The utility and power generation giant AES Corporation laid off 10% of its staff last week, citing “current market conditions.”
The firings, which impacted roughly 1,000 people, came as a part of cost-reduction efforts for a company weathering energy market uncertainty. AES is aiming to eventually save $300 million annually, the company’s executives outlined in its Friday fourth quarter earnings call.
While the company had initially planned to phase staff reductions through 2027, the COO and president of the company’s new energy technologies division Ricardo Falú said “current market conditions” prompted the company to take more immediate action. Those conditions include policy uncertainties and the worsening economics of the company’s renewables arm.
As a result, AES reduced its investment in the renewables business by $1.3 billion through 2027, and “eliminated the need for equity,” according to president and CEO Andrés Gluski. AES Indiana also has secured an increase in its base rate from the Indiana Utility Regulatory Commission.
Gluski otherwise emphasized that AES — and even the company’s renewables program — is well-prepared for the Trump years (though the new president’s name came up not once on the earnings call).
“Even in the very unlikely scenario where tax credits for renewables are eliminated prospectively in their entirety, we believe that there will be continued strong demand from our corporate clients, especially data centers, because there are no realistic alternatives for many years,” Gluski said. “Without timely access to power, there can be no AI revolution.”
AES executive Kleber Costa told Latitude Media last summer that the company’s hyperscaler customers have a growing appetite for faster deployment; the “clear winner” for powering data centers, he said, was a combination of solar, storage, and artificial intelligence. And especially in the latter half of 2024, that demand increased dramatically, chief product officer Chris Shelton said.
Preparing from policy changes
In the last five years, Gluski said, AES has actively worked to make its business resilient to policy changes.
Specifically, Gluski said the company onshored its supply chain, insulating it from upheaval from tariffs. “We now have essentially all of our solar panels, trackers, and batteries either in-country or contracted to be domestically produced for our U.S. projects coming online through 2027,” Gluski said.
Also, he added that the AES 8.4-GW project backlog has safe harbor protections, and has locked in both equipment and EPC pricing; more than half of those projects are under construction. Meanwhile, about 3 GW are in international markets.
“In our international markets, renewables can be even more profitable and, most often, the cheapest form of dispatchable energy even in a regime without meaningful subsidies,” Gluski said.
And even within the U.S., “notwithstanding concerns about potential regulatory changes under the new administration, renewables have the best time-to-market at a competitive price,” he added. “Our renewables business is at an inflection point with improving financial results from the combination of continued growth, reaching economies of scale, and reductions in development expenses.”
The company has a renewables backlog of 11.9 gigawatts, and 16.2 GW deployed — 6.6 GW were inaugurated in 2023 and 2024 alone.
“We see strong demand from the growing needs of AI data centers and new manufacturing plants in the U.S., and we are well-placed to meet their demand for the shortest time to power,” said Gluski.
Investors reacted with enthusiasm to the layoffs; the company’s shares rose nearly 14% on Friday afternoon. However, they have since dropped alongside the rest of the market, in reaction to news that postponed 25% tariffs on Canada and Mexico will take effect tomorrow.
