Transalta Corporation · TSX:TA
Transalta — Investor Presentation (October 2022)
44 slides from Transalta's investor presentation, October 2022
Slide 1: Investor Presentation
Investor Presentation October 2022
Slide 2: Disclaimer and Forward-Looking Statements
Disclaimer and Forward-Looking Statements This presentation includes "forward-looking information" within the meaning of applicable Canadian securities laws, and "forward-looking statements" within the meaning of applicable United States securities laws, including the United States Private Securitie
Slide 3: TransAlta at a Glance
TransAlta at a Glance ~6,600 MW $9.0 billion DIVERSIFIED PORTFOLIO 111 Years 74 generating facilities in Canada, the United States and Australia ENTERPRISE VALUE GENERATION EXPERIENCE Strong balance sheet and The foundation of our capital discipline focused strategy $455 - $555 million 2022 expected
Slide 4: Financial Strength
Financial Strength Adjusted EBITDA 1 ($millions) FCF 1 ($millions) 2022 Guidance $455 - $555 2022 Guidance $1,065 - $1,185 $562 $1,263 $1,123 $984 $367 $379 $927 $358 $253 $538 2018 2019 2020 2021 2022 YTD 2018 2019 2020 2021 2022 YTD FCF Per Share 1 $2.07 $1.28 $1.34 $1.30 $0.93 Cash and available
Slide 5: 2022 Outlook
2022 Outlook ($millions) 2022 Target Adjusted EBITDA $1,065 - $1,185 FCF $455 - $555 Sustaining Capital(1) $150 - $170 Market 2022 Prices (Updated as at Q2) Alberta Spot ($/MWh) $115 - $125 AECO Gas Price ($/GJ) $6.50 - $7.50 Alberta Hedging BOY 2022 Assumptions (Updated as at Q2) Hedged Production
Slide 6: Q2 2022 At A Glance
Q2 2022 At Transaction Achievements A Glance Q2 2022 Results and Strategic Financial Position Initiatives Adjusted EBITDA1 of of growth announced in Advanced rehabilitation of Kent Oklahoma at Horizon Hill wind facility Hills and extended contracts with NB Power for Mount Keith Transmission Expansio
Slide 7: 2022 Priorities
2022 Priorities Safety, Reliability Strategic Initiatives and Availability Achieve strong safety performance Secure 400 MW of growth Accelerate CO2 emissions reduction to 75% from 2015 levels by 2026 Complete Garden Plain and Northern Achieve strong fleet availability Goldfields Solar Progress ESG e
Slide 8: Who We Are
Our Vision A in clean electricity – committed to a Our Strategy Our Values Customer Needs Safety Operational Excellence Innovation Who We Are People Sustainability Shareholder Value Respect Integrity A Customer-Centred 8
Slide 9: TransAlta's Core Businesses
TransAlta’s Core Businesses Merchant Thermal Energy Marketing Business Hydro Generation and Trading Development Diversified and reliable generation with world-class trading and business development teams 9
Slide 10: Fleet Overview
Fleet Overview Wind, Solar and Storage 29 Facilities Hydro 27 Facilities Natural Gas 17 Facilities Coal 1 Facility TECHNOLOGY Wind Solar Hydro Battery Natural gas Coal 10
Slide 11: Clean Energy Transition Ahead of Plan
Clean Energy Transition Ahead of Plan Clean Energy Emissions Growth Reductions Over 400 MW of renewables and storage 1,600 MW of coal generation retired by CO₂ emissions reduced by 61% added, including first utility-scale end of 2021 from 2015 storage 1,660 MW of conversions completed by T
Slide 12: Strategic Accomplishments Led to Dramatic Evolution
Strategic Accomplishments Transaction At A Glance Led to Dramatic Evolution Senior Corporate Debt Share Price2 ($ billion) ($/share) $562 $1.6 $12.07 $9.28 $1.1 $379 2019 2021 2019 2021 2019 Today 1 Free Cash Flow is a non-IFRS measures. Reconciliations to the nearest IFRS measures are included in t
Slide 13: The Global Race to Decarbonize is On
The Global Race to Decarbonize is On Significant required to meet the challenge Global efforts to are accelerating at a rapid pace Strong gaining higher than today momentum with explicit net zero goals 505 GW of renewables and energy storage and of per year competing with fossil fuel generation 455
Slide 14: Accelerating Renewables Growth 2021 to 2030
Accelerating Renewables Growth 2021 to 2030 2021 2025 2 GW $3 billion $250 million Of Renewables Of Growth CapEx New Annual EBITDA Growth 2025 2030 5 GW Of Growth Pipeline 2X Increase in Renewables Fleet 14
Slide 15: Our Clean Energy Evolution
Our Clean Energy Evolution EBITDA 2020 EBITDA 2025 1 30% 25% 35% 5% 24% 11% 70% Legend Renewables Energy Marketing Natural Gas Coal EBITDA attributable to renewables will reach by end of 2025 1 Post-Centralia retirement 15
