Stephen Coughlin
Executive Vice President and Chief Financial Officer at AES
Thank you, Andres, and good morning, everyone. Today, I will cover the following key topics. Our financial performance during 2022, our parent capital allocation, and our 2023 guidance and expectations through 2025. As Andres mentioned, our results for 2022 demonstrate the strength, resiliency and flexibility of our portfolio as we surpassed our guidance range of $1.55 to $1.65. Overall, our portfolio is well structured to perform in the current market environment and is well positioned for growth as AES continues to lead the global energy transition.
Turning to Slide 13. Full year 2022 adjusted EPS was $1.67 versus $1.52 in 2021, driven primarily by a significant volume of LNG sales and our increased ownership of AES Andes. These positive drivers were partially offset by unplanned outages, several one-time expenses we recorded at our US & Utilities and South America SBUs, a higher share count as a result of the 2021 accounting adjustment for our equity units, and higher parent interest, stemming from higher debt balances. The $1.67 per share also includes approximately $0.12 of losses from AES Next, primarily from our ownership in Fluence, which served as an additional drag year-over-year. We expect Fluence's results to significantly improve beginning this year as they discussed on their recent earnings call.
Turning to Slide 14. Adjusted pretax contribution, or PTC was $1.6 billion for the year, an increase of $149 million and 11% growth over 2021. I'll cover our results in more detail over the next four slides, beginning with the US & Utilities SBU on Slide 15. Lower PTC in the US was primarily driven by the recognition of one-time expenses from previously deferred purchased fuel and energy costs at our utilities, outages at Southland Energy and AES Indiana in the second quarter, and lower contributions from Clean Energy and the retirement of our coal plant in Hawaii, partially offset by higher contributions from our Southland legacy assets in the third quarter.
Higher PTC at our South America SBU was primarily driven by our increased ownership of AES Andes and higher margins at both AES Andes and AES Brasil, but partially offset by a prior year gain related to an arbitration at Alto Maipo, outages at AES Andes, and a one-time regulatory provision in Argentina. Higher PTC at our MCAC SBU reflects the benefit from a large volume of LNG sales redirected to the international market. As I'll discuss later, we do not expect an opportunity of the same scale to recur this year and anticipate lower PTC from MCAC in 2023. The LNG sales were partially offset by the full year impact from the sale of our coal plant in the Dominican Republic in 2021. Finally, in Eurasia, adjusted PTC was relatively flat year-over-year with an overall net decline driven by higher interest expense, but partially offset by higher energy prices earned at our wind plant in Bulgaria.
Now let's turn to how we allocated our capital in 2022 on Slide 19. Beginning on the left-hand side, sources reflect $1.3 billion of total discretionary cash. This includes parent free cash flow of $906 million, which was near the top end of our guidance expectations. Asset sales were below our expectations for the year, but we still expect to achieve our goal of $1 billion in proceeds by 2025. Given the delay in asset sales, we accelerated the issuance of some parent debt, which is within our long-term expectations. Moving to uses on the right-hand side, we invested more than $700 million in growth at our subsidiaries, of which approximately two-thirds were in the US. We also allocated nearly $500 million of our discretionary cash to our dividend.
Turning to our guidance and expectations, beginning on Slide 20. Today, we are initiating 2023 adjusted EPS guidance of $1.65 to $1.75. This year we expect to commission approximately 3.4 gigawatts of new renewables, which is the largest year-over-year increase in AES history. This growth further validates AES' position as a leader in renewables and highlights the outstanding efforts of our commercial and operations teams in our markets. Roughly 65% of this new renewable capacity is located in the US. More than half our total 2023 adjusted PTC will come from the US this year, as we execute on the transformation of our portfolio.
