AES and Meta Ink 2 PPAs for 650 MW of Solar Projects in US

AES Corp (AES) has signed two long-term power purchase agreements (PPAs) with Meta for 650 MW of solar capacity to support Meta's data centers in Texas and Kansas. This move aligns with AES's strategy to capitalize on the growing U.S. solar market, where solar accounted for 66% of new electricity-generating capacity in 2024, and supports the company's existing 7.7 GW of long-term PPAs for data center renewable capacity; other utilities like CMS Energy, Ameren, and PPL Corporation are also expanding their solar generation capabilities amid projections of significant solar power growth.

Analysis

The AES Corporation (AES) has solidified its strategic focus on renewable energy by signing two long-term Power Purchase Agreements (PPAs) with Meta, committing 650 MW of solar capacity from projects in Texas and Kansas to support Meta's data centers. This move underscores AES's proactive approach to capitalizing on the escalating demand within the U.S. solar market, particularly from large corporate clients, and aligns with the market trend where solar energy represented 66% of all new U.S. electricity-generating capacity added in 2024, according to the Solar Industries Association. AES has demonstrated substantial progress in its solar initiatives, having completed the construction of 643 MW of solar and energy storage projects in the first quarter of 2025 and securing 7.7 gigawatts (GW) of long-term PPAs as of March 31, 2025, to build renewable capacity supporting data center energy needs. Further, AES Indiana, a subsidiary, received regulatory approval for the 170 MW Crossvine solar-plus-storage project (expected online in 2027) and is advancing the 295 MW Petersburg Energy Center (expected online by end of 2025), with an overarching goal to bring up to 1,300 MW of new renewable capacity online by 2027. Despite these positive operational developments and a U.S. Energy Information Administration forecast for solar power generation to grow 34% in 2025, AES shares have underperformed recently, losing 2% in the past month against the industry's 0.9% growth. This broader industry expansion is also evidenced by peers like CMS Energy, Ameren Corporation, and PPL Corporation, who are actively increasing their solar generation capacities and project notable earnings and sales growth for 2025.

Key Decisions for Investors

• Investors should view the new PPAs with Meta as a significant de-risking event that enhances AES's long-term contracted revenue visibility and reinforces its strategic alignment with the high-growth data center sector's demand for renewable energy.
• It is advisable to assess AES's current valuation considering its recent share price underperformance (-2% in the past month) relative to its substantial solar project pipeline (7.7 GW in PPAs for data centers, 643 MW completed in Q1 2025) and the strong secular growth forecasted for the U.S. solar market, including a 34% projected output increase in 2025.
• Monitor AES's execution on its announced solar development targets, such as AES Indiana's objective of 1,300 MW by 2027, and compare its progress and capital deployment efficiency against industry peers (CMS, AEE, PPL) who are also aggressively expanding their renewable portfolios.