Transalta Corporation · TSX:TA
Transalta — Investor Presentation (January 2025)
52 slides from Transalta's investor presentation, January 2025
Slide 1: Investor Presentation
tronsakeet s Investor Presentation January 2025 L =——
Slide 2: Forward-looking statements and non-IFRS measures
Forward-looking statements and non-IFRS measures This presentation includes "forward-looking information", within the meaning of returns; realization of expected benefits from our early stage development and other uncertainties and potential events. Except as required by law, applicable Canadian sec
Slide 3: TransAlta at a glance
TransAlta at a glance ~9,000 MW Diversified portfolio 88 generating facilities in Canada, $10.5 billion 113 years United States and Australia Enterprise value1 Generation experience Strong balance sheet Foundation of our and capital discipline focused strategy ~$550 million 2024 expected free cash f
Slide 4: Highly diversified portfolio of high-quality assets
Hydro Gas Wind and solar Energy Development marketing pipeline and capabilities Highly diversified portfolio of high-quality assets Stable contracted base with Alberta merchant upside 4
Slide 5: Fleet Overview
Fleet Overview Wind, Solar and Storage 36 Facilities Hydro 25 Facilities Natural Gas 26 Facilities Coal 1 Facility Technology: Wind Solar Hydro Battery Natural Gas Coal 5
Slide 6: Strategic position strengthened since 2021
Strategic position strengthened since 2021 CO2 Progressed Clean Simplified Corporate Advanced Carbon Expanded Alberta Electricity Growth Structure Transition Diversification +800 MW of wind +1.2 GW increase in -800 MW of thermal +1.7 GW of complementary and solar economic ownership of generation ret
Slide 7: Delivered exceptional results
Delivered Free Cash Flow1,2 Adjusted EBITDA1,2 Free Cash Flow1,2 increased by exceptional +29% $350 Million results +64% Adjusted EBITDA1,2 increased by $370 Million 2021 2023 2021 2023 Contractedness1,2 increased by Contractedness1,2 Emissions reductions Renewable capacity1,2 (MW) (Millions tonnes
Slide 8: Electrification presents significant opportunities
Electrification presents significant opportunities1 CO2 Global efforts to Policy responses Corporations Significant decarbonize are are fast‐tracking and investors are investment accelerating at a the emergence of a leading by required to meet rapid pace clean electricity committing to the challenge
Slide 9: Balanced approach required for success in energy transition
Balanced approach required for success in energy transition Affordability Energy Transition Reliability Decarbonization 9
Slide 10: Strategic priorities to 2028
Strategic 1 Optimize Alberta portfolio priorities 2 Execute Clean Electricity Growth Plan to 2028 Selective expansion of flexible generation 3 and reliability assets Maintain financial strength and capital 4 allocation discipline 5 Define next generation of power solutions 6 Lead in ESG and market p
Slide 11: Our investment focus to 2028
Our investment focus to 2028 Renewables and Responsive and flexible New technology storage generation for reliability Expand position in renewables Optimize legacy thermal sites to Monitor and assess new maximize cash flow and fund technologies such as storage, Expand position in storage to meet ren
Slide 12: Growing our contracted base
Growing our contracted base 23% Of AB 1 ~5,250 MW 52% of total fleet contracted fleet capacity is contracted1 83% Of US ~1,720 MW fleet contracted 100% Of Can. 1 ~1,540 MW fleet contracted Fleet expects to be increasingly contracted over time 100% Of Aus. ~500 MW fleet contracted 12 1 Includes all a
Slide 13: Heartland acquisition provides significant upside
Heartland acquisition provides 5.4x adjusted EBITDA multiple1 significant upside at closing Gross Owned Contracted Asset Tech. Capacity Capacity Capacity (MW) (MW) ~$85-$90 million Muskeg River Cogen 85% 202 202 annual average Scotford Cogen 54% 195 195 adjusted EBITDA2 McMahon Cogen 100% 120 60 con
Slide 14: Pursuing multiple options for Centralia redevelopment
Pursuing multiple options for Centralia redevelopment Operating unit Transmission interconnection Natural gas Next generation technology potential site Skookumchuck Reservoir Water rights Temperate climate and existing cooling ponds Skilled workforce Centralia, availability Washington Renewables pot