Slide 16: Operational Excellence: Where We Are Going
Operational Excellence: Where We Are Going 94% $400 92% 90% $350 88% $300 86% $250 84% 82% $200 2017-2020 Average 2022-2026 Average 2017-2020 Average 2022-2026 Average $200 1400 $150 1100 $100 800 $50 500 2017-2020 Average 2022-2026 Average 2017-2020 Average 2022-2026 Average 16
Slide 17: Accelerating Clean Growth Strategy
Accelerating Clean Growth Strategy
Slide 18: Our Investment Focus
Renewables and Storage • Expand core focus of onshore wind in North America with customer-centred greenfield development • Establish position in solar targeting the United States, Canada and Australia markets through acquisition • Establish position in storage, targeting Alberta to meet future grid
Slide 19: Our Competitive Advantage: Foundations for Growth
Our Competitive Advantage: Foundations for Growth ESG Strategy Extensive North American renewables fleet Highly Local Credible Presence Developer Extensive full lifecycle development optimization and operational excellence Customer Robust balance sheet and competitive cost of Focus capital with Tran
Slide 20: Development Pipeline: United States
Development Pipeline: United States Total All Stages: 1,650 MW – 1,900 MW Project MW Fuel Location Stage COD Range White Rock West 100 Wind OK 2023 White Rock East 200 Wind OK 2023 Horizon Hill 200 Wind OK 2023 Prairie Violet 130 Wind IL 2026 Old Town 185 Wind IL 2024-2025 Big Timber 50 Wind PA 2026
Slide 21: Development Pipeline: Canada
Development Pipeline: Canada Total All Stages: 1,820 MW – 2,670 MW COD Project MW Fuel Location Stage Range Garden Plain 130 Wind AB 2022 Tempest 100 Wind AB 2024 Riplinger 300 Wind AB 2025 Willow Creek 1 70 Wind AB 2024-2025 Willow Creek 2 70 Wind AB 2024-2025 WaterCharger 180 Battery AB 2023 SunHi
Slide 22: Development Pipeline: Australia
Development Pipeline: Australia Total All Stages: 298 MW COD Project MW Fuel Location Stage Range Northern Solar and 48 WA 2022 Goldfields Solar Battery Mt Keith 132kV N/A Transmission WA 2023 Expansion SCE Capacity 40 Gas WA 2023 Expansion Goldfields Wind, Solar, 160 WA 2024 Expansions Gas South He
Slide 23: Clean Electricity Growth Plan Execution
Clean Electricity Growth Plan Execution Capital EBITDA MW Location PPA Term Customer COD ($ millions) ($ millions) North Carolina Solar 122 North Carolina US$99 11 years Duke US$9 In service Pembina and Garden Plain Wind 130 Hanna, AB $190 - $200 17 years1 investment-grade $14 - $15 H2 2022 customer
Slide 24: Windrise
Project Highlights Location Ft Macleod, Alberta Contracted 100% Size 206 MW Customer AESO Technology SiemensGamesa Term 20 years COD November 2021 EBITDA $20-$22 million All turbines commissioned and now in operation Transmission interconnection fully complete and commissioned Work successfully comp
Slide 25: Garden Plain
Project Highlights Location Hanna, Alberta Contracted 100% Size 130 MW Customer Pembina and Investment-grade Technology SiemensGamesa Term 17 years COD H2 2022 EBITDA $14-$15 million Turbine deliveries commenced in July Fully contracted On track to be completed on schedule Garden Plain Our wind faci
Slide 26: Northern Goldfields
Project Highlights Location Western Australia Contracted 100% Size 48 MW Customer BP Technology Solar PV & Battery Term 16 years COD H2 2022 EBITDA AU$9-$10 million Racking and panels have been delivered and battery is in transit to site Construction underway and on track to be completed on schedule
Slide 27: North Carolina Solar
Project Highlights Location North Carolina Contracted 100% Size 122 MW Customer Duke Energy Technology Solar PV Term 12 years COD November 5, 2021 EBITDA US$9 million Expected production of ~195,000 MWh per year 20 operating facilities across North Carolina ranging in size from 3.2 MW to 6.7 MW Long
Slide 28: White Rock East and West
Project Highlights Location Caddo County, OK Contracted 100% Size 300 MW Customer Amazon Technology Vestas Term Long-term COD H2 2023 EBITDA US$42-$46 million All major equipment and EPC agreements executed, detailed design and final permitting on track Provides a significant step towards 2 GW targe
Slide 29: Horizon Hill
Project Highlights Location Logan County, OK Contracted 100% Size 200 MW Customer Meta Technology Vestas Term Long-term COD H2 2023 EBITDA US$27-$30 million All major equipment and EPC agreements executed Provides a significant step towards 2 GW target On track to be completed on schedule Horizon Hi
