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How Is AES Using Long-Term PPAs to Drive Renewable Growth?
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Key Takeaways
AES secured 4 GW of renewable PPAs in 2025 and has a 12-GW backlog, with 5.7 GW under construction.
AES signed long-term PPAs to supply power for Google's new data center.
AES trades at a forward P/E of 5.93X, well below the industry average of 16.59X.
The AES Corporation (AES - Free Report) is increasingly relying on long-term Power Purchase Agreements (“PPAs”) to fuel its growth strategy, particularly as global electricity demand surges from energy-intensive data centers and artificial intelligence (“AI”) infrastructure. Through these long-term contracts, AES secures agreements with corporate customers to supply renewable electricity at fixed or predictable prices. It provides AES with stable and visible cash flows, reducing exposure to wholesale electricity price volatility while improving the financial viability of large-scale renewable projects.
PPAs support project financing by guaranteeing future revenues, encouraging lenders and investors to fund new solar and wind projects. This enables AES to expand its renewable capacity more rapidly while maintaining financial stability.
This strategy not only supports AES’ expanding renewable portfolio but also aligns with the broader global transition toward decarbonized energy systems. As corporate demand for reliable clean power continues to grow, long-term PPAs are expected to remain a key driver of AES’ project pipeline, revenue stability and long-term growth.
AES signed or secured new long-term PPAs for 4 gigawatts (GW) of renewables in 2025. It also completed the construction of 3.2 GW of solar, energy storage and wind projects during the year and currently has a project backlog of 12 GW under signed PPAs, including 5.7 GW under construction.
In February 2026, AES signed agreements for energy generation projects. Under the deal, AES signed long-term PPAs to supply electricity for Google’s new data center in Wilbarger County and will develop co-located generation while owning, operating and managing the power assets.
Utilities Are Expanding Operations Through PPAs
PPAs mainly help utilities by giving them a steady, long-term source of income from renewable energy projects. Along with AES, other utilities that are involved in PPAs to expand operations have been discussed below:
In January 2026, Vistra (VST - Free Report) entered into 20-year PPAs to provide more than 2,600 MW of zero-carbon energy from a combination of three different Vistra nuclear plants to support Meta's operations in PJM. Dominion Energy (D - Free Report) and its subsidiaries sell a substantial volume of energy produced under long-term PPAs, which provide visibility of earnings.
AES’ Earnings Estimates
The Zacks Consensus Estimate for 2026 and 2027 EPS indicates an increase of 2.56% and 1.98%, respectively, year over year.
Image Source: Zacks Investment Research
AES Stock Trading at a Discount
AES is trading at a discount relative to the industry, with a forward 12-month price-to-earnings of 5.93X compared with the industry average of 16.59X.
Image Source: Zacks Investment Research
AES Stock Price Performance
In the past three months, the company’s shares have risen 2.6% compared with the industry’s 4.4% growth.
View the Zacks #1 Rank List
Image: Bigstock
How Is AES Using Long-Term PPAs to Drive Renewable Growth?
Key Takeaways
The AES Corporation (AES - Free Report) is increasingly relying on long-term Power Purchase Agreements (“PPAs”) to fuel its growth strategy, particularly as global electricity demand surges from energy-intensive data centers and artificial intelligence (“AI”) infrastructure. Through these long-term contracts, AES secures agreements with corporate customers to supply renewable electricity at fixed or predictable prices. It provides AES with stable and visible cash flows, reducing exposure to wholesale electricity price volatility while improving the financial viability of large-scale renewable projects.
PPAs support project financing by guaranteeing future revenues, encouraging lenders and investors to fund new solar and wind projects. This enables AES to expand its renewable capacity more rapidly while maintaining financial stability.
This strategy not only supports AES’ expanding renewable portfolio but also aligns with the broader global transition toward decarbonized energy systems. As corporate demand for reliable clean power continues to grow, long-term PPAs are expected to remain a key driver of AES’ project pipeline, revenue stability and long-term growth.
AES signed or secured new long-term PPAs for 4 gigawatts (GW) of renewables in 2025. It also completed the construction of 3.2 GW of solar, energy storage and wind projects during the year and currently has a project backlog of 12 GW under signed PPAs, including 5.7 GW under construction.
In February 2026, AES signed agreements for energy generation projects. Under the deal, AES signed long-term PPAs to supply electricity for Google’s new data center in Wilbarger County and will develop co-located generation while owning, operating and managing the power assets.
Utilities Are Expanding Operations Through PPAs
PPAs mainly help utilities by giving them a steady, long-term source of income from renewable energy projects. Along with AES, other utilities that are involved in PPAs to expand operations have been discussed below:
In January 2026, Vistra (VST - Free Report) entered into 20-year PPAs to provide more than 2,600 MW of zero-carbon energy from a combination of three different Vistra nuclear plants to support Meta's operations in PJM. Dominion Energy (D - Free Report) and its subsidiaries sell a substantial volume of energy produced under long-term PPAs, which provide visibility of earnings.
AES’ Earnings Estimates
The Zacks Consensus Estimate for 2026 and 2027 EPS indicates an increase of 2.56% and 1.98%, respectively, year over year.
Image Source: Zacks Investment Research
AES Stock Trading at a Discount
AES is trading at a discount relative to the industry, with a forward 12-month price-to-earnings of 5.93X compared with the industry average of 16.59X.
Image Source: Zacks Investment Research
AES Stock Price Performance
In the past three months, the company’s shares have risen 2.6% compared with the industry’s 4.4% growth.
Image Source: Zacks Investment Research
AES’ Zacks Rank
The company currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.