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The AES Corporation is a global power generation and utility company. It generates and sells electricity to utilities, businesses, and governments using coal, gas, hydro, wind, solar, biomass, energy storage, and landfill gas. AES owns or operates about 32,000 megawatts of generation capacity. Founded in 1981 as Applied Energy Services, it adopted the AES name in 2000.

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AES (AES): Company Profile, Stock Price, News, Rankings

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Hello, everybody, and welcome to the AES Corporation Q1 twenty twenty five Financial Review Call. My name is Emily, and I'll be moderating your call today. After the presentation, you will have the opportunity to ask any questions. I will now hand the call over to Susan Harcourt, Vice President of Investor Relations to begin. Susan, please go ahead.

Thank you, operator. Good morning and welcome to our first quarter twenty twenty five financial review call. Our press release, presentation and related financial information are available on our website at aes.com. Today, we will be making forward looking statements. There are many factors that may cause future results to differ materially from these statements, which are disclosed in our most recent 10 ks and 10 Q filed with the SEC.

Reconciliations between GAAP and non GAAP financial measures can be found on our website along with the presentation. Joining me this morning are Andres Glueski, our President and Chief Executive Officer Steve Coughlin, our Chief Financial Officer Ricardo Fallou, our Chief Operating Officer and other senior members of our management team. With that, I will turn the call over to Andres.

Good morning, everyone, and thank you for joining our first quarter twenty twenty five financial review call. Today, I'm very pleased to reaffirm both our 2025 guidance and long term growth rate targets, which reflect our strong execution to date as well as the resilience of our business overall. I will discuss this in more detail and provide an update on the robust growth program at our U. S. Utilities.

Following my remarks, Steve Coughlin, our CFO will provide additional color on our financial performance and outlook. Beginning on Slide three with our first quarter results. Our financial performance was in line with our expectations with adjusted EBITDA of $591,000,000 and adjusted EPS of $0.27 We completed the construction of six forty three megawatts and signed or were awarded four forty three megawatts of new PPAs, bringing our backlog to 11.7 gigawatts. We have achieved our asset sale proceeds target for the year including the sale of a minority stake in our global insurance company AGIC for $450,000,000 Now turning to the resilience of our business model and portfolio. Our execution is proceeding as planned and we expect to hit all of our financial metrics for the year.

We have positioned ourselves for success even in the face of uncertainty around tariffs, changes to the Inflation Reduction Act or potential recession. Our business model is based on long term contracted generation with creditworthy offtakers as well as growth in our U. S. Regulated utilities. Our contracting, financing and supply chain strategies have all been designed to minimize the impact of economic conditions including inflation, interest rates, energy prices and tariffs.

As a result, we have clear visibility into our future financial performance. I'll first discuss the performance of our renewable business and then address the ways we have ensured that this business is resilient to macroeconomic and policy shifts. Turning to slide four, a major driver of our renewables EBITDA growth this year is the approximately three gigawatts of new projects we expect to bring online. I'm pleased to say that we are fully on track with more than 600 megawatts already completed, including the two fifty megawatt Morris solar project in Missouri serving Microsoft. Our remaining projects under construction for the year are now approximately 80% complete.

Our one gigawatt Bellfield One project, which includes 500 megawatts of solar and 500 megawatts of storage is virtually complete and we will be fully operational this summer. This is the first phase of what will be a two gigawatt project and the largest solar plus storage plant ever built in The United States, all of which is contracted with Amazon. Moving on to slide five. Our supply chain strategy provides us strong protections from any current or potential future tariffs as well as from the impact of inflation. For the seven gigawatts in our backlog scheduled to come online in The U.

S. Between 2025 and 2027, nearly all of the CapEx is protected with zero exposure to tariffs as the equipment is already in The U. S. In transit or contracted to be produced domestically. Our tariff exposure is limited to a small quantity of batteries that are being imported from Korea for projects coming online in 2026 with a maximum potential exposure of €50,000,000 which we are actively working to further mitigate.

This represents just 0.3% of the total U. S. CapEx and is well within the normal project contingency. I would like to emphasize that our U. S.

Supply chain protects us from any potential tariffs that could be announced including reciprocal tariffs. We also serve our corporate customers outside The U. S. Where we continue to see substantial demand. Contracts that we are signing outside The U.

S. Are benefiting from lower equipment prices as the result of the increase in international equipment supply with solar panels typically one third the cost in Chile versus The U. S. Turning to Slide six, our business is also well protected from possible changes to U. S.