Slide 30: Mt. Keith Transmission Expansion
Project Highlights Location Western Australia Contracted 100% Term 15 years Customer BHP COD H2 2023 EBITDA AU$6-$7 million EPC agreement executed Facilitates the connection of additional generating capacity to our network On track to be completed on schedule Mt. Keith Transmission Expansion Buildin
Slide 31: Optimizing and maintaining Competitive Advantage in Alberta
Optimizing and maintaining Competitive Advantage in Alberta
Slide 32: Alberta Business
Alberta Business MAXIMIZE shareholder returns through active management of our diversified merchant portfolio PROVIDE dynamic, cost-effective and low carbon solutions to meet customer power demand and ESG goals IDENTIFY and evaluate market and technological sources for long-term growth TECHNOLOGY WI
Slide 33: Alberta Merchant Market is Evolving
Alberta Merchant Market is Evolving • Load growth moderating • Significant supply additions • Strong customer demand for renewables and • ~8,500 MW of gas, wind and solar storage planned or under construction • Cost of carbon emissions increasing • ~2,500 MW of storage planned or • CCS/CCUS solution
Slide 34: Price Volatility Expected to Increase
Price Volatility Expected to Increase Forecasted Power Price Levels ($/MWh) 100% 90% 80% 70% Number of $0 hours expected to increase 60% 50% 40% TransAlta well-positioned to 30% compete in $50+ zone 20% 10% 0% 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 $0 <$50 $50-$100 >$100 34
Slide 35: Alberta Electricity Portfolio
Alberta Electricity Portfolio Q2 2022 Realized Prices $150 7% Alberta Hydro average $130 premium in Q2 2022 $110 Average $90 Spot Price in Quarter $70 $50 4% Hydro Gas and Energy Wind Gas and Energy Transition Transition average premium in Q2 2022 1 Demonstrating the value of our diversified fleet i
Slide 36: Our Evolving Position in the Alberta Market
Our Evolving Position in the Alberta Market 2020 Reported 2025 With Growth 1 and Retirements 2 265 MW 10 MW 1,250 MW 2,666 MW 1,724 MW 1,967 MW 110 MW LEGEND: Renewables Battery Natural Gas Coal Well-positioned to perform in energy-only market 36 1Growth includes Windrise, Garden Plain, Riplinger, S
Slide 37: Financial Strategy and Plan
Financial Strategy and Plan
Slide 38: Disciplined Capital Allocation
Disciplined Capital Allocation Factors Impacting Risk Premium Project Development Technology Economies of Scale Future Business Synergies Future Optimizations and Synergies Operational Synergies Counterparty Quality • Tax Optimization • Operational and Platform Contract Tenor • Commercial Merchant E
Slide 39: Prudent Capital Allocation
Prudent Capital Allocation Deconsolidated FFO 1 5-Year Trend Improving performance provides increased allocation Amortizing Debt (6-8%) to: Preferred Dividends (8-10%) Common Dividends (10-15%) Growth Sustaining Capital (25-35%) Dividends Growth Capital Debt Reduction Share Buyback Share Buybacks (3
Slide 40: Growth Plan is Fully Funded
Growth Plan is Fully Funded Consolidated Sources and Uses 2021-2025 RNW Equity & Other Return to Shareholders3 RNW Dividend Adjusted FFO 1 Amortizing Debt Growth Capital Project Financing Net Cash 2 2022 Bond Refinance 2022 Bond Maturity Sources Uses 2 GW growth plan fully funded with cash flow and
Slide 41: Sustainability Target Highlights
Sustainability Target Highlights Environmental Governance Goals Goals • End coal generation by 2021 in • Support Indigenous communities • 50% female representation on the Canada and 2025 in US Board by 2030 • Reduce safety incidents • 40% female employment across • Reduce GHG emissions by 75% the co
Slide 42: Strategic Priorities to 2025
Strategic Clean Electricity Growth Plan Priorities to 2025 1 Accelerate growth into customer-centred renewables and storage 2 Targeted approach to diversification 3 Maintain financial strength and capital allocation discipline 4 Define next generation of power solutions 5 Lead in ESG policy developm
Slide 43: Our Value Proposition
Diversified and Clean electricity Our resilient fleet leader with ESG focus Value Proposition 3+ GW Strong growth pipeline financial position
Slide 44: Questions and Answers
Questions and Answers Visit us at: www.transalta.com Investor_relations@transalta.com