v3.25.2
Fair Value
 6 Months Ended
Jun. 30, 2025
Fair Value Disclosures [Abstract]  
FAIR VALUE FAIR VALUE
The fair value of current financial assets and liabilities, debt service reserves, and other deposits approximate their reported carrying amounts. The estimated fair values of the Company’s assets and liabilities have been determined using available market information. Because these amounts are estimates and based on hypothetical transactions to sell assets or transfer liabilities, the use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. For further information on our valuation techniques and policies, see Note 5—Fair Value in Item 8.—Financial Statements and Supplementary Data of our 2024 Form 10-K.
Recurring Measurements
The following table presents, by level within the fair value hierarchy, the Company’s financial assets and liabilities that were measured at fair value on a recurring basis as of the dates indicated (in millions). For the Company’s investments in marketable debt securities, the security classes presented were determined based on the nature and risk of the security and are consistent with how the Company manages, monitors, and measures its marketable securities:
 June 30, 2025December 31, 2024
 Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Assets
DEBT SECURITIES:
Available-for-sale:
Certificates of deposit
$— $2 $— $2 $— $4 $— $4 
Government debt securities— 1 — 1 — 4 — 4 
Total debt securities— 3 — 3 — 8 — 8 
EQUITY SECURITIES:
Mutual funds53 — — 53 51 — — 51 
Common stock
1 — — 1 4 — — 4 
Total equity securities54 — — 54 55 — — 55 
DERIVATIVES:
Interest rate derivatives— 183 — 183 — 349 — 349 
Foreign currency derivatives— 10 35 45 — 9 52 61 
Commodity derivatives158 58 4 220 193 80 5 278 
Total derivatives — assets (1)
158 251 39 448 193 438 57 688 
TOTAL ASSETS$212 $254 $39 $505 $248 $446 $57 $751 
Liabilities
Contingent consideration (2)
$— $— $144 $144 $— $— $145 $145 
DERIVATIVES:
Interest rate derivatives— 76 — 76 — 14 1 15 
Foreign currency derivatives— 25 — 25 — 18 — 18 
Commodity derivatives197 31 26 254 185 44 26 255 
Total derivatives — liabilities (1)
197 132 26 355 185 76 27 288 
TOTAL LIABILITIES$197 $132 $170 $499 $185 $76 $172 $433 
_____________________________
(1)Includes $3 million of derivative assets reported in Current held-for-sale assets and $3 million of derivative liabilities reported in Current held-for-sale liabilities on the Condensed Consolidated Balance Sheets related to Dominican Republic Renewables as of December 31, 2024.
(2)The level 3 contingent consideration is mainly related to the acquisition of Bellefield in June 2023.
As of June 30, 2025, all available-for-sale debt securities had stated maturities within one year. For the three and six months ended June 30, 2025, no impairments of marketable securities were recognized in earnings or other comprehensive income (loss). Credit-related impairments are recognized as an allowance with a corresponding impact recognized as a credit loss in Other expense. Gains and losses on sales of investments are determined using the specific identification method. The following table presents gross proceeds from the sale of available-for-sale securities for the periods indicated (in millions):
Three Months Ended June 30,Six Months Ended June 30,
2025202420252024
Gross proceeds from sale of available-for-sale securities$1 $375 $4 $494 
The Company accounts for equity securities without readily determinable fair values using the measurement alternative in accordance with ASC 321. These securities are measured at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investments of the same issuer. As of December 31, 2024, the carrying amount of equity securities accounted for using the measurement alternative was $62 million, inclusive of $22 million of cumulative upward adjustments recorded in Other income in prior years to reflect observable price changes for our investment in 5B Holdings Ptd. Ltd. (“5B”). During the three months ended June 30, 2025, the Company recorded a $48 million downward adjustment to our investment in 5B in Other expense due to an observable price change resulting from a transaction between 5B and a third-party. As a result, the carrying amount of equity securities accounted for using the measurement alternative as of June 30, 2025 was $19 million.
The following tables present a reconciliation of assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and six months ended June 30, 2025 and 2024 (derivative balances are presented net), in millions. Transfers between Level 3 and Level 2 principally result from changes in the significance of unobservable inputs used to calculate the credit valuation adjustment.
