How Is AES Using Long-Term PPAs to Drive Renewable Growth?

The AES CorporationAES 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 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 EnergyD 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.
 

Just Released: Zacks Top 10 Stocks for 2026

Hurry – you can still get in early on our 10 top tickers for 2026. Handpicked by Zacks Director of Research Sheraz Mian, this portfolio has been stunningly and consistently successful.

From inception in 2012 through November, 2025, the Zacks Top 10 Stocks gained +2,530.8%, more than QUADRUPLING the S&P 500’s +570.3%.

Sheraz has combed through 4,400 companies covered by the Zacks Rank and handpicked the best 10 to buy and hold in 2026. You can still be among the first to see these just-released stocks with enormous potential.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research