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AES CORPORATIONAES Alternative Energy Strategy
William LuraschiExecutive Vice President, Business Development
December 11, 2006
1www.aes.com
Safe Harbor Disclosure
Certain statements in the following presentation regarding AES’s business operations may constitute “forward looking statements.” Such forward-looking statements include, but are not limited to, those related to future earnings, growth and financial and operating performance. Forward-looking statements are not intended to be a guarantee of future results, but instead constitute AES’s current expectations based on reasonable assumptions. Forecasted financial information is based on certain material assumptions. These assumptions include, but are not limited to continued normal or better levels of operating performance and electricity demand at our distribution companies and operational performance at our contract generation businesses consistent with historical levels, as well as achievements of planned productivity improvements and incremental growth from investments at investment levels and rates of return consistent with prior experience. For additional assumptions see the Appendix to this presentation. Actual results could differ materially from those projected in our forward-looking statements due to risks, uncertainties and other factors. Important factors that could affect actual results are discussed in AES’s filings with the Securities and Exchange Commission including but not limited to the risks discussed under Item 1A “Risk Factors” in the Company’s 2005 Annual Report on Form 10-K as well as our other SEC filings. AES undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
2www.aes.com
AES Alternative Energy Strategic Overview
(1) Non-GAAP financial measure. See Appendix.
Contains Forward Looking Statements
AES Alternative Energy RoleAES 2008 TargetAES Goals
Financial goals
Revenue growth
Gross margin growth
Earnings per share growth
ROIC improvement (1)
Cash flow growth
Subsidiary distributions (1)
Restructuring opportunities
Growth goals
Platform expansion
Greenfield investment
Privatization/M&A
--
$3.5 Billion
13-19% per year
11%
$2.6-2.9 Billion
--
--
--
--
--
Above Average
Above Average
Above Average
Near-term Dampening
Above Average
Retain Cash for Growth
Not Applicable
Significant Opportunities
Significant Opportunities
Significant Opportunities
3www.aes.com
The Case for AES Alternative Energy
Energy demand increasingEnergy securityPublic policyTechnology
Alternative energy mission
To be a leader in:Providing energy derived from alternative sources that reduce dependence on traditional fuel and power suppliesInvesting in developing sectors and technologies, delivering high return, rapid growth, and superior shareholder value
Global platformGreenfield developmentProject structuring expertiseCulture
Why alternative energy?
Why AES?
Contains Forward Looking Statements
4www.aes.com
AES Alternative Energy Vision
Wind Generation
AES Alternative
Energy
Geothermal
Ethanol
Emerging Technology
Coal-to-Liquids
Biodiesel
Biomass
Solar
CarbonOffsets
LNG Regasification
Current Businesses
Businessesunder
Development
Contains Forward Looking Statements
5www.aes.com
0
100
200
300
400
500
600
700
2002 2006 2010 2014 2018
Energy Growth by Region
North America
Europe & Africa
Latin America
Asia
World Total Energy Consumption 2002-2020Quadrillion Btu
1.3%
1.5%
2.3%
3.5%
Annual Growth Rate
50% increase by 2020
Source: US Department of Energy.
Contains Forward Looking Statements
2020
6www.aes.com
New Investment OpportunitiesContains Forward Looking Statements
Source: CERA.
Global Energy Production 2005-2030Quadrillion Btu Non-hydroelectric renewables
Hydro
Coal
LNGNon-traditional liquids
Gas
Conventional oil
Nuclear
2005 2010 2015 2020 2025 2030
0
100
200
300
400
500
700
600
7www.aes.com
Select New Investment Opportunities: US
Geothermal
Municipal solid waste
Biomass
Solar
Wind
US Renewable Generation 2006-2030 (Excluding Hydro)Billion Kilowatthours
Contains Forward Looking Statements
2030
1.0%
4.9%
6.7%
8.0%
Annual Growth Rate
3.8%
0
50
100
150
200
250
20262021201620112006
Source: EIA.
8www.aes.comSource: CERA.
Contains Forward Looking Statements
Select Investment Opportunities: EU
European Union 2010 Renewable Electricity TargetsPercentH
unga
ry
Belg
ium
Pola
nd
Cze
ch R
epub
lic
Net
herla
nds
UK
Ger
man
y
Irela
nd
Gre
ece
Fran
ce
Italy
Den
mar
k
Spa
in
Slo
vaki
a
Finl
and
Por
tuga
l
Swed
en
Aus
tria0
20
40
60
80
100
EU Average21%
9www.aes.com
Saudi Arabia
Energy Security
Medium RiskMedium - Low RiskLow Risk
High RiskMedium - High Risk
Sources: CERA, AON, BP and EIA.(1) OPEC member.
Top 9 Oil Reserves: Proven and Potential Billion Barrels
Rank Country 2005 2015
1 Saudi Arabia (1) 12.7 13.02 Russia 9.6 11.53 Iran (1) 4.3 5.74 Iraq (1) 2.6 5.55 Canada 3.5 5.3
Rank Country 2005 2015
6 Venezuela (1) 3.0 4.57 UAE (1) 3.1 3.98 Kuwait (1) 2.9 3.79 Nigeria (1) 2.9 3.610 Kazakhstan 1.2 3.1
Contains Forward Looking Statements
Oil Production Capacity - Million Barrels per Day
USA 105
97 Venezuela
126
98
UAE
94
142Iran
157Iraq
346
Nigeria 67
Russia
Kuwait
10www.aes.com
Changing Environmental Regulations
Renewable production tax credits
RPScommitments:23 US states +
DC
US Energy Policy Act of 2005
Mercury standards
Waste disposal programs
SO2 and NOXprograms
EUETS
Particulate emissions
limits
Ethanolproduction credits
European renewable operating
credits
Global clean water initiatives
Australian GHG program
Kyoto Protocol:
163 countries
Create opportunities, especially in the areas of renewables and carbon offsets.
Contains Forward Looking Statements
11www.aes.com
0
3
6
9
12
15
18
21
Coal Gas IGCC Oil Nuclear Geo-thermal
Wind Biomass Solar
US 2005 Production CostCents/kWh
Advances in Technology
(1) Base costs include fixed and variable costs except carbon offset cost, less any production tax credit or subsidy.Sources: CERA, EIA, AWEA.
Contains Forward Looking Statements
Base costs (1)
High fuel price
Potential CO2 offset cost
Low capacity factor (wind)
Production tax credit
Development/construction contingency
12www.aes.com
0
200
400
600
800
1,000
1,200
1,400
Announced Capital Investments
Announced Capital Investments (1)
$Millions
Wind LNGClimate Change
AnnouncedInvestments(1) Includes all sources of funds.
WindPurchase of SeaWest, WEL, Innovent, California assets, KavarnaDevelopment and construction of Buffalo Gap 1 and 2
Carbon Offsets9% Equity stake in AgCert (AGC: LN)Up to $325 MM committed to AES AgriVerde (joint venture with AgCert)Forward CER purchases
LNGDevelopment costs including land acquisition
Contains Forward Looking Statements
13www.aes.com
Significant Ten Year Development Opportunities
(1) Includes all sources of funds, and is based on current assumptions, expectations and available knowledge.(2) Bio-Fuels includes Ethanol, Biodiesel and Biomass.
Contains Forward Looking Statements
Potential Capital Investment (1)
$Millions
Up to $10 billion investment potential over next 10 years
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Wind LNG ClimateChange
Bio-Fuels (2) Coal toLiquids
Solar Geo-Thermal
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