As I discussed last quarter, our US renewables projects benefit from both investment tax credits and production tax credits. Our 2023 guidance includes approximately $500 million of adjusted PTC from tax credits generated and recognized by new US renewable projects coming online this year, which is approximately double the amount from 2022. Tax credits are an important component of our renewables business earnings and cash flow and we intend to provide updates on our 2023 tax credit expectations throughout the year. While the midpoint of our 2023 guidance range is below our long-term annual growth target, we are reaffirming the 7% to 9% growth rate through 2025. 2023 growth is lower than the long-term trend for a few reasons.
First, we've taken a conservative approach to modeling renewables projects expected to come online in 2023. Our renewables construction is typically concentrated in the fourth quarter, and this year will be no exception. As a result, construction delays of only a few days could cause a project to shift from 2023 to 2024 and negatively impact this year's results. This is particularly relevant for our US renewables projects, where we recognize significant earnings from investment tax credits in the year a project is placed into service. Of the 2.1 gigawatts we plan to complete in 2023, two-thirds are expected to come online in the fourth quarter. Our guidance assumes that an additional 600 megawatts of projects, currently scheduled to come online in December, slip into 2024. If some or all of these projects are completed on schedule, this will create up to $0.10 of upside to our 2023 guidance. It's also important to note that even if there are delays next year, this is only a timing issue with no material value impact and would support higher growth in 2024 with no impact on our long-term growth rate expectations.
Second, we expect to see lower contributions from our MCAC SBU on a year-over-year basis, primarily driven by more than $200 million of adjusted PTC from LNG sales we executed in 2022. Our commercial team was able to leverage the optionality embedded in our LNG supply contracts to capitalize on high international gas prices by redirecting Henry Hub-linked LNG cargos to the international market. Although LNG sales will continue in 2023, we do not expect the same magnitude of opportunity as the spread between Henry Hub and international gas prices have compressed and more of our gas supply this year is linked to TTF international prices rather than Henry Hub.
Third, we expect to see lower margins at our Chile business this year, particularly in the first half of the year, which is a temporary impact of our Green Blend and Extend strategy to transition our customers from coal power to renewables. Several coal PPAs have or will expire this year as we proceed with our intent to fully exit coal by 2025, and others have been restructured to be priced off renewables that are still under construction. We view this as a short-term cost of decarbonizing our portfolio and do not expect any impact to our 7% to 9% long-term growth rate.
Looking ahead, our teams are working on commercial solutions to mitigate the dilution as the portion of our earnings from coal continues to decline. Based on the drivers discussed, we expect our 2023 earnings to be significantly second half weighted, with approximately three quarters recognized in the second half of the year. While we typically have had about two-thirds of our earnings in the second half, the increase in seasonality this year is driven by the significant volume of new US renewable projects coming online in the fourth quarter.
Now turning to our 2023 parent capital allocation plan on Slide 21. Beginning with approximately $2.2 billion of sources on the left-hand side, parent free cash flow for 2023 is expected to be $950 million to $1 billion, in line with our annualized growth target. In addition to parent free cash flow, we expect to generate $400 million to $600 million in asset sale proceeds this year. This includes our previously announced sale in Jordan, as well as the pending sell-down of some of our operating renewables in the US. I also want to point out that we intend to relaunch the sale process for our Mong Duong coal plant in Vietnam to better align with the approval requirements that became clear during the initial sale. The remaining portion of our 2023 asset sales is expected to come from additional sell-downs and sales supporting our decarbonization goals.
Now to the uses on the right-hand side. We plan to invest approximately $1.7 billion toward new growth of which about two-thirds will be allocated in the US to renewables and to increase our utility rate base. We expect to allocate approximately $500 million to our shareholder dividend, which reflects the previously announced 5% increase. In summary, we exceeded our financial commitments for 2022 and are confident in this year's guidance and the long-term outlook for AES. The energy transition provides tremendous investment in innovation opportunities, and I believe no company is better positioned than AES to lead this transition. As we execute on our strategy, we will continue to deliver on our financial commitments to maximize per share value for our shareholders.
With that, I'll turn the call back over to Andres.