Renewable policy for several reasons. First, we are the top electricity provider to premier corporate clients including data center customers that require capacity that can come online relatively quickly. We have signed agreements for 9.5 gigawatts with data center companies more than anyone else in the sector. There are few others in the industry who can develop, build and operate the projects we offer, which are often large, geographically diverse and with customized commercial structures. Furthermore, with our extensive history of working with large corporate customers, our development projects are tailored to meet their specific needs.

We believe our customers will have strong demand for renewables in any scenario. Through the end of the decade, Bloomberg New Energy Finance sees increased electricity demand requiring at least four twenty five gigawatts of new capacity. While AES is committed to serving our customers with an all of the above strategy, including new gas generation, we see renewables as the primary source of new energy to serve this demand for the following reasons. First, they offer the fastest time to power given their short construction period and advanced permitting and interconnection queue positions. Second, the fact that they are a low cost source of power, particularly considering the rapidly rising cost of gas turbines and long lead times.

And third, the price stability that they offer customers once contracted, unlike thermal power, which is subject to fluctuating fuel prices. In addition, roughly one third of our backlog is in international markets where we develop, build and operate renewable projects without tax credits usually with higher returns than in The U. S. In the absence of tax credit, projects have higher net capital needs, but PPA prices are also higher to account for this funding structure. In these cases, we earn higher EBITDA per megawatt and are able to achieve our financial targets with fewer projects.

Turning to slide seven, another reason for our confidence in the resilience of our business is that nearly our entire U. S. Backlog has safe harbor protections. Once a project starts construction or incurs 5% of the cost of materials, the project has safe harbor protections and has a period of four years to be placed in service and begin receiving tax credits. For example, any project that reaches start of construction milestones in 2025 is safe harbored through 2029.

Turning to slide eight, we're also resilient to any economic downturn. Our business is heavily contracted with approximately two thirds of our EBITDA coming from long term contracted generation, essentially all of which are take or pay and not tied to underlying demand conditions. Looking to the future, nearly all of our growth through 2027 is already secured through our 11.7 gigawatt backlog of signed long term contracts. At the same time we sign our PPAs, we contractually lock in all major capital costs, EPC arrangements and hedge our long term financing. This approach gives us clear line of sight to our future EBITDA.

We have also achieved our asset sale proceeds target for the year with the sale of a minority interest in our captive insurance company and we have closed the sell down of AES Ohio. Furthermore, with our March debt issuance, we have successfully completed all financings needed to address our twenty twenty five debt maturities and we have hedged 100% of our benchmark interest rate exposure for all corporate financings through 2027. Next, I'll discuss the robust growth program we're undertaking at our U. S. Utilities on slide nine.

We are executing on the largest investment program in the history of both AES Indiana and AES Ohio as we work to improve customer reliability and support economic development. This year we're on track to invest approximately $1,400,000,000 across the two utilities to support areas such as hardening the distribution network, smart grid, new generation and transmission build out for data centers. We signed agreements for 2.1 gigawatts of new data centers in AES Ohio's service territory. We're beginning construction on new transmission to service load. This summer we'll be breaking ground on the $500,000,000 transmission investment needed to serve a new Amazon data center in Fayette County.

Additionally, last month we completed the sale of a 30% stake in AS Ohio for $544,000,000 to CDPQ, a global investment partner that also owns 30% of AS Indiana. This partnership helps support capital requirements for their substantial growth programs, while also strengthening our balance sheet. Now turning to AS Indiana. We're continuing to invest in new generation to support our customers with affordable and reliable power. In March, we brought online the Pike County Energy Storage Project, which includes 200 megawatts of installed capacity and 800 megawatt hours of dispatchable energy, the largest operational battery project in MISO.

We continue to make progress on the Petersburg Energy Center, a two fifty megawatt solar and 180 megawatt hour energy storage facility, which we expect to be operational by the end of the year. And in April, we received final regulatory approval for the 170 megawatt cross vying solar plus storage project, which we expect to bring online in 2027. With that, I would now like to turn the call over to our CFO, Steve Kaufman.

Thank you, Andres, and good morning, everyone. Today, I will discuss our first quarter results, our 2025 full year guidance and our parent capital allocation plan. Turning to Slide 11. Adjusted EBITDA was $591,000,000 in the first quarter versus $640,000,000 a year ago. This decline was anticipated in our guidance and was primarily driven by prior year revenues from the accelerated monetization of the Warrior Run PPA and the sale of our five gigawatt AES Brazil business, but partially offset by growth in our Renewables and Utilities businesses.

