AES Creates Alternative Energy Group; AES Plans to Invest Approximately $1 Billion over Three Years in Alternative Energy Businesses, Including Greenhouse Gas Reduction Projects.

ARLINGTON, Va. -- The AES Corporation (NYSE: AES) today announced plans to invest approximately $1 billion over the next three years to expand the company's alternative energy business and bring to market new projects and technologies to reduce or offset greenhouse gas emissions.

Through the creation of an alternative energy business group, AES said it intends to expand its existing alternative energy businesses in wind power generation, biomass and the development of liquefied natural gas (LNG) terminals and announced the following new initiatives:

--AES will invest in the commercial development of projects and technologies that directly reduce greenhouse gas emissions or create emission offsets under the Clean Development Mechanism (CDM) of the Kyoto Protocol. AES said that, since October 2005, it has already committed to approximately $100 million in investments which will generate over 17 million tonnes of carbon reduction credits through 2012.

--AES said it plans to triple its investment in its wind generation business over the next three years.

--AES has entered strategic partnerships with Los Alamos National Laboratory and XL TechGroup (AIM:XLT), to identify, evaluate and bring to market new technologies in the alternative energy area. AES's partnerships with Los Alamos and XL Tech Group - an architect and builder of high value new businesses, primarily in the ecotech, biotech and medtech fields - give AES the opportunity to develop and commercialize proprietary energy-related technologies developed by these entities.

AES said it is evaluating future investments in other sources of alternative energy such as solar power and wave technologies. The company said it is also evaluating future investments in non-electric business lines such as ethanol, bio diesel, methane capture and conversion projects, synthetic fuels and new technologies to reduce greenhouse gas emissions.

"AES is committed to meeting a developing market need for new energy resources and technologies that will lead to a secure and sustainable energy future," said AES President and Chief Executive Officer Paul Hanrahan. "With 25 years of experience in energy and a presence in virtually every region of the world, AES will play a leading role in this rapidly growing segment of the energy industry."

William Luraschi, AES Executive Vice President, Business Development, will lead AES's alternative energy group.

"Global energy consumption is expected to more than double by 2025," Luraschi said. "We believe that traditional ways of producing energy alone will not meet this demand, due to rising production and transportation costs, energy security issues and the growing recognition of environmental impacts. That leaves an enormous opportunity for alternative sources of energy to fulfill a large part of this growing demand."

AES's Existing Alternative Energy Portfolio

Wind

AES entered the wind generation business in 2004 and has invested approximately $265 million to date. AES currently operates 600 MW of wind facilities and is pursuing another 2,000 MW of wind projects in development, primarily in the US. The company said it also is currently developing wind power projects in Europe, China, India and Central and South America, with an emphasis on countries with existing AES businesses.

Climate Change

AES started its Climate Change business last year and is pursuing offset projects in the agricultural, reforestation and landfill gas and coal mine methane emission reduction sectors. The company has acquired rights to more than 17 million tonnes of certified emission reduction credits (CERs), and intends to become one of the largest producers of CERs within the next three years.

"Virtually all countries in the world have demonstrated their commitment to reducing the concentration of greenhouse gases in the atmosphere. We believe that meeting this challenge by developing projects and technologies that reduce or offset greenhouse gas emissions from existing energy sources will serve as a worthwhile and attractive opportunity for AES," Luraschi said. "AES first began investing in greenhouse gas reduction projects in the late 1980's. Today, regulations provide an economic incentive for continued investment. With our experience and global platform, AES is well positioned to play a leading role in this sector."

LNG

AES is currently developing three LNG regasification terminals to provide affordable, clean energy to the fast growing markets of New England, Mid-Atlantic and South Eastern United States. Ocean Cay, the company's proposed LNG facility in the Bahamas, has secured approvals from the Federal Energy Regulatory Commission, the State of Florida and Broward County to provide natural gas to Florida. The project is pending final approval from the Commonwealth of the Bahamas.

About AES: AES is one of the world's largest global power companies, with 2005 revenues of $11.1 billion. With operations in 25 countries on five continents, AES's generation and distribution facilities have the capacity to serve 100 million people worldwide. Our 14 regulated utilities amass annual sales of over 82,000 GWh and our 128 generation facilities have the capacity to generate over 44,000 megawatts. Our global workforce of 30,000 people is committed to operational excellence and meeting the world's growing power needs. To learn more about AES, please visit www.aes.com or contact AES media relations at [e-mail].

Safe Harbor Disclosure: This news release contains forward-looking statements within the meaning of the Securities Act of 1933 and of the Securities Exchange Act of 1934. 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 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 investments at normalized investment levels and rates of return consistent with prior experience. 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 the caption "Cautionary Statements and Risk Factors" in AES's 2005 annual report on Form 10-K. Readers are encouraged to read AES's filings to learn more about the risk factors associated with AES's business. AES undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

FACT SHEET

WIND GENERATION

Wind generation is one of the fastest growing sectors in the global power market today.

--Over the next five years, global installed wind generation capacity is expected to more than double. From 2006-2011, capacity is estimated to expand by nearly 80,000 MW worldwide, bringing the total installed wind generation capacity to over 152,000 MW.

