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AES Corporation’s New Strategic Initiatives

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Dec. 4 2020, Updated 10:53 a.m. ET

Natural gas plant in Panama

ETESA (Electric Transmission Company), an electric transmission company in Panama, organized a competitive bid to supply 350 MW (megawatts) of new capacity. AES Corporation’s (AES) subsidiary Gas Natural Atlantico won this bid and will set up a 350 MW combined-cycle natural gas plant, with a 170,000 cubic meter liquefied natural gas storage tank and regasification facility. By the end of 2015, AES will sign a ten-year PPA (power purchase agreement) with ETESA.

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5,819 megawatts of projects under construction

AES is actively increasing its generating capacity. As of June 30, 2015, 5,819 MW of projects are under construction. 77% of these upcoming projects are expected to be located in the Americas (the United States, the Andes, Central America, and the Caribbean). The total cost of these projects is expected to be about $7 billion. These projects are expected to yield a return of more than 15% on equity based on the projected contribution of the projects in 2018.

Several other competitors in the utilities space (XLU), such as Southern Company (SO), Duke Energy (DUK), and American Electric Power (AEP), have plans to increase their generation capacity significantly.

New investments versus share repurchases

In 2015, AES is expected to have cash of $1,540–$1,640 million. AES expects to put $350 million towards new investments in various subsidiaries, and $345 million towards debt repayment. It also intends to issue a shareholder dividend of $282 million and buy back shares worth $281 million.

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