Turning to slide 12. Adjusted EPS for the quarter was $0.27 versus $0.50 last year and was also in line with our expectations. Drivers include the prior year Warrior Run PPA monetization, the timing of U. S. Renewables tax attribute recognition, higher parent interest and the prior year tax benefit associated with our transition to a more U.

S.-oriented holding company structure. This was partially offset by higher contributions from our utilities SBU. I'll cover the performance of our SBUs or strategic business units on the next four slides. Beginning with our Renewables SBU on Slide 13. Higher EBITDA of approximately 45% year over year was driven primarily by contributions from new projects, which includes projects brought online over the prior four quarters.

In addition, the Renewables segment now includes all of our renewables in Chile, which were a part of the Energy Infrastructure SBU in prior years. This change was offset by the EBITDA impact from the sale of AES Brazil in the fourth quarter of last year. With this quarter's results, we are fully on track to achieve our full year renewables SBU guidance of $890,000,000 to $960,000,000 Our construction program is proceeding on schedule, cost savings measures have been implemented and we have already seen hydrological conditions in Colombia normalized year to date. In other words, our main segment drivers are greatly derisked and we're well on our way to achieving 60% renewables growth year over year. Turning to slide 14.

Higher adjusted PTC at our utilities SBU was mostly driven by tax attributes from the completion of the Pike County Energy Storage Project, new rates implemented in Indiana in May of last year, demand growth and favorable weather in The U. S. Lower EBITDA at our Energy Infrastructure SBU primarily reflects prior year revenues recognized from the accelerated monetization of the coal PPA at our Warrior Run plant as well as Chile Renewables moving to the Renewables segment. Finally, lower EBITDA at our New Energy Technologies SBU reflects lower contributions from Fluence in the first quarter. Now turning to our guidance beginning on slide 17.

We are reaffirming our 2025 adjusted EBITDA guidance of 2,650,000,000.00 to 2,850,000,000.00 We continue to see strong growth in our renewables SBU and expect our utilities businesses to grow approximately 7% this year despite the sell down of AES Ohio. The cost savings actions we announced on our February call have already been implemented. We expect the $150,000,000 cost savings in 2025 will primarily benefit the second half of the year and we remain on track to achieve a full run rate of over $300,000,000 of cost savings next year. We are also reaffirming our 2025 adjusted EPS guidance of $2.1 to $2.26 As you can see on slide 18, we expect growth in the three remaining quarters of this year to be driven by adjusted EBITDA growth in Renewables and Utilities and the monetization of tax attributes on new Renewables projects, partially offset by higher interest and a higher adjusted tax rate. Now to our 2025 parent capital allocation plan on Slide 19.

Sources reflect approximately $2,700,000,000 of total discretionary cash, including $1,200,000,000 of parent free cash flow, which represents more than an 8% increase versus 2024. We also expect $700,000,000 of planned parent debt issuance and close the $450,000,000 sell down of a minority interest in our Global Insurance business earlier this week. Our captive Global Insurance business is a valuable asset within the AES portfolio that consistently produces attractive cash flow while managing property and business interruption risk within our operating portfolio. This structured transaction allows us to monetize a minority portion of this valuable business to support growth capital for Renewables and Utilities businesses. With this transaction, we have achieved our entire asset sale target for 2025.

On the right hand side, you can see our planned use of capital. We will return approximately $500,000,000 to shareholders this year, reflecting the 2% dividend increase announced last December. We also plan to invest approximately $1,800,000,000 toward new growth and have already repaid roughly $400,000,000 of subsidiary debt. With the sell down of a minority interest in AS Ohio at the April, we now have CDPQ as a 30% partner in both of our U. S.

Utilities. This partnership is another example of how we use private capital to help fund growth and reduce parent investment requirements into our subsidiaries. Finally, turning to Slide 20. Our credit metrics are progressing in line with our expectations, benefiting from the actions we've taken since the beginning of this year. With the sell down of our Global Insurance business, we have locked in our asset sales proceeds for the year.

The sell down of AS Ohio and subsequent debt pay down enabled S and P's recent one and two notch upgrades for DPL Inc. And AS Ohio respectively. We have also refinanced this year's parent debt maturity and have already fully hedged the benchmark on all expected parent financing through 2027. Additionally, we implemented cost efficiencies and resized our development business to generate over $300,000,000 in annual savings by next year. These actions provide us with a fully self funded plan through 2027.

