 million was allocated to AES and will be recognized ratably as an income tax benefit throughout the year and $568 million was allocated to noncontrolling interests and treated as a contribution from noncontrolling interest holders. The Company received cash proceeds from these tax credit transfers of $567 million during the nine months ended September 30, 2025 and recorded a receivable in Other current assets on the Condensed Consolidated Balance Sheets for the remaining $354 million. The Company received $161 million of this amount during October 2025 and the remaining $193 million is expected to be received in the first quarter of 2026. The Company is contractually obligated to distribute this $193 million to the noncontrolling interest holders, and therefore recorded a corresponding payable in Accrued and other liabilities as of September 30, 2025. In addition, during the nine months ended September 30, 2025, the Company received cash proceeds of $75 million related to a tax credit transfer agreement which was executed in 2024.

During the nine months ended September 30, 2024, the Company executed agreements to transfer ITCs directly to third parties for $351 million. Of this amount, $173 million was allocated to AES and was recognized ratably as an income tax benefit throughout the year and $178 million was allocated to noncontrolling interests and treated as a contribution from noncontrolling interest holders. The Company received cash proceeds from these tax credit transfers of $227 million during the nine months ended September 30, 2024, and received the remaining $124 million during October 2024.