AES AES · USD

SEGMENTS AND GEOGRAPHIC INFORMATION The segment reporting structure uses the Company’s management reporting structure as its foundation to reflect how the Company manages the businesses internally. The management reporting structure is composed of four SBUs, mainly organized by technology, led by our Chief Executive Officer, who is our Chief Operating Decision Maker. Using the accounting guidance on segment reporting, the Company determined that its four operating segments are aligned with its four reportable segments corresponding to its SBUs. In March 2026, the Company announced changes in its internal management structure, including a change in its President. The Company is currently evaluating the impact, if any, these changes may have on its segment reporting structure in future periods; however, no changes in the Company's operating or reportable segments are reflected in the accompanying financial statements.•Renewables — Solar, wind, energy storage, and hydro 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, and other new and innovative energy technology businesses.Prior to the first quarter of 2025, our businesses in Chile (which had a mix of generation sources, including renewables, that were pooled to service our existing PPAs initially entered into for sale of the output of the coal plants) were reported in the Energy Infrastructure SBU. After the sale or disconnection of a significant portion of AES Andes’ coal plants and the expiration of its coal-indexed contracts with regulated customers at the end of 2024, the results of our businesses in Chile, excluding the two remaining coal plants, are now reported as part of the Renewables SBU in financial information regularly reviewed by the Chief Operating Decision Maker. The results of the two remaining coal plants in Chile, Angamos and Cochrane, remain within the Energy Infrastructure SBU. As the composition of the segments changed in the first quarter of 2025, the segment information for prior comparative periods has been retrospectively revised to reflect AES Andes’ renewables partnership with GIP, Chile Renovables, which is separable from the rest of the AES Andes portfolio, as part of the Renewables SBU.

COMMITMENTSThe Company enters into long-term contracts for construction projects, maintenance and service, transmission of electricity, operations services, and purchases of electricity and fuel. In general, these contracts are subject to variable quantities or prices and are terminable only in limited circumstances.

OBLIGATIONSNON-RECOURSE DEBT — Non-recourse debt represents debt issued by one of our subsidiaries to be repaid solely from the subsidiary's assets. Repayments of the loans, and interest thereon, is secured solely by the capital stock, physical assets, contracts, and cash flows of that subsidiary, and the Parent Company is not otherwise liable for such debt. The following table summarizes the carrying amount and terms of non-recourse debt at our subsidiaries, excluding amounts classified as held for sale, as of the periods indicated (in millions):NON-RECOURSE DEBTWeighted Average Interest RateMaturityDecember 31,20252024Variable Rate: Bank loans 5.61%2026 - 2040$5,746 $5,132 Notes and bonds— 105 Revolver borrowings5.47%2026 - 20301,441 3,147 Other9.13%2028 - 203020 16 Fixed Rate:Bank loans6.19%2026 - 20673,933 2,610 Notes and bonds5.24%2026 - 205512,203 11,737 Other (1)6.71%2026 - 2061177 297 Unamortized (discount) premium & debt issuance (costs), net(342)(301)Subtotal $23,178 $22,743 Less: Current maturities (2) (3)(2,211)(2,670)Noncurrent maturities (2) (3)$20,967 $20,073 _____________________________(1) Other fixed rate debt included $250 million related to preferred shares that included mandatory redemption features at Bellefield Equity Holdings and were therefore classified as a liability under ASC 480 as of December 31, 2024.(2) Excludes $21 million and $18 million (current) and $714 million and $553 million (noncurrent) finance lease liabilities included in the respective non-recourse debt line items on the Consolidated Balance Sheets as of December 31, 2025 and 2024, respectively. See Note 15—Leases for further information.(3) Includes $1.3 billion (current) and $10.5 billion (noncurrent) of non-recourse debt related to VIEs as of December 31, 2025.The interest rate on variable rate debt represents the total of a variable component that is based on changes in an interest rate index and a fixed component. The Company has interest rate swap agreements designated as accounting hedges that economically fix the variable component of the interest rates on the portion of the variable rate debt being hedged in an aggregate notional principal amount of approximately $3.4 billion on non-recourse debt outstanding at December 31, 2025.

