The AES Corporation AES is benefiting from the rising demand for renewable energy by advancing its solar, wind and energy storage projects and expanding its contracted project backlog. The company is enhancing its position in the liquefied natural gas (LNG) market by advancing key infrastructure and development projects.
However, this Zacks Rank #3 (Hold) company remains exposed to risks associated with declining wholesale electricity prices.
Growth Initiatives Supporting AES
AES is capitalizing on the global shift toward clean energy through strategic investments in utility-scale renewable projects and energy storage solutions, creating significant long-term growth opportunities. The company is also benefiting from rising electricity demand from data centers, fueled by the rapid expansion of AI and cloud computing. By delivering renewable power under long-term Power Purchase Agreements (PPAs), AES is strengthening its revenue visibility while establishing itself as a critical energy partner for the growing technology sector.
As of March 31, 2026, AES signed or secured 735 megawatts (MW) of new long-term PPAs. The company completed construction of 150 MW of solar, wind and energy storage projects and maintained a backlog of 12.6 gigawatts (GW) under signed PPAs, including 5.6 GW currently under construction. In March 2026, Maximo, AES’ solar robotics company, installed 100 MW of utility-scale solar capacity at the Bellefield complex.
AES is strengthening its position in the expanding LNG market through strategic infrastructure investments and development projects. Its Andres business operates the Dominican Republic’s only LNG import terminal, supplying power plants and industrial customers under long-term agreements. The company is also progressing the Son My LNG terminal project, which is designed to handle up to 9.6 million metric tons annually, alongside the Son My 2 combined-cycle gas turbine project, which is expected to have a generation capacity of nearly 2,250 MW.
Challenges Blocking AES' Growth
Wholesale electricity prices have declined significantly in recent years due to the growing penetration of renewable energy resources, low-cost natural gas and demand-side management initiatives. In many markets, new renewable energy PPAs are being awarded at prices well below those seen a few years ago. This downward pricing trend is expected to persist and could materially adversely affect the company's financial performance.
AES' wind, solar and energy storage projects face risks related to regulatory support, market conditions and resource variability. The company's renewable energy growth strategy in the United States relies heavily on government policies and tax incentives, including those provided under the Inflation Reduction Act. Any reduction or elimination of these incentives, the imposition of new import tariffs or financing constraints could limit future PPA opportunities, reduce revenues and negatively affect project returns.
AES Stock Price Movement
Over the past year, AES shares have climbed 40.4% compared with the industry’s growth of 21.3%.
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Stocks to Consider
Some better-ranked stocks from the same industry are NextEra Energy, Inc. NEE, Consolidated Edison, Inc. ED and PG&E Corporation PCG, 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.
NEE’s long-term (three to five years) earnings growth rate is 8.51%. The Zacks Consensus Estimate for its 2026 earnings per share (EPS) is pegged at $4.01, which implies a year-over-year improvement of 8.1%.
ED’s long-term earnings growth rate is 6.47%. The Zacks Consensus Estimate for its 2026 EPS stands at $6.09, which calls for a year-over-year rise of 6.8%.
PCG’s long-term earnings growth rate is 15.89%. The Zacks Consensus Estimate for its 2026 EPS stands at $1.65, which suggests a year-over-year increase of 10%.
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NextEra Energy, Inc. (NEE): Free Stock Analysis Report
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The AES Corporation (AES): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).