AES narrows Q2 net loss to US$19 million, on track to hit renewable ops targets

AES has brought online a 100MW solar PV plant in Arizona that will provide electricity to Meta and utility SRP. Credit: SRP

US energy utility AES has narrowed its net loss in the second quarter of 2023 to US$19 million from US$136 million in the same period a year earlier. This was the result of what it called ‘favourable contributions’ at the Utilities, Renewables, and New Energy Technologies strategic business units.

Adjusted EBITDA fell to US$569 million from US$686 million in the previous second quarter, primarily reflecting higher cost of sales and lower thermal dispatch substituted with renewable sources at the Energy Infrastructure business unit.

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Revenues in the second quarter were broadly unchanged at US3.03 billion compared with US$3.08 billion a year earlier.

Adjusted EPS was down at US$0.21, compared to US$0.34 previously, due to lower contributions from the Energy Infrastructure business.

AES affirmed its full-year guidance for adjusted EPS of between US$1.65 and US$1.75 and adjusted EBITDA of between US$2.6 and US$2.9 billion. Growth for 2023 is expected to be primarily driven by new renewables expected to come online, and is expected to be partially offset by lower margins from the company’s LNG business.

AES President and Chief Executive Officer Andrés Gluski said in a statement: “We are making excellent progress on our strategic priorities: tripling our installed renewables capacity by 2027; growing our US utilities’ rate base by more than 10% annually; and exiting coal by year-end 2025.”

“So far this year, we have signed long-term contracts for 2.2 GW of new renewables and increased our backlog of signed PPAs to a record level of 13.2 GW.  At the same time, our construction programme is going very well, with 786 MW of renewable projects completed year-to-date.  We remain on track to commission a total of 3.4 GW this year, including 2.1 GW in the US,” Gluski added.

Vice president and chief financial officer Stephen Coughlin calling the Q2 figures “fully in line with our expectations”. A significant part of the company’s power generation remains tied up in natural gas, with one-third of total capacity of 30.3GW in gas, as of 2020, and changes in the natural gas price have had a significant impact on the company.

In the second quarter of this year, US natural gas prices averaged US$2.4 per million British thermal units, almost 63% lower than in the second quarter of 2022 following Russia’s invasion of Ukraine, which drove the demand for and price of natural gas to historic levels.

AES announced ambitious climate plans earlier this year, including phasing out coal entirely from its operations by 2025 and tripling its renewable generation capacity by 2027.

As of 2020, 36% of the company’s power generation portfolio was in renewables, more than any other power source, including natural gas and coal. However, just 1GW of this capacity was in solar, compared to 3.6GW in hydropower and 1.7GW in wind, and balancing its renewable portfolio could be of benefit in the long-term.

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