INCOME TAXESIncome Tax Provision — The following table summarizes the expense/(benefit) for income taxes on continuing operations for the periods indicated (in millions):December 31, 202520242023Federal:Current$(5)$4 $9 Deferred(451)(220)15 State:Current2 29 16 Deferred6 23 30 Foreign:Current320 249 289 Deferred(53)(26)(98)Total$(181)$59 $261 Effective and Statutory Rate Reconciliation — The following table summarizes a reconciliation of the U.S. statutory federal income tax expense/(benefit) and rate to the Company’s effective income tax expense/(benefit) and rate, expressed as both amounts and percentages of income from continuing operations before income taxes, for the year ended December 31, 2025, following the prospective adoption of ASU 2023‑09:December 31, 2025AmountPercentStatutory Federal tax rate $16 21 %State and Local Income Taxes, Net of Federal Income Tax Effects (1)6 8 %Foreign Tax EffectsArgentinaInflationary adjustments20 27 %Valuation allowance(50)(67)%Other23 31 %Bulgaria28 37 %ChileForeign Tax Credits(35)(47)%Foreign Dividends35 47 %Other23 31 %ColombiaTax rate differential27 36 %Other1 1 %VietnamTax rate differential(53)(71)%Other(11)(15)%Other Foreign Jurisdictions50 67 %Effect of Changes in Tax Laws or Rates Enacted in the Current Period— — %Effect of Cross-Border Tax Laws7 9 %Tax CreditsU.S. Investment Tax Credits(593)(791)%Other(1)(1)%Changes in Valuation Allowances120 160 %Nontaxable or Nondeductible Items3 4 %Changes in Unrecognized Tax Benefits6 8 %Other AdjustmentsTax basis reduction on Investment Tax Credit67 89 %U.S. capital losses(121)(161)%Noncontrolling interest in U.S. subsidiaries244 325 %Other7 9 %Effective Tax Rate$(181)(241)%(1)State taxes in New York, Utah, and Ohio Municipalities made up the majority (greater than 50 percent) of the tax effect in this category.For 2025, the $(593) million U.S. Investment Tax Credits item relates to investment tax credits for renewables projects placed in service this year, and it is partially offset by the $67 million of Tax basis reduction on Investment Tax Credit item. The $(121) million U.S. capital losses item relates to capital losses associated with the sale of an indirect equity interest in AES Ohio, which is fully offset within the $120 million valuation allowance item.The following table summarizes a reconciliation of the U.S.

SHARE-BASED COMPENSATIONRESTRICTED STOCKRestricted Stock Units — The Company issues RSUs under its long-term compensation plan. The RSUs are generally granted based upon a percentage of the participant's base salary. Most RSUs have a three-year vesting period and vest evenly in annual increments over that period. In all circumstances, RSUs granted by AES do not entitle the holder the right, or obligate AES, to settle the RSU in cash or other assets of AES.For the years ended December 31, 2025, 2024, and 2023, RSUs issued had a grant date fair value equal to the closing price of the Company's stock on the grant date. The Company does not discount the grant date fair values to reflect any post-vesting restrictions. RSUs granted to employees during the years ended December 31, 2025, 2024, and 2023 had grant date weighted average fair values per RSU of $10.59, $16.01, and $22.33, respectively.The 2023 RSUs awarded to certain executives have a performance condition related to the achievement of environmental and social goals for the three-year period ending December 31, 2025. This performance condition can adjust the final number of units that vest to increase or decrease by up to 15% of the total units for all three years. The adjustment will be reflected in the number of units that vest at the end of the three-year performance period.The following table summarizes the components of the Company's stock-based compensation related to its employee RSUs recognized in the Company's consolidated financial statements (in millions):December 31, 202520242023RSU expense before income tax$20 $22 $16 Tax benefit(3)(5)(3)RSU expense, net of tax$17 $17 $13 Total value of RSUs converted (1)$8 $9 $10 Total fair value of RSUs vested$23 $19 $15 _____________________________(1)Amount represents fair market value on the date of conversion.Cash was not used to settle RSUs in the years ended December 31, 2025, 2024, and 2023. Compensation costs of $3 million, $2 million, and $1 million were capitalized as part of the cost of an asset in the years ended December 31, 2025, 2024, and 2023, respectively. As of December 31, 2025, total unrecognized compensation cost related to RSUs of $20 million is expected to be recognized over a weighted average period of approximately 1.6 years. There were no modifications to RSU awards during the year ended December 31, 2025.

LESSOR — The following table presents lease revenue from operating leases in which the Company is the lessor, recognized in Revenue on the Consolidated Statements of Operations for the periods indicated (in millions):Years Ended December 31,Operating Lease Revenue20252024Non-variable lease revenue$325 $414 Variable lease revenue90 61 Total lease revenue$415 $475 The following table presents the underlying gross assets and accumulated depreciation of operating leases included in Property, plant, and equipment, net on the Consolidated Balance Sheets as of the dates indicated (in millions):Property, Plant, and Equipment, NetDecember 31, 2025December 31, 2024Gross assets$1,923 $1,085 Less: Accumulated depreciation(231)(218)Net assets$1,692 $867 The option to extend or terminate a lease is based on customary early termination provisions in the contract, such as payment defaults, bankruptcy, or lack of performance on energy delivery. The Company has not recognized any early terminations as of December 31, 2025. Certain leases may provide for variable lease payments based on usage or index-based (e.g., the U.S. Consumer Price Index) adjustments to lease payments.The following table shows the future lease receipts as of December 31, 2025 for 2026 through 2030 and thereafter (in millions):Future Cash Receipts forSales-Type LeasesOperating Leases2026$63 $144 202763 65 202863 1 202963 — 203063 — Thereafter945 — Total$1,260 $210 Less: Imputed interest(659)Present value of total lease receipts$601 Battery Storage Lease Arrangements — The Company constructs and operates projects consisting only of a stand-alone BESS facility, as well as projects that pair a BESS with solar energy systems. These projects allow more flexibility on when to provide energy to the grid. The Company will enter into PPAs for the full output of the facility that allow customers the ability to determine when to charge and discharge the BESS. Generally, these arrangements include both lease and non-lease elements under ASC 842, with the BESS component typically constituting a sales-type lease. Generally, losses recognized on the commencement of sales-type leases primarily relate to PPAs that contain no variable lease payments and the exclusion of the value of ITCs from the fair value of the renewable asset, which is used in the determination of the rate implicit in the lease.

