2020 Annual report Accelerating the future of energy, together 2020 annual report Accelerating the future of energy, together At AES, we’re leading the world’s transition to greener, smarter energy. We partner with our customers to help them achieve their energy goals, with a focus on offering innovative solutions while maintaining reliability. Our unique combination of global scale and local market knowledge helps us to partner with our customers to strategically transition to new, low-carbon and renewable solutions while continuing to meet their energy needs, and we’ve been doing it with safety, integrity and the highest standards for over four decades. Together with our many stakeholders, we are improving lives and making communities more sustainable. Achieving a higher standard of new energy Each customer’s clean energy journey and sustainability goals are unique. We work together to develop the new renewable energy solutions that meet their needs now, and in the future. Together with KIUC Kaua‘i Island Utility Cooperative (KIUC) and AES created a new model for delivering large-scale renewable energy in 2019 with the EEI award- winning Lāwa’i Solar and Energy Storage Project. We’re continuing to innovate together with a new solar and pumped storage hydro project that will meet up to 25% of the island’s energy needs while moving Kaua‘i beyond 80% renewable generation with the new West Kaua‘i Energy Project. Driving impact through access and insights We are putting our customers in the driver’s seat with access to cleaner energy and data to help them make informed sustainability decisions and optimize their energy use. We connect our customers to the insights that matter most to create operational efficiencies, fuel innovation and drive meaningful progress toward a sustainable future. Together with CMI We’re helping CMI (Corporación Multi Inversiones) in the Dominican Republic navigate the complex energy landscape and add value to their customer experience. Through our digital customer enablement platform, Clean Energy Navigator , CMI has access to intuitive energy usage visualization, historical costs, budget tracking and bill comparisons with data-driven, personalized and actionable insights. 2 | © 2021 THE AES CORPORATION 2020 annual report Securing a sustainable future Whether it’s optimizing contracts or developing infrastructure solutions and managing complex logistics, we partner to ensure our customers have the cleaner, cost-effective and reliable energy they need. Together with Chile Chile is working toward an ambitious goal to generate 70% of its energy from renewable sources by 2030. AES is significantly contributing to Chile’s goal by accelerating the decarbonization of its customers energy supplies and portfolios in order to reach 100% renewable power by the beginning of the next decade. Not only are we working to turn on greener technologies, but we’re also reliably turning off conventional power plants. Last year in Chile, we inaugurated the world’s first virtual reservoir which stores energy in batteries when power prices are low and provides critical capacity at night when it is most in demand. We also began operations of the most efficient solar project in the world, Andes Solar IIa, and are advancing on the construction of 1,074 MW of renewable projects, including the single most important hydro project in the country and Latin America’s largest energy storage system. Gaining scale benefits through shared platforms and applications We joined with our partners and innovative startups to create scalable clean energy solutions to serve our customers and peers in the industry. In building these scalable ecosystems, we accelerate the future of energy by leveraging shared platforms and technologies while continually innovating together with our platform businesses, providing access to sustainable energy solutions with the greatest impact for our customers and the world. Together with 5B 5B is an innovative solar technology business based in Australia. The company’s revolutionary pre-fabricated solar solution, MAVERICK, enables customers to add solar resources at a pace that is three times faster while providing up to two times more energy within the same footprint of traditional solar facilities. With our investment in 5B in 2020, we are making clean energy available in places previously thought impossible. We are removing the barriers to widespread solar energy adoption, ushering in a new wave of customers to meet their short-term and long-term energy goals. © 2021 THE AES CORPORATION | 3 2020 annual report Driving an accelerated future for an accelerated impact Today, we’re closer to the greener, smarter energy future as a result of the work we’re doing together. We’re dramatically reducing We’re leading green growth coal generation in our portfolio i Æ Signed 3,017 MW of renewable PPAs in 2020 45% 25% 10% vs. target