Derivative Assets and Liabilities
Three Months Ended June 30, 2025Interest RateForeign CurrencyCommodityContingent ConsiderationTotal
Balance at April 1, 2025
$(2)$43 $2 $(173)$(130)
Total realized and unrealized gains (losses):
Included in earnings— 1 1 20 22 
Included in other comprehensive income (loss) — derivative activity— 1 (29)— (28)
Included in regulatory (assets) liabilities— — 5 — 5 
Acquisitions— — — (11)(11)
Settlements— (10)(1)20 9 
Transfers of assets, net out of Level 3
2 — — — 2 
Balance at June 30, 2025$— $35 $(22)$(144)$(131)
Total gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities held at the end of the period
$— $(6)$— $20 $14 
Derivative Assets and Liabilities
Three Months Ended June 30, 2024Interest RateForeign CurrencyCommodityContingent ConsiderationTotal
Balance at April 1, 2024
$(2)$64 $(79)$(158)$(175)
Total realized and unrealized gains (losses):
Included in earnings— 4 — (1)3 
Included in other comprehensive income (loss) — derivative activity— 2 4 — 6 
Included in other comprehensive income (loss) — foreign currency translation activity— — — 1 1 
Included in regulatory (assets) liabilities— — 5 — 5 
Acquisitions— — — (5)(5)
Settlements— (10)(1)1 (10)
Balance at June 30, 2024$(2)$60 $(71)$(162)$(175)
Total losses for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities held at the end of the period
$— $(3)$— $(1)$(4)
Derivative Assets and Liabilities
Six Months Ended June 30, 2025Interest RateForeign CurrencyCommodityContingent ConsiderationTotal
Balance at January 1, 2025
$(1)$52 $(21)$(145)$(115)
Total realized and unrealized gains (losses):
Included in earnings— 2 — (18)(16)
Included in other comprehensive income (loss) — derivative activity— 1 (3)— (2)
Included in regulatory (assets) liabilities— — 5 — 5 
Acquisitions— — — (11)(11)
Settlements— (20)(2)30 8 
Transfers of assets (liabilities), net into Level 3— — (1)— (1)
Transfers of assets, net out of Level 3
1 — — — 1 
Balance at June 30, 2025$— $35 $(22)$(144)$(131)
Total losses for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities held at the end of the period
$— $(12)$— $(18)$(30)
Derivative Assets and Liabilities
Six Months Ended June 30, 2024Interest RateForeign CurrencyCommodityContingent ConsiderationTotal
Balance at January 1, 2024
$(4)$59 $(110)$(165)$(220)
Total realized and unrealized gains (losses):
Included in earnings— 14 4 5 23 
Included in other comprehensive income (loss) — derivative activity2 5 32 — 39 
Included in regulatory (assets) liabilities— — 5 — 5 
Acquisitions— — — (14)(14)
Settlements— (18)(2)12 (8)
Balance at June 30, 2024(2)60 (71)(162)(175)
Total gains for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities held at the end of the period
$— $— $6 $5 $11 
The following table summarizes the significant unobservable inputs used to value Level 3 derivative assets (liabilities) as of June 30, 2025 (in millions, except range amounts):
Type of DerivativeFair ValueUnobservable Input
Amount or Range (Average)
Foreign currency:
Argentine peso$35 
Argentine peso to USD currency exchange rate after one year
1,210 to 1,520 (1,384)
Commodity:
CAISO energy swap(2)
Forward CAISO energy prices per MWh after 2031
$13.45 to $132.30 ($68.56)
MISO energy swap(25)
Forward MISO energy prices per MWh after 2031
$22.42 to $75.68 ($43.07)
Other5 
Total$13 
For the Argentine peso foreign currency derivatives, increases (decreases) in the estimate of the above exchange rate would increase (decrease) the value of the derivative. For the CAISO and MISO energy swap, increases (decreases) in the estimate above would decrease (increase) the value of the derivative.
Contingent consideration is primarily related to future milestone payments associated with acquisitions of renewables development projects. The estimated fair value of contingent consideration is determined using probability-weighted discounted cash flows based on internal forecasts, which are considered Level 3 inputs. Changes in Level 3 inputs, particularly changes in the probability of achieving development milestones, could result in material changes to the fair value of the contingent consideration and could materially impact the amount of expense or income recorded each reporting period. Contingent consideration is updated quarterly with any prospective changes in fair value recorded through earnings. Gains and losses on the remeasurement of contingent consideration are recognized in Other income and Other expense, respectively, on the Condensed Consolidated Statements of Operations.