In summary, I am very pleased with our results this quarter, which were fully in line with the guidance we gave in February. We expect significant growth in the year to go that will come from projects that have already been brought online, but which are still ramping to their full EBITDA, rate based investments that have already been made and cost reduction actions already implemented. I am confident we will achieve our guidance regardless of changes in the economic environment or changes in policy due to our focus on regulated utilities and long term contracted generation, which has minimal volume interest rate or foreign currency exposure. I look forward to providing an update on our progress on our second quarter call. With that, I'll turn the call back over to Andres.

Thank you, Steve. In summary, our long term contracted business model continues to demonstrate its resilience to tariffs, economic policies and business cycles. Our first quarter results are in line with our expectations and we are reaffirming our 2025 guidance and long term growth rate targets. Demand from our core corporate customers remains very strong and we're seeing no slowdown in the energy needs of hyperscalers in any scenario. As a result of our strategy to be a first mover in creating a domestic supply chain and working with existing suppliers to onshore imported equipment, the tariff exposure on our 11.7 gigawatt backlog is de minimis.

Similarly, our construction program of 3.2 gigawatts this year is on track and well advanced. We have completed construction of six forty three megawatts and we are 80% complete for the remaining 2.6 gigawatts, including 99% complete on the one gigawatt of our Bellfield project, which will be the largest solar plus storage project in The U. S. Our two utilities are among the fastest growing in the country and we continue to make progress on attracting new data centers to our service territory. Lastly, we have already completed all of our major asset sales and financings for the year, solidifying our commitment to self funding through our long term guidance period.

With that, I would like to open up the call for questions.

Thank you. We will now begin the question and answer session. First question comes from Julien Dumoulin Smith with Jefferies. Please go ahead, Julien.

Hey, good morning, team. Thank you guys very much. Appreciate the time and the opportunity here. Nicely done on this insurance transaction. Actually, if I can just start off a little bit of housekeeping there.

How do you think about that transaction just in terms of the perspective EBITDA impact just when you think about the financials here? I mean, innovative idea on how to raise kind of equity indirectly, right, from private capital, you say?

Yes. Good morning, Yes, the EBITDA impact, we expect in the $25,000,000 to $30,000,000 range. So overall, given that we've raised $450,000,000 we're reinvesting that in returns 13%, fourteen %, fifteen %. It's very accretive for us.

So we're very pleased. This was an opportunity that we have seen quite a while ago. It had been part of the universe of potential asset sales. And so we've anticipated for some time. We did include it in our guidance in February.

And it's effectively a low cost equity financing that supports growth while also meeting our credit goals. So very happy to complete this early this year.

Awesome. Yes. Nicely done, Steve. I got to say, neat idea. If I can turn more substantively, right, just to clarify your earlier comments, like, first, just on on the tariff exposure, is it is it principally that you've got a recovery as in, from your, your suppliers, I.

E, they are taking the risk when you guys provide this 0.3% that effectively the risk burden is effectively put on the vast majority of your suppliers versus going back to your customers? Just wanted to clarify that. And then related, just given the 400 and change megawatts of origination this quarter, given the backdrop today, would you say that this is kind of what we should be expecting for this year? Or could you see some sort of more meaningful uptick? I'm just trying to get a sense of what that cadence should be against setting expectations for further down the line.

I'll have Ricardo answer the first question, and then I'll take the second.

Thank you, Julien. I think let me provide a bit of more context on our supply chain. Three years ago, we have made the decision of basically building a reliable and USA made supply chain. And guided by that sort of decision, we implemented three actions. The first one was that we enter into strategic partnerships with suppliers with manufacturing capacity outside of China.

That was the first action. The second action, we were a first mover as Andres mentioned in supporting U. S. Manufacturing to secure solar batteries and wind components. And third, to bridge the gap as local manufacturing ramps up, we accelerated the import of all the equipment coming from abroad required to support our backlog through 2027.

And as a result of these actions, apart from the small quantity of batteries that Andres mentioned that these are for a few projects coming online in 2026. We have no impact on tariff for our twenty twenty five, twenty twenty seven backlog. I think with respect to who sort of bear the exposure, these contracts are with the Korean supplier for a very few projects. Of course, these tariffs were not in place at the time we signed the contract. And what we're doing, the $50,000,000 represent the full exposure to be shared between parties.

