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 2019 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 2019 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
2019 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 $0.15 to a loss of $0.13. This decrease reflects
higher impairments and losses on sales in the current period, a higher effective
tax rate, lower contributions from our US and Utilities SBU primarily driven by
the realization of the anticipated impact of COVID-19 on demand and lower
regulated rates as a result of the changes in DP&L's ESP, and prior year gains
on foreign currency derivatives; partially offset by a positive impact in Chile
due to incremental capitalized interest and higher margins at our MCAC SBU
largely due to higher availability and improved hydrology in Panama.
Adjusted EPS, a non-GAAP measure, decreased $0.01 to $0.25, mainly due to lower
contributions from our US and Utilities SBU primarily driven by the realization
of the anticipated impact of COVID-19 on demand and lower regulated rates as a
result of the changes in DP&L's ESP, partially offset by a positive impact in
Chile due to incremental capitalized interest.
Compared with last year, diluted earnings per share from continuing operations
for the six months ended June 30, 2020 decreased $0.17 to $0.09. This decrease
reflects higher impairments and losses on sales in the current period, lower
contributions from our US and Utilities SBU primarily driven by the realization
of the anticipated impact of COVID-19 on demand and lower regulated rates as a
result of the changes in DP&L's ESP, and prior year insurance proceeds in the
Dominican Republic; partially offset by higher margins at our MCAC SBU largely
due to higher availability and improved hydrology in Panama, a gain on sale of
land in the U.S., and a positive impact in

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28 | The AES Corporation | June 30, 2020 Form 10-Q

Chile due to incremental capitalized interest. Adjusted EPS, a non-GAAP measure, increased $0.01 to $0.54, mainly due to higher margins at our MCAC SBU largely due to higher availability and improved hydrology in Panama, a gain on sale of land in the U.S., a positive impact in Chile due to incremental capitalized interest, and a lower adjusted tax rate; partially offset by lower contributions from our US and Utilities SBU primarily driven by the realization of the anticipated impact of COVID-19 on demand and lower regulated rates as a result of the changes in DP&L's ESP, and prior year insurance proceeds in the Dominican Republic.

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29 | The AES Corporation | June 30, 2020 Form 10-Q



               [[Image Removed: q22020aes10qaesinfograph008.jpg]]

(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 2019.

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30 | The AES Corporation | June 30, 2020 Form 10-Q



Overview of Strategic Performance
AES is leading the industry's transition to clean energy by investing in
sustainable growth and innovative solutions. The Company is taking advantage of
favorable trends in clean power generation, transmission and distribution, and
LNG infrastructure to deliver superior results.
Sustainable Growth: Through its presence in key growth markets, AES is
well-positioned to benefit from the global transition toward a more sustainable
power generation mix.
•   In year-to-date 2020, the Company completed construction of 1,437 MW of new

projects, including:

• 1,299 MW Southland repowering project in Southern California;

• 100 MW Vientos Bonaerenses wind facility in Argentina;




•      28 MW of solar and solar plus storage in the U.S. at AES Distributed
       Energy; and

• 10 MW Alfalfal Virtual Reservoir energy storage facility in Chile.

• In year-to-date 2020, the Company was awarded or signed 1,537 MW of

renewables and energy storage under long-term PPAs, including 852 MW in the

second quarter of 2020:

• 589 MW of energy storage, solar and solar plus storage in the U.S.;

• 581 MW of wind and solar at AES Gener in Chile and Colombia;

• 187 MW of wind at AES Tietê in Brazil;

• 109 MW of wind in Mexico; and

• 71 MW of wind and solar in Panama.

• The Company's backlog of 6,191 MW of renewables now includes:

• 2,092 MW under construction and expected on-line through 2021;

• 3,683 MW of renewables signed under long-term PPAs; and

• 416 MW awarded.

• The Company is on track to reduce its coal-fired generation to below 30% of

total generation volume by year-end 2020 (proforma for asset sales announced

in 2020) and to less than 10% by year-end 2030.




•      In the second quarter of 2020, the Company signed agreements to sell three
       coal-fired plants (2,000 MW) in India and the Dominican Republic, which
       will decrease the Company's generation from coal by 11 percentage points,
       to approximately 34% of its total generation.


•   In August 2020, the Company acquired an additional 18.5% interest in AES

Tietê in Brazil, bringing its total interest to 43%.




•      This transaction will strengthen the Company's renewable portfolio and
       reinforces the substantial progress the Company is making toward achieving
       its aggressive decarbonization targets.

Innovative Solutions: The Company is developing and deploying innovative solutions such as battery-based energy storage, digital customer interfaces and energy management. • Fluence, the Company's joint venture with Siemens, is the global leader in

the fast-growing energy storage market, which is expected to increase by 15

to 20 GW annually.

• Fluence has a total backlog of 1.6 GW.

• In July 2020, the Company acquired a 25% stake in 5B, a prefabricated solar


    solution provider whose patented technology allows solar projects to be
    installed up to three times faster, while using half the land to achieve the
    same solar output.

Superior Results: By investing in sustainable growth and offering innovative solutions to customers, the Company is transforming its business mix to deliver superior results. • The Company has a resilient and diversified portfolio of electric generation

and utilities with credit-worthy offtakers and an average contract life of 14

years.

• As of June 30, 2020, the Company had $3.5 billion of available liquidity.


    This includes $2.2 billion of cash and cash equivalents, restricted cash and
    short-term investments, as well as $1.3 billion available under committed
    credit lines.

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31 | The AES Corporation | June 30, 2020 Form 10-Q

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