AES Accelerates Growth With Renewable Expansion and LNG Presence

The AES Corporation AES is enhancing its renewable energy generation by incorporating solar, wind and battery storage solutions to support its long-term clean energy objectives. The company is also broadening its presence in the liquefied natural gas (LNG) market.

However, this Zacks Rank #3 (Hold) company is exposed to risks like a decline in wholesale electricity prices.

Positive Drivers for AES Stock

AES has been increasing its clean power generation assets to capitalize on the rising electricity demand in its service areas. In the first quarter of 2025, it completed the development of 643 megawatts (MW) of solar and energy storage projects and plans to add 3.2 gigawatts (GW) of new renewables to its operating portfolio by the end of this year.

In the first quarter of 2025, AES inked long-term power purchase agreements (PPAs) for 443 MW of new renewables, with a total PPA backlog of 11.7 GW. During the same period, the company's AES Indiana subsidiary was granted final approval by regulators for the 170 MW Crossvine solar-plus-storage project.

AES continues to make progress on the 295 MW Petersburg Energy Center solar-plus-storage project, which is scheduled to be operational by the end of 2025. AES Indiana intends to add up to 1,300 MW of wind, solar and battery energy storage by 2027.

AES operates LNG import terminals in the Dominican Republic, with a storage capacity of 160,000 cubic meters. The company has long-term contracts to supply re-gasified LNG to industrial users and third-party power plants, covering the needs of both industrial and commercial customers.

Factors That May Hinder AES Stock

Wholesale electricity costs have dropped considerably in recent years, thanks to increased usage of renewable energy sources, low-cost natural gas and demand-side management. New power purchase agreements for renewable power have been issued in numerous locations at far lower costs than those awarded a few years ago. This declining trend in wholesale prices is projected to continue, which may have an adverse effect on AES' financial performance.

As of March 31, 2025, AES had a long-term debt of $26.41 billion and a current debt of $4.18 billion. The company’s cash equivalents, worth $2.55 billion as of March 31, 2025, remained much lower than its long-term and current debt levels.

AES Stock Price Movement

In the past three months, AES shares have climbed 28.7% compared with the industry’s growth of 1%.

Stocks to Consider

Some better-ranked stocks from the same industry are Entergy Corporation ETR, CenterPoint Energy CNP and NiSource Inc. NI, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. 

ETR’s long-term (three to five years) earnings growth rate is 9.5%. The Zacks Consensus Estimate for its 2025 earnings per share (EPS) stands at $3.88, which indicates year-over-year growth of 6.3%.

CNP’s long-term earnings growth rate is 7.8%. The Zacks Consensus Estimate for its 2025 EPS stands at $1.75, which calls for a year-over-year increase of 8%.

NiSource’s long-term earnings growth rate is 7.9%. The Zacks Consensus Estimate for its 2025 EPS is pegged at $1.88, which implies year-over-year growth of 7.4%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research