And of course, the first action as Andres mentioned is to actively reduce that exposure, which we've been so far very successful and for the remaining impact to share it evenly. So we expect the overall impact to be well below that $50,000,000 that is the total exposure that Andres mentioned. Other than that contract, we have no exposure to tariffs.

Yes. I'd like to clarify that what we did was we imported all of our equipment, the vast majority of it. So we have all that equipment that we need, for example, for 2025 with the exception that we pointed out already in The U. S. And most of it on-site.

And we have a lot of the equipment for 2026 that's imported as well. So in 2026, we expect to shift over to domestic supply. So when we say that the exposure is de minimis, we really got ahead of this. Now I will remind you, this is what we did in 2020 as well. In 2020, we achieved all of our targets that were the only large developer who did not abandon or significantly delay any large project and we intend to continue that track record.

Now getting your question about the cadence of PPA signings. As we've been saying, look, we're concentrating on fewer larger projects that are also more financially attractive. So the 400 megawatts is not a cadence that you should expect for every quarter. We are in final negotiations of a number We expect to hit the four gigawatt roughly that we have talked about prior to this year to hit sort of the three year target we had talked about of 14 gigawatts to 17 So we remain on track.

And we've always said these are lumpy. So it's not like we're doing a lot of small projects. We're doing a few large ones and sometimes they happen in a quarter or they happen in the next quarter or they come together. So there's nothing to be read in the 400 megawatts.

Got it. All right. Excellent guys. Thank you. I'll leave it there.

Thank you. Our next question comes from Nick Campanella with Barclays. Please go ahead, Nick.

Hey, good morning, everyone. Thanks for taking my questions, and I appreciate all the color. I just wanted to come back to the insurance sale quickly. So I know you kind of disclosed the the class b dividends are, a hundred $48.05 to a hundred 98,000,000. Is that, a yearly number, or is that a cumulative number?

And I guess if you hit that call option in 2030 to 2035, what is that that strike price? And, you know, how should we kind of think of the the cost of financing here that that you just raised versus, I guess, deploying deploying, you know, future CapEx at 13 to 15% returns. Maybe you could just unpack that.

Yeah. Hey, Dick. It's Steve. So those numbers are based on the five year the first five year target distribution. And so this would be the aggregate amount at that five year call date that needs to get met.

And that's very much in line with a fairly conservative case on what this insurance business delivers. Keep in mind, this is a business that is, it's captive, but it has a reinsurance behind it. So we have a very predictable max amount of losses, and then the reinsurance kicks in. So this was structured very conservatively that even in the event max losses, we feel very comfortable servicing this financial structure. In terms of the cost of this, I would think about it as roughly in line with like a junior subordinated debt issuance at the parent.

And given that this is getting equity treatment that effectively looks like a low cost equity financing that is quite accretive. It will have target payments in the range of about 37,000,000 to $40,000,000 per year to the counterparty.

Okay. That's helpful. Appreciate that. And I'll try not to butcher it, but just the Cochrane buyout that you disclosed in the 10 Q, can you just give us a sense of what you're purchasing or and how much you paid for it either on like a multiple basis or cash and just the rationale behind that transaction?

Yes. Look, I mean, this is an asset that we already own and operate. We have a minority partner that was looking to exit. So what we're doing is we're buying up the 40% minority and taking nearly complete ownership of the asset. It's very valuable.

It's contracted well into the next decade. It's serving key customers for us in Chile. And the valuation was at a very low multiple. So it's quite accretive immediately this year and beyond. So we're pleased with it.

It's one of the assets that we had already guided that would be extended beyond 2027. So it's no additional new capacity, just taking advantage of attractive financial return on owning the entire thing as opposed to just the share that we had.

Thank you. The next question comes from David Alcaro with Morgan Stanley. Please go ahead, David.

I was wondering on the AGIC sale, just one other follow-up there. You sold a minority stake. I'm just wondering, is there any strategic reason that you want to retain control and the remaining stake there? Or could that be a consideration for future asset sales out

rest of the program, the financing plans going forward as well

Yes. No, we want to maintain our control of this asset. And as Steve said, it's the financial metrics are very conservative and we're coming in with considerable margin on this. So we do want to maintain it.

It's been very successful. We set this up about fifteen, twenty years ago. It was an independent business. It's a unicorn. So it's been very successful, lowered our insurance costs and improved the quality of our reinsurers.

Okay, great. Yes, thanks for that detail. And I was wondering if you could comment on just what you're seeing in terms of latest renewable demand trends. Has there been any pull forward ahead of potential IRA changes here or any just general change in customer demand levels that you're seeing?

