President & Chief Executive Officer at AES
Good morning, everyone. And thank you for joining our first quarter 2023 financial review call. We are very pleased with our progress so far this year. And today, I will discuss our first quarter results and provide key business updates. Steve Coughlin, our CFO, will give some more detail on our financial performance and outlook.
Beginning on Slide 3. As you may have seen in our press release, we introduced new strategic business units, which better reflect the greatly simplified company that AES is today and the pillars of our future growth. We will be giving a broader strategic review at our Investor Day on Monday, including an update on our portfolio transformation and an overview of our strong growth expectations for our renewables and utility businesses.
Our first quarter 2023 adjusted earnings per share was $0.22 compared with $0.21 in 2022, which is in line with our expectations. With these results and the underlying performance we are seeing across our business, we are reaffirming our 2023 adjusted earnings per share guidance of $1.65 to $1.75, and our 7% to 9% annualized growth rate target through 2025.
Now turning to Slide 4. We continue to see strong demand for renewables both in the U.S. and internationally, including from U.S. corporate customers with operations in international markets. So far this year, we have signed PPAs for 309 megawatts of new renewables, including 154 megawatts of wind with a U.S. technology customer in Brazil. We're in advanced negotiations for several large additional projects and remain on track to meet our PPA signing target of 14 to 17 gigawatts over the next 3 years.
In the U.S., key elements of the Inflation Reduction Act or IRA are being clarified. This past month, the Department of Treasury and the IRS release detailed guidance on how clean energy projects located in energy communities can qualify for an additional 10% bonus tax credit. We estimate that approximately one-third of our 51 gigawatt pipeline of projects in the U.S. would qualify, which directly translates into a combination of higher potential returns and increased competitiveness for the projects we are developing.
We are currently awaiting treasury department guidance on certain provisions of the IRA, including requirements for the clean hydrogen production tax credit. As a reminder, at our green hydrogen project in Texas, the largest advanced green hydrogen project in the U.S., which we are developing jointly with Air Products, we plan to co-locate 1.4 gigawatts of new renewables with the electrolyzers. This means that the projects would have the lowest possible carbon emissions of any known project in the U.S. Additionally, the project is located adjacent to the site of a decommissioned coal plant, which will provide significant existing infrastructure.
All of these attributes and the fact that the energy will include hourly matching indicate that the project should qualify for the highest possible tax credit in any scenario.
Turning to Slide 5. Our backlog of projects with signed long-term contracts is now around 12 gigawatts, of which roughly half are already under construction. We continue to maintain a robust supply chain, and we continue to hit our construction milestones without delay. We expect to bring online more than 3 gigawatts of new wind, solar and battery storage this year. As we bring projects currently in the backlog online in coming years, we will nearly double our installed renewables capacity, making us one of the fastest-growing renewable companies in the world.
Turning to Slide 6. We are also happy to report a positive development at AES Ohio, which puts us on track for unprecedented growth in the business. In April, AES Ohio signed a comprehensive settlement agreement for its Electric Security Plan, or ESP4, which received broad support from residential, commercial, industrial and low income customers. The settlement included the commission staff as a signatory, and we expect to receive final approval by the end of the third quarter.
With ESP4 in place, along with our existing investment programs, we expect to more than double our rate base by the end of 2027, which would make AES Ohio one of the fastest growing utility businesses in the country, while still having the lowest tariffs in the state.
Turning to Slide 7. We also reached a major milestone towards exiting coal by the end of 2025. We agreed to terminate the PPA at the Warrior Run plant in Maryland, for which we will receive total payments of $357 million. We will retain control of the site and are exploring new uses that capitalize on its valuable location and existing infrastructure. We see this transaction is very beneficial for all parties involved.
Moving to Slide 8. We signed agreements to extend the operations of 1.4 gigawatts of gas generation at our legacy Southland units in California for 3 more years. These plans were previously scheduled to retire at the end of this year. The extensions will lock in additional upside and will help meet the state of California's grid reliability needs while supporting its efforts to transition over time to low carbon sources of electricity.
The monetization of the contract at Warrior Run and the extensions of the legacy Southland units are both good examples of how we are creating value from our existing infrastructure assets during the energy transition.
Finally, as I mentioned earlier, we will be holding an Investor Day on Monday, where we will be sharing our strategic long-term view of the company, discussing our new business segments and providing long-term growth rates through 2027 for adjusted earnings per share, adjusted EBITDA and parent free cash flow.
With that, I would like to turn the call over to our CFO, Steve Coughlin.