AES Rides on Renewable Expansion, Declining Wholesale Prices Ail

Core Viewpoint - AES Corporation is focused on expanding its renewable energy generation and reducing its carbon footprint by retiring coal-fired units, but it faces challenges from declining wholesale prices and a weak financial position [1][4]. Group 1: Renewable Energy Expansion - AES Corporation is increasing its renewable generation portfolio, completing the construction or acquisition of 593 megawatts (MW) of renewables and energy storage in Q1 2024 [2]. - The company signed long-term contracts for 1.2 gigawatts (GW), raising its backlog to 12.7 GW as of March 31, 2024 [2]. - AES is actively retiring coal-fired units, having exited or announced the sale or closure of 2.1 GW of coal generation in Vietnam, the United States, and Chile in 2023 [2]. Group 2: Liquefied Natural Gas (LNG) Market - AES Corporation operates the only LNG import terminal in the Dominican Republic, with a storage capacity of 160,000 cubic meters [3]. - The company has long-term contracts to sell re-gasified LNG to industrial users and third-party power plants, capturing demand from industrial and commercial customers [3]. Group 3: Financial Challenges - Wholesale electricity costs have significantly decreased due to increased renewable energy use, low-cost natural gas, and demand-side management, which may negatively impact AES's financial performance [4]. - As of March 31, 2024, AES Corporation had a long-term debt of $25.37 billion and current debt of $4.23 billion, indicating a weak solvency position as cash equivalents were only $2.75 billion [4].