Yes, great question. Look, what we are seeing is continued strong demand. We're not seeing any sort of temporal shifts as a result. So our data center customers continued strong demand. I think the keyword is time to power.

And that's why we mentioned that certainly for the next five years, the predominant of this is going to be renewables because it's the fastest to power. It's also very cost effective. And so this is more sort of you can combine this with gas in many cases to reach the optimal solution. I think there's too much discussion about the technology and not really what the customer wants. So we combine ways of producing energy in a way that satisfies our customer.

So look, we're not seeing any pull forward. We are seeing, I would say, some of the contracts we're signing today that they have provisions for, say, changes in law, changes in tariffs, etcetera, to take that into account. Now for our backlog, as I said before, we have imported the materials or have domestic supply. We have the EPC and we have the financing. So all that's locked in.

Thank you. Our next question comes from Dagesh Chopra with Evercore. Please go ahead, Dagesh.

Thank you. Good morning, team. Thanks for giving me time. Steve, congrats on this transaction. Maybe just a little bit more detail.

You talked about cash distributions being conservative. Can you just frame for us the 40,000,000 or so average distributions a year? What's what is that as a percentage of total cash generated for that business?

Yeah. It's it's roughly around, you know, depending on the year, you know, 35%, forty %, I would say, in terms of this business reliably generates about 100,000,000 of cash thereabouts even with typical losses. So and that includes some amortization of the instruments. So this is self amortizing over the full twenty year life. It's nothing like these convertible portfolio financings that you've heard about with some other yieldcos that were not amortizing and had a significant economic ownership flip.

This doesn't have that kind of change. We have a call right at year five. And otherwise, there's no incentive to have to call it. It continues along the same economics for the full twenty year potential period. So it's priced, as I said, like a junior parent note and gives us access to cheap what I call cheap equity capital.

And then we can continue to retain this so long as it's unless we have a better option down the road that's lower cost. But this one is a good way to monetize an asset that I think is perhaps underappreciated in the value that it generates. It's been in our disclosures around the distribution to the parent from this asset in the past, so you can see that. And this is capital that will be put to work to generate you know, mid teens returns. So so I think it it looks quite good.

Got it. Thank you for that clarity, a creative transaction there. Just just sticking on the on the financing topic, there's been a lot of discussion around transferability. You know, some legislation recently proposed with or else you is is probably doesn't get much traction. But just in terms of thinking about risks, can you talk about, like, you know, in in an event that transferability is eliminated, do you go back to, tax equity and perhaps even frame for us, you know, what percentage of your plan is is is is being provided by cash financing is being provided by transferability?

all, transferability has only been around for a little over two years when the IRA was passed in 2022. It has been very good for the industry as it's opened up a broader participation in the market for monetizing tax value. And it is typically a little bit more efficient in transferring most of the tax benefit savings on to customers. Just there's less friction in these types of transactions. But that said, before the IRA, we did tax equity.

The majority of what we continue to do is still through tax equity partnerships. In fact, we continue to form the partnerships anyway because we need to monetize the tax depreciation to maximize the opportunity even when we are doing transfers. So we can continue to do the tax equity partnerships for all of our future projects if this were removed. We don't think it will be because we think it goes with the tax credits in terms of getting the most benefit of the tax credit to the cost of the end consumer of the energy. And then effectively, the cash benefit to AES is the same.

So we bridge the tax financing with debt during construction, as I walked through on the February call. And then we immediately, when the tax value comes in, either from the transfer counterparty or from the tax equity partner, we immediately monetize that at the place in service date and pay down a significant portion of the debt, typically more than 50% at that point. So you have a significant deleveraging from this. The fundamental cash and credit profile is really exactly the same. So I think it's been good a lot more for some smaller developers and to sort of democratize the participation in the market.

But as a large scale developer with deep relationships with sophisticated tax equity partners, we still feel very comfortable that we can monetize all of the tax value that we create with the tax equity venue if needed.

Thanks, Steve. Appreciate that discussion. Just real quick. Sorry. This is my third question.

I I I understand and realize. Just the the hydrogen project that was canceled in Texas, are we still pursuing other customers for contracted power generation that I believe it was over a gig?

The answer is yes. I mean, that was a very attractive asset to development. It's in it's all on private land on one farm and it's very well located for the grid and for anything else. So yes, we're continuing to pursue it. It's part of our pipeline.

AES (AES) Q1 2025 Earnings Call Transcript

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