--Once concentrated in Europe, wind generation growth today is shifting to new markets in North America and parts of Asia Pacific. By 2010, North America's growth will nearly equal that of Europe with approximately 6,000 MW added yearly.(1)

--India is now adding around 1,400 MW per year, while China is surpassing the 500 MW per year mark. Japan and Australia also contribute over 200 MW per year, to create an overall regional Asia Pacific market of over 2,500 MW.

--Other areas, such as Brazil, Egypt and Mexico, are adding large-scale 50-100 MW projects, while increasing their regulatory support for wind energy.

Source: Emerging Energy Research.

What AES is Doing

--AES entered the wind generation business in 2004 and has invested approximately $265 million to date, demonstrating its continued commitment to being a leader in alternative energy. The Company plans to triple its investment in wind generation over the next three years.

--AES currently operates 600 MW of wind facilities and is pursuing another 2,000 MW of wind projects in development, primarily in the US.

--AES has a presence in many of the countries that are expected to experience the greatest growth in wind generation--like the growing markets in North America and parts of Asia Pacific. The Company is exploring wind power projects in Europe, China, India and Central and South America, with an emphasis on countries with existing AES businesses.

--With the acquisition of SeaWest in 2005, AES gained an immediate entry point into the US wind generation market, hands on experience and a robust pipeline.

--Today, the Company has a foothold in two US markets that have 50 percent of the installed megawatts in the country: California and Texas. Buffalo Gap, AES's 120 MW wind farm in Abilene, Texas, began commercial operation in 2006. Its entire output for 15 years is already contracted for by a major utility.

AES Expertise

--AES has almost 25 years of experience originating, financing and developing large-scale construction projects all over the world. The Company's recent expansion into wind leverages these proven capabilities.

--AES's global footprint--a presence in 25 countries on five continents--gives it both flexibility and balance. The Company's global vantage point allows it to anticipate and go where the growth is in wind generation.

(1) This presumes that the Production Tax Credit (PTC) is extended through 2010 in the US and developers successfully deliver on Canadian Request for Proposals (RFPs).

FACT SHEET

CLIMATE CHANGE

Climate change represents one of the most significant challenges of the 21st Century. AES intends to take a leadership role in the burgeoning $10 billion climate change market by committing capital and bringing to market projects to help reduce and offset greenhouse gas emissions associated with global warming.

--As economies around the world continue to grow, demands for energy to power that growth are continually increasing.

--At the same time, regulations like the EU's Emission Trading System and the United Nations' Kyoto Protocol, require industrialized countries to reduce or offset their greenhouse gas emissions.

--These types of regulations will be increasingly important in the global effort to preserve the Earth's natural ecosystem. They have also created a market for new, clean technologies and carbon emission offset credits.

--To meet that market need, AES plans to invest in projects or technologies to reduce or offset emissions. The Company plans to become one of the largest producers of emissions offsets--and realize an attractive financial return in this new market.

--At today's price for CO2--approximately $33 per tonne--this represents a market size of approximately US$10 billion a year.

--Overall, taking a leadership role in this new market is good for the environment and it's good for business.

What AES is Doing

--AES has created a Climate Change and Technology Development (CC&TD) Group to focus its efforts in this area which is being led by Managing Director, Bill Lyons.

Emissions Offset Projects

--Since October 2005, AES has committed to investments of approximately $100 million that are associated with projects that will generate over 17 million tonnes of emission reduction credits through 2012.

--The Company's strategy includes developing projects in the agricultural, reforestation, landfill gas and coal mine methane emission reduction sectors. Through these projects, AES will capture greenhouse gases from the atmosphere to contribute to the solution to global climate change.

New Alternative Energy Technologies

--AES also has entered into strategic partnerships with Los Alamos National Laboratory and XL TechGroup (AIM:XLT), to identify, evaluate and bring to market new technologies in the alternative energy area. These partnerships give AES the opportunity to develop and commercialize proprietary energy-related technologies developed by these entities.

--Technologies being evaluated under these strategic relationships include alternatives to geological and terrestrial sequestration of carbon dioxide, fuel cell and other energy storage technologies, and alternative biomass opportunities.

AES Expertise

--Projects that generate emission offset credits under existing regulatory systems are required to be located in developing countries that are signatories to and qualify as candidates under the Kyoto Protocol. They also necessitate a wide range of skills and experiences unique to AES.

--AES has local expertise on a global scale. AES has a long history of doing projects in the developing world and has operational presence in 18 countries that qualify as candidates for the development of offset creation projects under the Kyoto Protocol.

--AES has operational and technical skills. The Company's project development, project management and construction skills have been finely honed over the past 25 years of AES's history in greenfield development projects.

--AES has practical experience and commitment. In the early 1990s, AES was one of the first companies to voluntarily take steps to help counter the effects of carbon dioxide emissions on global warming when it sponsored the planting of 50 million trees in Guatemala and preserved thousands of acres of rain forest in South America.

--The combination of AES's global presence, experience, and desire to be an environmentally conscientious corporate leader makes this market a perfect fit for AES.