Nonrecurring Measurements
The Company measures fair value using the applicable fair value measurement guidance. Impairment expense, shown as pre-tax loss below, is measured by comparing the fair value at the evaluation date to the then-latest available carrying amount and is included in Asset impairment reversals (expense) on the Condensed Consolidated Statements of Operations. The following table summarizes our major categories of asset groups measured at fair value on a nonrecurring basis and their level within the fair value hierarchy (in millions):
Measurement Date
Carrying Amount (1)
Fair ValuePre-tax Loss
Six Months Ended June 30, 2025Level 1Level 2Level 3
Held-for-sale businesses: (2)
Mong Duong (3)
3/31/2025$383 $— $371 $— $17 
Measurement Date
Carrying Amount (1)
Fair Value
Six Months Ended June 30, 2024Level 1Level 2Level 3Pre-tax Loss
Held-for-sale businesses: (2)
Mong Duong3/31/2024$450 $— $413 $— $37 
AES Brasil (4)
5/15/20241,577 — 1,565 — 25 
Mong Duong (3)
6/30/2024390 — 389 — 6 
_____________________________
(1)Represents the carrying values of the asset groups at the dates of measurement, before fair value adjustment.
(2)See Note 18—Held-for-Sale and Dispositions for further information.
(3)The pre-tax loss recognized was calculated using the fair value of the Mong Duong disposal group less costs to sell of $5 million.
(4)The pre-tax loss recognized was calculated using the fair value of the AES Brasil disposal group less costs to sell of $13 million. A subsequent impairment analysis was performed as of June 30, 2024 and no additional impairment was identified.
Mong Duong — During the six months ended June 30, 2025, the Company recognized a $243 million increase in the carrying value of the Mong Duong asset group due to the derecognition of a $239 million valuation allowance on the loan receivable accounted for under ASC 310, which had been recognized in Asset impairment expense between December 31, 2023 and March 31, 2025 while Mong Duong was classified as held-for-sale, and the elimination of $4 million in net estimated costs to sell from the measurement of the asset group. Upon reclassification out of held-for-sale, the loan receivable was remeasured at amortized cost and individual non-loan assets were remeasured at the lower of (i) carrying value before Mong Duong was classified as held for sale, adjusted for any depreciation expense or impairment losses that would have been recognized had the asset been continuously classified as held and used, or (ii) fair value at the date of the subsequent determination that held-for-sale criteria was no longer met. See Note 16—Asset Impairment Expense for further information.
AES Clean Energy Development Projects — On a quarterly basis, the Company reviews the status of development projects to identify projects that are no longer viable and will be abandoned. The fair value of each abandoned project with no salvage value is determined to be zero as there are no future projected cash flows, resulting in a full write-off of the carrying value of project development intangibles and capitalized development costs incurred.
The Company recognized $117 million and $14 million of pre-tax asset impairment expense related to AES Clean Energy Development Projects during the six months ended June 30, 2025 and 2024, respectively. See Note 16—Asset Impairment Expense for further information.
Financial Instruments Not Measured at Fair Value in the Condensed Consolidated Balance Sheets
The following table presents (in millions) the carrying amount, fair value, and fair value hierarchy of the Company’s financial assets and liabilities that are not measured at fair value in the Condensed Consolidated Balance Sheets as of the dates indicated, but for which fair value is disclosed:
June 30, 2025
Carrying
Amount
Fair Value
TotalLevel 1Level 2Level 3
Assets:
Financing receivables (1)
$893 $1,007 $— $— $1,007 
Liabilities:Non-recourse debt23,865 24,525 — 22,035 2,490 
Recourse debt5,792 4,735 — 4,735 — 
December 31, 2024
Carrying
Amount
Fair Value
TotalLevel 1Level 2Level 3
Assets:
Financing receivables (1)
$87 $171 $— $— $171 
Liabilities:Non-recourse debt22,743 23,066 — 20,981 2,085 
Recourse debt5,704 4,538 — 4,538 — 
_____________________________
(1)These amounts primarily relate to the sale of the Redondo Beach land, payment deferrals granted to mining customers as part of our green blend agreements in Chile, fair value of the Argentine FONINVEMEM receivables, and as of June 30, 2025, the Mong Duong loan receivable. These are included in Other noncurrent assets and Loan receivable in the accompanying Condensed Consolidated Balance Sheets. See Note 5—Financing Receivables for further information.