The condensed consolidated financial statements included in Item 1.-Financial Statements of this Form 10-Q and the discussions contained herein should be read in conjunction with our 2021 Form 10-K.

Forward-Looking Information

The following discussion may contain forward-looking statements regarding us, our business, prospects and our results of operations, including our expectations regarding the impact of the COVID-19 pandemic on our business, that are subject to certain risks and uncertainties posed by many factors and events that could cause our actual business, prospects and results of operations to differ materially from those that may be anticipated by such forward-looking statements. These statements include, but are not limited to, statements regarding management's intents, beliefs, and current expectations and typically contain, but are not limited to, the terms "anticipate," "potential," "expect," "forecast," "target," "will," "would," "intend," "believe," "project," "estimate," "plan," and similar words. Forward-looking statements are not intended to be a guarantee of future results, but instead constitute current expectations based on reasonable assumptions. Factors that could cause or contribute to such differences include, but are not limited to, those described in Item 1A.-Risk Factors of this Form 10-Q, Item 1A.-Risk Factors and Item 7.-Management's Discussion and Analysis of Financial Condition and Results of Operations of our 2021 Form 10-K and subsequent filings with the SEC.

Readers are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date of this report. We undertake no obligation to revise any forward-looking statements in order to reflect events or circumstances that may subsequently arise. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the SEC that advise of the risks and factors that may affect our business.

Overview of Our Business

We are a diversified power generation and utility company organized into the following four market-oriented SBUs: US and Utilities (United States, Puerto Rico and El Salvador); South America (Chile, Colombia, Argentina and Brazil); MCAC (Mexico, Central America and the Caribbean); and Eurasia (Europe and Asia). For additional information regarding our business, see Item 1.-Business of our 2021 Form 10-K.

We have two lines of business: generation and utilities. Each of our SBUs participates in our first business line, generation, in which we own and/or operate power plants to generate and sell power to customers, such as utilities, industrial users, and other intermediaries. Our US and Utilities SBU participates in our second business line, utilities, in which we own and/or operate utilities to generate or purchase, distribute, transmit and sell electricity to end-user customers in the residential, commercial, industrial, and governmental sectors within a defined service area. In certain circumstances, our utilities also generate and sell electricity on the wholesale market.

Executive Summary

Compared with last year, second quarter diluted earnings per share from continuing operations decreased $0.30, from earnings of $0.03 to a loss of $0.27. This decrease is mainly driven by the prior year gains on remeasurement of our interest in sPower's development platform and on the issuance of new shares by Fluence, which was accounted for as a partial disposition, and the prior year net gains from early contract terminations at Angamos; partially offset by lower impairments in the current year.

Adjusted EPS, a non-GAAP measure, increased $0.03 to $0.34, mainly due to a lower adjusted tax rate and higher contributions from our South America SBU due to increased ownership in AES Andes, partially offset by lower contributions from our US and Utilities SBU due to impacts of outages and timing of renewables projects coming online.

Compared with last year, diluted earnings per share from continuing operations for the six months ended June 30, 2022 increased $0.09, from a loss of $0.19 to a loss of $0.10. This increase is mainly driven by lower impairments in the current year, partially offset by the prior year gains on remeasurement of our interest in sPower's development platform and on the issuance of new shares by Fluence, which was accounted for as a partial disposition, prior year net gains from early contract terminations at Angamos, lower capitalized interest at construction projects, and higher income tax expense.

Adjusted EPS, a non-GAAP measure, decreased $0.04 to $0.55, mainly due to the prior year impact of

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33 | The AES Corporation | June 30, 2022 Form 10-Q

realized gains on de-designated interest rate swaps at the Parent Company and lower contributions from our US and Utilities SBU due to timing of renewables projects coming online, partially offset by higher contributions from our South America SBU due to increased ownership in AES Andes and a lower adjusted tax rate.

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34 | The AES Corporation | June 30, 2022 Form 10-Q



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(1) See Item 2.-Management's Discussion and Analysis of Financial Condition and Results of Operations-SBU Performance Analysis-Non-GAAP Measures for reconciliation and definition. (2) GWh sold in 2021.

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35 | The AES Corporation | June 30, 2022 Form 10-Q Overview of Strategic Performance

AES is leading the industry's transition to clean energy by investing in clean power growth and innovative technology businesses. The Company is well-positioned to benefit from very favorable trends in clean power generation, distribution, and supporting technologies.

•In year-to-date 2022, the Company signed or was awarded 1,618 MW of renewables and energy storage under long-term PPAs expected to come online in 2023 and 2024, primarily including 1,250 MW of solar and energy storage in the U.S.

•In the second quarter of 2022, the Company signed 531 MW of renewables and energy storage under long-term PPAs.

•In year-to-date 2022, the Company completed the construction or acquisition of 390 MW of solar projects in the U.S. and the Dominican Republic.

•The Company's backlog is now 10,468 MW expected to be completed through 2025, including:

•3,792 MW under construction; and

•6,676 MW of renewable energy projects signed under long-term PPAs, but not yet under construction.

•In June 2022, the Company formed the U.S. Solar Buyer Consortium with three other leading solar companies to drive the expansion of the U.S. solar supply chain and support the growth of the American solar industry.

•In year-to-date 2022, the Company signed agreements that will direct excess LNG from the Company's business in Panama to international customers.

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36 | The AES Corporation | June 30, 2022 Form 10-Q

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