FACT SHEET

LNG

Demand for natural gas around the world is increasing as the need for cleaner burning fuels grows. Natural gas is clean burning and emits lower levels of potentially harmful byproducts into the air than other fossil fuels.

What is LNG? Liquefied Natural Gas (LNG) is simply natural gas that is stored and transported in liquid form. Once transported, the LNG is sent to regasifiers which turn the liquid back into a gas that enters a pipeline system for distribution to customers as part of their natural gas supply.

--Demand for LNG is on the rise in the United States. While the US has been an importer of LNG since 1971, it has not been a significant energy source because of the historically abundant supply of inexpensive natural gas. That has now changed. Because of declining US gas supplies and continued increases in US demand for natural gas, the demand for LNG is quickly growing. At the same time, the total cost of producing and delivering LNG to the US is coming down.

--The result is that LNG is becoming the least expensive incremental supply of gas for the United States. That's why most industry consultants predict that LNG supply to the US will see a marked increase over the next few years. It is predicted that LNG supply to the US will increase to 15 BCF a day by 2015 and represent 19% of US gas supply (compared to only 3% currently).

Source: CERA

What AES is Doing

--AES is focusing its LNG efforts on the fast growing markets of New England, the Mid-Atlantic and South Eastern United States.

--By investing in this sector, the Company will have a hand in helping to bring down the price of gas for US customers. By increasing the supply of natural gas to the United States, prices for this fuel should come down.

--AES is also careful to ensure that its LNG terminals are located in areas that are at least one mile away from population centers, and that avoid or minimize the potential environmental and socioeconomic impact on landowners, natural resources and the environment.

--The Company also works with federal, state and local agencies to ensure compliance with standards and regulations in design, construction and operation of the facilities.

AES Expertise

--AES power development skills place it at an advantage relative to many other industry participants who do not have the operational and permitting experience that AES has.

--AES Andres - Dominican Republic AES developed, constructed, and currently owns and operates AES Andres, a one million barrel tank LNG terminal and a 310 megawatt combined-cycle power plant located in the Dominican Republic. AES Andres has been in operation since December 2003.

--AES Ocean LNG, Ltd. - The Bahamas AES has received all US and Bahamian environmental approvals related to the construction of a 900,000 MMbtu/day LNG import terminal that will be located in The Bahamas. The Company is waiting for the final approval from The Bahamas government for construction. The terminal will vaporize and transport natural gas via a 95-mile pipeline to the Florida market. Construction of the project is targeted to commence in 2006. Though it is located in The Bahamas, AES designed and permitted the facility in accordance with US codes and standards.

--In addition to these projects, the AES team is pursuing two other US LNG import terminals, both of which are in the early development stages. One of the proposed projects is an import terminal near Baltimore, Maryland on Sparrows Point. The other site is an isolated island off the coast of Boston, Massachusetts. Both of these locations are in high-demand market areas.

FACT SHEET

AES AND THE ENVIRONMENT

Since its earliest days, AES has been a leader in environmental responsibility.

--In the early 1990s, AES was one of the first companies to voluntarily take steps to help counter the effects of carbon dioxide emissions on global warming. The Company started programs to offset carbon dioxide emissions from coal-fired plants by sponsoring the planting of 50 million trees in Guatemala and by preserving thousands of acres of forestland in South America.

--In the early 1990s, AES helped pioneer coal-fired circulating fluidized bed (CFB) technology in the US, providing a cleaner way to burn coal than by conventional means. Today, AES operates five CFB plants in North America with outstanding sulfur dioxide and nitrous oxide emissions performance compared to the US average. AES Puerto Rico has one of the lowest sulfur dioxide emissions of any coal-fired plant in the US.

--In the area of biomass, AES is the leading company in biomass conversion in Hungary, generating more than a third of the nation's total renewable energy in 2004, which is the most recently available data. At AES Kilroot in Northern Ireland, the team recently completed a successful trial to convert the plant to burn a mixture of coal and biomass. With further investment in the technology, almost half of Northern Ireland's 2012 renewable target could be met from AES Kilroot alone. In California, AES has two biomass plants that have helped divert four million tons of urban and agricultural waste away from overcrowded landfills. In Chile, AES Gener's subsidiary Energia Verde S.A, has utilized biomass and woodwaste since 1993 as its primary fuel to produce and supply power and steam to industrial customers in the forestry, pulp and paper industry.

--IPL, the Company's utility in Indianapolis, Indiana, has implemented a metering program that allows homeowners and schools to reduce their electric bills by generating their own power using small-scale solar--called "Solar Photovoltaics (PV)"--wind or hydroelectric energy systems. The benefits are widespread: customers enjoy reduced electric bills while investing in renewable energy and IPL benefits from decreased demand for power on its utility system.

--Across its generation fleet, AES has invested in environmental upgrades. This year, the Company started the construction of a $46 million emission reduction project at its AES Greenidge coal-fired plant in New York, which will extend the life of the plant by more than 20 years. IPL in Indianapolis will soon complete a 10-year, $600 million multi-pollutant reduction initiative to lessen the impact of the utility's coal-fired plants on the environment while maintaining competitive rates.