President & Chief Executive Officer at AES
Good morning, everyone and thank you for joining our first quarter 2022 financial review call. I am very happy to report that we have attained an investment-grade rating for Moody's.
We are now investment-grade rated by all 3 major agencies which is an important milestone for our company and reflects a decade worth of work to transform our business. We're also reaffirming our 2022 guidance and annualized growth of 7% to 9% through 2025. Our business model continues to demonstrate its resilience and predictability even in the face of market volatility. Steve will cover our expectations for the remainder of the year in more detail, including the seasonality of our earnings profile.
Today, I will discuss our 2022 construction program and the Department of Commerce's investigation into solar panel imports, the diverse drivers of our growth, including signed renewable energy PPAs and our U.S. utility, AES Next influence and our strategic outlook for the sector, beginning with our 2022 construction program on Slide 4. We are laser-focused on ensuring timely completion of projects. As we see our ability to execute on our commitments as a key source of competitive advantage. This year, we expect to complete more than 2 gigawatts of new renewables, including over 800 megawatts of solar in the U.S.
In late March, the U.S. Department of Commerce launched an investigation into solar imports from 4 Southeast Asian countries which collectively supply approximately 80% of solar panels for the U.S. market. The Department of Commerce is expected to make a preliminary determination on this case by no later than August. The resulting uncertainty around tariff levels has led to a drop in imports and project delays across the industry. However, due to our supply chain strategy, all of the panels for our 830 megawatts of projects to be completed in 2022 in the U.S. are already in country and we do not anticipate any delays to those projects.
I'd also note that 1/3 of our 2022 renewable projects are international and the remaining 683 megawatts in the U.S. are wind and energy storage.
Moving to the diverse drivers of future growth, beginning on Slide 5. Our strategy is to provide differentiated products that allow us to work with our customers on a bilateral basis. As a result, last year, we signed a total of 5 gigawatts of PPAs for renewable energy, including more contracts with C&I customers than anyone else in the world. For full year 2022, we continue to expect to sign 4.5 to 5.5 gigawatts of renewables under long-term contracts with a roughly 50-50 split between the U.S. and international markets. We do expect PPA signings in the U.S. to be more weighted towards the second half of the year. So far this year, we have signed or been awarded 1.1 gigawatts, bringing our backlog to 10.3 gigawatts.
Despite current headwinds for the sector, such as delays in U.S. climate legislation and the supply chain issues we just discussed, we continue to see very strong demand for low-carbon energy and especially for structured products, such as our 24/7 renewable offering. In fact, as you may have seen earlier this week, we announced 2 key agreements for our structured products.
First, the expansion of our partnership with Microsoft into California, the third market where we will supply renewable energy to match the load at their data centers; and second, our agreement with Amazon, under which we will provide 675 megawatts of renewable energy to their operations in California, including AWS' data centers. With these agreements, we are helping both companies achieve their ambitious sustainability goals. As you can see on Slide 6, we believe our development pipeline of 59 gigawatts is the second largest among U.S. renewables developers. This robust pipeline provides us with the projects we need to deliver on our backlog and continue to build on our competitive position in the market.
Now turning to our regulated U.S. utility platforms, beginning on Slide 7. These businesses represent one of the key contributors to our overall 7% to 9% annual growth in earnings and cash flow as well as advancing our objective of increasing the proportion of earnings from the U.S. to 50%. In both markets, we have the lowest residential rates in the entire state which provides a runway for growth and investment while keeping affordable rates for our customers.
Moving to Slide 8. In Indiana, we're benefiting from incentives to modernize the transmission and distribution network and transitioning to greener generation. Through 2025, we will be investing $2.7 billion which we will recover through already approved rate mechanisms. Additionally, we expect to finalize our next integrated resource plan by this fall, allowing us to further transform AES Indiana's generation fuel mix.
In Ohio, we're capitalizing on FERC formula rate-based investments in the transmission network. At the same time, we are implementing our Smart Grid investment program which is recovered through an existing rate mechanism. We also have a distribution rate case pending before the Public Utilities Commission of Ohio. Later this month, we will be presenting oral arguments directly to the commission and a favorable outcome, in this case, will bolster our ability to make the new investments needed to further strengthen AES Ohio's network.
Turning to Slide 9. Through 2025, we expect to invest $4 billion to modernize our U.S. utilities. These investments translate to average annual rate base growth of 9% through 2025 which is at the high end of growth projections for U.S. utilities. We expect the earnings from these core businesses to grow in line with the rate base.
Turning to Slide 10 for an update on AES Next. We are developing and incubating new products and business platforms through AES Next. Our investments in AES next help our businesses to be more innovative and competitive and drive value for our customers and shareholders. We are proud that earlier this year, Fast Company named AES as one of the 10 most innovative energy companies in the world and the only large publicly-traded company to be included on that list.
Turning to Slide 11. The most mature initiative under AES Next today is Fluence which as of December 31, had 4.2 gigawatts of energy storage products deployed and contracted and a signed backlog of $1.9 billion. Additionally, Fluence's digital platform, Fluence IQ, recently acquired Nispera and now has a combined 15 gigawatts contracted or under management, of which more than 80% is with third-party customers.
Over the past several months, Fluence has been dealing with short-term challenges mostly stemming from COVID-19 related supply chain issues. Their management team has taken proactive steps to address these challenges, including diversifying battery suppliers signing new shipping agreements, building out their in-house supply chain team and regionalizing their manufacturing. Overall, demand for energy storage remains very robust and Fluence is well capitalized and positioned to grow as a market leader. We see a pathway for them to improve their margins and grow as the global energy transition continues to progress.
Finally, turning to our strategic outlook for the sector, beginning on Slide 12. Our goal is to be the leader in providing low carbon energy solutions while delivering annualized earnings and cash flow growth of 7% to 9% through 2025. Today, there is an unprecedented transformation of our sector underway with governments, utilities and companies working to shift to low carbon sources of power. For example, just looking at the public commitment of the RE100, a group of over 350 large corporations who have committed to 100% renewable energy, we expect our annual demand to more than double to almost 400 terawatt hours of renewable energy by 2030. Facing this immense opportunity we are taking steps to ensure our continued competitive advantage in this once in a generation transformation of our sector.
As you can see on Slide 13, this transformation is reflected in our own portfolio as we expect renewables to represent more than 3/4 of our installed capacity by the end of 2025. During that same time period, we expect our renewables business to nearly triple from 13 gigawatts to approximately 38 gigawatts and our capacity from coal to go from 7 gigawatts to 0.
With that, I will now turn the call over to our CFO, Stephen Coughlin.