ACQUISITIONSCrossvine — On May 16, 2025, the Company completed the acquisition of 100% of the membership interests in Crossvine Solar 1, LLC, which is developing an 85 MW solar generation facility and an 85 MW battery storage project in Indiana, for total consideration of $78 million. The nature of the assets acquired is largely intangible, consisting mainly of a project development intangible valued at $64 million. The transaction was accounted for as an asset acquisition of a variable interest entity that did not meet the definition of a business. Crossvine is reported in the Utilities SBU reportable segment.AES Clean Energy Wind and Solar Project Acquisitions — In 2025, the Company closed on the acquisitions of 1.8 GW of renewables development projects in Texas, New York, and Oklahoma (the purchase of 100% of the membership interests in Homer Solar Energy Center, LLC, Moraine Solar Energy Center, LLC, Tracy Solar Energy Center, LLC, and Grand Mayes solar energy projects; and White Oak and Lake Creek wind projects). The total fair value of the consideration of these acquisitions was $63 million, including contingent consideration of $37 million. The contingent consideration will be updated quarterly with any prospective changes in fair value recorded through earnings. The fair value of the consideration paid was attributed mainly to project development intangible assets. The transactions were accounted for as asset acquisitions of variable interest entities that did not meet the definition of a business.In 2024, the Company closed on the acquisitions of 1.1 GW of renewables development projects in Texas, Virginia, Illinois, and California (the purchase of 100% of the equity interests in Armadillo, Red Brick, Pulaski, Staley, Stags, and Jasmine solar projects). The total consideration of these acquisitions was $97 million, including contingent consideration of $44 million. The contingent consideration will be updated quarterly with any prospective changes in fair value recorded through earnings. The fair value of the consideration paid was attributed to identifiable assets and liabilities, consisting of intangible assets for $92 million, primarily project development intangibles, right-of-use assets for $40 million, PP&E for $18 million, and lease liabilities for $40 million. The transactions were accounted for as asset acquisitions of variable interest entities that did not meet the definition of a business.

CYBERSECURITYWe recognize the importance of maintaining the safety and security of our people, systems, and data and have a holistic process, supported by our management and Board of Directors, for overseeing and managing cybersecurity and related risks.AES’ Vice President Cybersecurity acts as the Chief Information Security Officer (“CISO”), reports to our Chief Digital Officer, and is the head of the Company’s cybersecurity team. The CISO is responsible for assessing and managing our cyber risk management program. In this role, the CISO informs senior management regarding the prevention, detection, mitigation, and remediation of cybersecurity incidents and supervises such efforts. Our CISO has extensive experience assessing and managing cybersecurity programs and cybersecurity risk and has served in that position since 2024.The CISO manages a global team of cybersecurity professionals with broad experience and expertise, including in cybersecurity threat assessments and detection, cloud security, mitigation technologies, cybersecurity training, incident response, cyber forensics, insider threats, and regulatory compliance. We rely on threat intelligence as well as other information obtained from governmental, public, or private sources, including contracted external consultants.The Board of Directors oversees our cybersecurity risk exposures and the steps taken by management to monitor and mitigate cybersecurity risks. The CISO briefs the Board of Directors on the effectiveness of our cyber risk management program, typically on a semi-annual basis, and provides off-cycle updates as needed.We consider cybersecurity as part of the enterprise risk process, including organized and structured reporting protocols. The prioritization of cybersecurity risk is aligned with overall risk management processes.In addition, the Company’s management team considers risks relating to cybersecurity, among other significant risks, and applicable mitigation plans to address such risks, at monthly performance review meetings. The Global Leadership Team, as well as the Vice President Global Financial Planning and Analytics, Vice President Global Treasurer, and Vice President Internal Audit, among others, participate in such meetings.We have also established an Incident Response Team and associated protocol led by our CISO that governs our assessment, response, and notifications internally and externally upon the occurrence of a cybersecurity incident.