of 2,000-3,000 MW Æ Completed construction of 2,318 MW of new projects in 2020 Æ Current backlog of 6,909 MW (1,850 MW under construction; 5,059 MW with signed PPAs) 2019 2020 2025 We’re delivering superior results Credit ratings Adjusted EPS ii $1.44 2016 2019 2020 $1.36 $1.24 Fitch BB- BBB- BBB- Moody’s Ba3 Ba1 Ba1 S&P BB BB+ BBB- 2018 2019 2020 2018-2020 total shareholder return 2012-2020 shareholder dividend by year 141.5% 2021 $0.602 expected 2020 48.8% $0.5732 32.2% 2019 $0.546 AES S&P Utilities S&P 500 2018 $0.52 i Based on annual generation in MWh from the portfolio as of, or expected by, the relevant date, adjusted for: (i) (+) generation from new assets added to the portfolio; and (ii) (-) actual generation from announced asset sales or retirements. ii A non-GAAP measure should not be construed as an alternative to diluted earnings per share from continuing operations . See Financial Notes on page 7 for a definition and reconciliation to the nearest GAAP number. 4 | © 2021 THE AES CORPORATION 2020 annual report Chairman and CEO letter to AES shareholders When 2020 began, no one predicted that we would be facing the strength of our business model. Even in the face of macroeconomic biggest public health crisis in a generation that would change so many headwinds, including sector-wide decreases in demand, we not only aspects of our lives. In early February, as the extent of the COVID-19 maintained our financial position, we strengthened it. We achieved pandemic became fully apparent, we started to adjust many of the improvements in our key credit metrics and became a double aspects of how we do business, from remote work to increased safety investment grade company for the first time in our 40-year history. protocols for our people in the field. We worked tirelessly to keep all of our people safe, support our communities, and most importantly, Our strength comes from two factors. The first is an emphasis on continue to provide the reliable power on which our customers depend long-term contracts with reliable, credit-worthy customers. In 2020, to live their lives. over 85% of our portfolio consisted of utilities or long-term contracted generation, with an average contract life of over 13 years. Our portfolio Not only were we able to overcome the challenges of 2020, but we includes very little volumetric risk, with many of our contracts including also had one of our most transformational and successful years ever. take-or-pay provisions. We were able to meet, or exceed, every goal we set while helping our customers transition to greener, smarter energy solutions. Despite the Second, we benefit from a fully diversified business, in terms of unprecedented headwinds, we achieved our second Investment Grade geography, technology and commercial structure. When portions of credit rating and advanced a number of key transactions and initiatives our business experienced headwinds, most notably the US utilities as to reduce our coal exposure to 25% of our total portfolio on a proforma a result of decreases in demand due to the COVID-19 pandemic and basis.iii We further established AES as a leader and partner of choice, mild weather, other businesses were experiencing more favorable and we achieved Adjusted Earnings Per Share (a non-GAAP financial circumstances to offset these impacts. measure) of $1.44 and Parent Free Cash Flow (a non-GAAP financial measure) of $777 million, exceeding our expectations. Our strong results and outlook for the future led to superior returns, and we ended the year as one of the best performing stocks in our sector with a Total Shareholder Return of 22%. While accomplishing so much during such a difficult year, we also laid the foundation for continued growth and leadership in the industry. We see a tremendous opportunity ahead, stemming from both increased electrification of other sectors and the global transition to lower- carbon sources of energy. With our unique expertise in applying and integrating different technologies based on customer and local market needs and our growing pipeline of projects, we are well-positioned to lead the widespread transformation happening in the energy sector. Accelerating growth Our focus on technological and commercial innovation also enables One of our greatest accomplishments in 2020 was the progress we us to play a key role in developing the new solutions that will define the made together toward our future growth. Despite the challenges of industry. the year, we signed 3 GW of renewables and energy storage Power Purchase Agreements (PPA), more than ever before in our history. These projects will come on-line through 2023 and represent 44% of our backlog. Much of this growth was in the United States, which we Highlights of our 2020 see as an increasing portion of our business, but the broad range of performance projects and markets speaks to our global reach.