AES Advances on Strong Renewable Energy Buildout and LNG Expansion

The AES Corporation AES is advancing its renewable energy generation by expanding solar, wind and battery storage capacity to achieve its long-term clean energy targets. It has also been boosting its footprint in the liquefied natural gas (LNG) market.

However, this Zacks Rank #3 (Hold) company faces challenges, such as a decline in wholesale electricity prices.

Growth Catalysts for AES

AES has been expanding its clean energy portfolio to meet rising electricity demand in its service regions. In the second quarter of 2025, it completed the development of 1.2 gigawatts (GW) of solar and energy storage projects and aims to add 3.2 GW of renewable capacity to its operating portfolio by year-end.

During the second quarter of 2025, AES secured long-term power purchase agreements (PPAs) for 1.6 GW of renewables, bringing its total PPA backlog to 12 GW. In the same period, its AES Indiana subsidiary acquired the 170-megawatt (MW) Crossvine solar-plus-storage project, slated to begin operations in 2027.

In the second quarter, AES completed the construction of the 1,000 MW Bellefield 1 project, backed by a 15-year contract with Amazon. Bellefield is being developed in two phases, each comprising 500 MW of solar and 500 MW of four-hour battery-based energy storage, for a combined capacity of 2,000 MW. AES Indiana plans to deploy up to 1,300 MW of solar, wind and battery energy storage by 2027.

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

Headwinds for AES

Wholesale electricity prices have declined significantly in recent years, driven by the rising adoption of renewable energy, abundant natural gas and demand-side management initiatives. New power purchase agreements for renewable energy are now being signed at much lower rates compared to just a few years ago. This downward trend is expected to persist, potentially pressuring AES’ financial performance.

As of June 30, 2025, AES had a long-term debt of $26.55 billion and a current debt of $3.72 billion. The company’s cash equivalents, worth $2.11 billion as of June 30, 2025, remained much lower than its long-term and current debt levels.

AES Stock Price Movement

In the past six months, AES shares have climbed 20.7% compared with the industry’s growth of 7.7%.

Stocks to Consider

Some better-ranked stocks from the same industry are Fortis FTS, Centuri Holdings, Inc. CTRI 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. 

FTS’ long-term (three to five years) earnings growth rate is 5.1%. The Zacks Consensus Estimate for its 2025 earnings per share (EPS) stands at $2.50, which calls for a year-over-year jump of 4.6%.

CTRI’s long-term earnings growth rate is 41.2%. The Zacks Consensus Estimate for its 2025 EPS is pegged at 63 cents, which implies a year-over-year rise of 96.9%.

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

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

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