Andres Gluski
President and Chief Executive Officer at AES
Good morning, everyone. And thank you for joining our second quarter financial review call. Today, I will discuss our progress to-date on a number of key strategic objectives before turning the call over to our CFO, Gustavo Pimenta to discuss our financial results in more detail. We had an excellent second quarter with a 24% increase in adjusted EPS from the second quarter of 2020 and a record 1.8 gigawatts of renewables under long-term contracts added to our backlog bringing our total to 8.5 gigawatt. We remain on track to achieve 7% to 9% average annual growth in adjusted EPS and parent-free cash flow through 2025.
I will give more color on our accomplishments while covering the following three themes shown on slide 4. One, the growth and transformation of our U.S. Utilities; two, our rapidly growing renewables business; and three, our strategic advantage from innovation. As you may recall, during our Investor Day in March, we outlined our plan to invest $2.3 billion to transform our two U.S. Utilities, AES Ohio and AES Indiana. During the second quarter we concluded key outstanding regulatory proceedings at both of our U.S. Utilities, clearing the path for investment in the latest technologies, which will enable us to deliver a higher level of service and reduce carbon emissions.
At the core of our efforts is a focus and deep understanding of the digital tools that vastly improved customer experience and enable the integration and orchestration of diverse and distributed renewable resources. Starting with AES Ohio on slide 5 where we expect to nearly double the rate base by growing 12% annually through 2025. Recently, we made a substantial headway on outstanding regulatory filings. First, the Commission approved AES Ohio stipulation allowing predictable cash flows and investment in smart grid initiatives over the next four years.
And second, AES Ohio also received approval for the FERC-regulated formulary allowing recovery of transmission investments. Now, moving on to AES Indiana on slide 6 where we're investing $1.5 billion over the next five years as part of our grid modernization program and our transition to more renewables-based generation. We recently received regulatory approval for our 195 megawatt Hardy Hills Solar Project. And we announced an agreement to acquire the Petersburg Solar Project, which includes 250 megawatts of solar and a 100 megawatt hours of energy storage. We expect to grow the rate base at AES Indiana by more than 7% annually.
With many of the key regulatory approvals behind us, we are now positioned to execute on our utility modernization and decarbonization programs, which have been years in the making. Now, turning to the second theme of renewables growth on slide 7; last year was a record-breaking year of renewable contracts for us with over 3 gigawatt signed. So far this year, we have already signed almost 3 gigawatt of contracts for wind, solar, and energy storage nearly double the amount at the same time last year. More than 90% of the new contracts are in the U.S. and we are well on our way towards achieving or exceeding our target of 4 gigawatts for 2021.
At the same time, more than 80% are with C&I customers negotiated on a bilateral basis. Our new projects will yield after-tax returns at the project level in line with our low teens average for the U.S. and mid to high teens internationally. Our progress so far this year includes our recent agreement to acquire 612 megawatts of operating wind assets in New York as shown on slide 8. New York State's supportive renewables policies, combined with the scarcity of wind projects in the Northeast provides us with several pathways for long-term attractive cash flows to support repowering by 2025. This wind acquisition complements our solar and energy storage pipeline providing us with another resource to offer diversified and differentiated products to our consumers.
Turning to slide 9, we're particularly pleased with our ability to advance new clean energy products. This year we announced the world's first ever large scale 24/7 carbon-free energy netted on an hourly basis supplying Google's Virginia data centers. We see this concept of real-time renewable generation as opposed to the purchase of offsetting renewable credits as the new highest standard in Clean Energy. We have since replicated similar structures with other large-scale customers helping them to achieve their sustainability targets while supporting our renewables growth goals or a total of 1.5 gigawatts of these Clean Energy products signed or awarded thus far this year.
