At its latest earnings call held on February 25, US-based power company AES announced that it has signed nearly 5GW worth of PPAs for renewable energy in 2021, thereby surpassing its original target of 3-4GW. The company also added around 2GW into its investment portfolio for renewables and energy storage during 2021. Hence, it is on track to exit from the market for coal-fired generation by 2025. AES released the highlights of its earnings call via a press release. Further details about its performance results and future plans were first reported by other renewable energy news outlets.
AES stated that it finished the construction and acquisition of 2,079MW of renewable generation and energy storage assets in 2021. These assets belong to categories including hydropower, wind power, solar PV, and battery energy storage. More than half of them (i.e., 1,129MW) are located around the US. The rest of these assets are spread out across the Latin America and the Caribbean. Specifically, AES completed 859MW of hydro, wind, PV, and energy storage projects in Chile, Brazil, and Colombia last year. It also set up 91MW of PV projects in the Dominican Republic during the same period.
Regarding new PPAs related to renewables and energy storage, 978MW of the nearly 5GW added in 2021 was signed after the company’s earnings call for the third quarter. Initially, the company aimed to add just 3-4GW through PPAs for the year. Moving into 2022, AES intends to add 4.5-5.5GW worth of PPAs related to renewables and energy storage.
The company’s backlog of renewable energy and energy storage projects reached above 9.2GW as of the end of 2021.These projects are to be completed by the end of 2025. Of the total, 3,497MW has entered the construction phase, and 5,742MW has been signed under long-term PPAs. At the time of the quarterly presentation, the company’s project pipeline had extended to about 59GW.
Additionally, AES reported that Fluence, which its energy storage joint venture with Siemens, completed its IPO in November 2021. AES currently owns a 34% stake in the company. Apart from developing and selling grid-scale energy storage systems, Fluence is also maintaining an AI-based platform for trading electricity. The platform will be adopted by AES for 1.1GW of its PV and energy storage assets.
Modest Growth Target for PPAs Related to Renewables and Energy Storage
Andrés Gluski, president and CEO of AES, said that 2021 was the “best year” in the company’s history with respect to securing new PPAs related to renewables, extending the project pipeline, and financial performances. Despite the COVID-19 pandemic, the company maintains “resiliency” in terms of supply chain, workforce, and customer relations.
Gluski said that AES is accelerating its efforts in energy transition and intends to phase out coal-fired generation by 2025. This is a revision to the company’s earlier target of reducing the share of coal-fired generation to less than 10% by the end of the same year. Currently, AES owns 7.1GW of coal-fired generation capacity. The company plans to eliminate coal by selling, retiring, or converting its coal-fired power stations. Gluski emphasized that the energy transition process will not affect the company’s ability to maintain its guidance and financial performance.
In July 2021, AES and the Chilean government signed an agreement to work towards shutting down the coal-fired generation units operated by AES in the country by 2025. To complement the coal phase-out, AES will also step up the deployment of renewable generation assets in Chile and other Latin American countries. If this agreement is effectively implemented in full, then it will contribute to a 20% reduction in Chile’s coal-fired generation capacity (i.e., approximately 1,097MW).
On the other hand, AES has yet to make a formal decision on the fate of its coal-fired power station in Petersburg, Indiana. This plant is recognized as being one of the major sources of pollution in the region.