We see these innovative carbon free energy products as examples of our unique advantages both in our technical and commercial ability as well as our culture of working together with customers to understand their specific needs. Turning to slide 10, with nearly 3 gigawatts of renewables and energy storage projects added this year we now have a backlog of 8.5 gigawatt including 2.5 gigawatts currently under construction. We expect to bring 1.4 gigawatts online during the remainder of 2021. The strength of our U.S. renewables growth in the rapidly expanding market will support achieving our goal of having 50% of our earnings from renewables and utilities and 50% of our earnings from the U.S. by 2025.
We also continue to aggressively grow our pipeline of early mid and late-stage development projects to support future growth. As you can see on slide 11, we now have a pipeline of 37 gigawatts, among the largest in the world. More than 60% of this pipeline is in the U.S. including 8 gigawatts in the hottest market in the country, California. Now to decarbonization on slide 12; last month, AES Andes announced that 1.1 gigawatts of coal-fired generation would be voluntarily retired as soon as January 2025 and will be replaced with 2.3 gigawatt of newly contracted renewable.
Since 2017, we have announced the sale or retirement of almost 12 gigawatts of coal-fired generation, which is among the largest programs of any American company. I am pleased to report that these exits along with our substantial renewable additions reduce our generation from coal to approximately 20% of total generation on a pro forma basis, an additional reduction of 5 percentage points since last quarter. I would like to address two key concerns that we're hearing from investors related to growth in renewables, inflationary pressures and supply chain bottlenecks. As one of the largest global renewable developers with a strong reputation we have a long history of successfully negotiating strategic supply agreements resulting in preferential access and pricing.
Furthermore, we lock-in the hardware prices when we sign the PPA sheltering us from future price fluctuations. With 90% of the equipment needed for our 8.5 gigawatt backlog already secured, we feel very comfortable in our ability to execute on our strong pipeline over the short- and medium-term. Now, turning to slide 13 and our third theme of innovation; as our entire sector continues to rapidly evolve, we increasingly find that there is a competitive advantage for those who are able to effectively incorporate new technologies and business models.
For example, we have benefited significantly from our Energy Storage business, which we started over 10 years ago and which now is one of the largest in the industry. There are important synergies between our core businesses and technology ventures. For example, this year, about half of our renewables energy PPA include an energy storage component. Last month, once again, we were awarded the highest honor in the Power and Utility sector, the Edison Award from the Edison Electric Institute for our work developing energy storage as a cost-effective alternative to new gas peaking plants.
Specifically, the award was for the AES Alamitos Battery Energy Storage System consisting of 400 megawatt hours of energy storage that can supply power to tens of thousands of homes in milliseconds. This is our seventh Edison Award overall and third U.S. Edison Award over the last decade. I would like to note that we have won many more Edison Awards than any other company in recent years. Turning to slide 14, we also continue to build on our prior success in creating technology unicorns. For example, we have previously mentioned our strategic investment in 5B, a prefabricated solar solution company that has patented technology allowing solar projects to be built in a third of the time and on half as much land while being resistant to hurricane force winds.
We continue to grow 5B's footprint across several markets including the U.S., Puerto Rico, Chile and Panama and they are now expanding into India where we are working with domestic partners to establish local manufacturing. We hope India will enable 5B to reach much greater scale, much more quickly, which combined with our leading work in robotics construction will help us lower all-in solar costs as we advance on the learning curve. Turning to slide 15, similarly, we continue to benefit from our investment in Uplight, which provide cloud-based energy efficiency solutions to more than a 110 million households and businesses through its numerous utility customers, including AES Ohio in AES Indiana.
In July, we closed the previously announced transaction with Schneider Electric and a group of investors that valued Uplight at $1.5 billion. In conclusion, we're very pleased with our progress to-date across all of our key strategic initiatives. Not only are we well-positioned to achieve all of our financial goals but we are on track to hit our transformational targets of more than 50% of our earnings from renewables and utilities and more than 50% from the U.S. while having less than 10% of our generation from coal by 2025.
I will now turn the call over to Gustavo Pimenta, our CFO.