Slide 15: TransAlta offers great locations for data centres
TransAlta offers great locations for data centres Wabamum Under 25ms latency1 Lake Area from Calgary Reliable Toronto Keephills operating units / and 41.83ms Highvale speed to market Sundance Transmission interconnection Wabamun Lake Seattle Calgary 20.56ms Boston 73.86ms Natural gas Sundance Manhat
Slide 16: Foundations for our success
Foundations for our success Optimization and trading expertise Highly credible developer Local presence Customer Focus Operational excellence Strong balance sheet Technological innovation 16
Slide 17: Our competitive advantage
Our competitive advantage Owner / operator business model Optimization and trading excellence Strong balance sheet Highly credible and Extensive wind platform capable developer Full life cycle capabilities and risk control Strong customer relationships Demonstrated ESG results 17
Slide 18: Sustainability targets
Sustainability targets Environmental goals Social goals Governance goals Net zero by 2045 Support for indigenous 50% female Board communities representation by 2030 Reduce GHG emissions by 1 75% by 2026 Reclaim mined land in Alberta 40% company-wide female and Washington State employment by 2030 Ver
Slide 19: Committed to emissions reductions
Committed to emissions reductions Combined emissions of TransAlta and Heartland2 TransAlta carbon reductions achieved to date1 (million tonnes CO2) 66% 21M 39.0 From 2015 levels Annual tonnes -75% from 2015 23.2 ~10% 0% 16.9 Of Canada’s Paris Coal-fired emissions Agreement Target in Canada 2015 2020
Slide 20: 2024 performance
2024 performance Horseshoe, Alberta 20
Slide 21: Q3 2024 achievements and strategic initiatives
Q3 2024Atachievements Transaction A Glance and strategic initiatives Results and Growth and customer Strategic initiatives financial position solutions Adjusted EBITDA1 of $325 million 41% from renewables Pursuing Centralia redevelopment Progressing Heartland Generation opportunities to closure FCF1
Slide 22: TransAlta segmented results
TransAlta segmented results Three months ended Sept. 30, 2024 ($millions) Adjusted EBITDA1 Q3 2024 Q3 2023 Hydro 89 150 Strong Wind and Solar 44 37 performance Gas 139 254 across the entire fleet Energy Transition 34 29 Energy Marketing 54 13 Corporate (35) (30) Total 325 453 22 1 Adjusted EBITDA is
Slide 23: Alberta electricity portfolio
Alberta electricity portfolio 164% Q3 2024 prices AB fleet average realized merchant and contract energy $100 price premium to average spot price in Q3 2024 1 $90 $85 Asset $80 151% optimization AB Hydro average merchant activities $60 $55 energy price premium to average spot price in Q3 2024 2 gene
Slide 24: Strong hedge position through 2026
Strong hedge position through 2026 1,400 Strong 1,200 portfolio Average MW per hour 1,000 hedge position 800 solidifies cash 600 flows into 400 2026 200 0 Q4 2024 2025 2026 Capacity Contract C&I and financial hedges Q4 20243 Full year 20253 Full year 20263 Hedged Price ($/MWh) 82 75 78 power prices
Slide 25: Hydro ancillary services provide stability
Hydro ancillary services provide stability Alberta hydro fleet volumes (GWh) 1,000 900 800 +33% Volume (GWh) 700 600 500 Ancillary volume increase year 400 over year 300 200 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Ancill
Slide 26: 2024 outlook
2024 outlook Windrise, Alberta 26
Slide 27: Tracking toward upper end of 2024 Outlook
Tracking toward upper end of 2024 Outlook ($ millions) Nine months ended 2024 Outlook Year-to-date Sept. 30, 2024 results Adjusted EBITDA1 968 1,150 to 1,300 trending FCF1 521 450 to 600 towards upper end of FCF ($/share) 1 1.72 1.47 to 1.96 guidance 27 1 Adjusted EBITDA, Free Cash Flow, and Free Ca
Slide 28: Enhanced shareholder returns with 2024 share repurchase program
Enhanced shareholder returns with 2024 share repurchase program Repurchased 13.5 million $140 million Balanced, common shares prudent and $150 disciplined Million approach Target to capital allocation Delivered 94% of up to $150 million 2024 program 28
Slide 29: 2024 in-year priorities
2024 in-year priorities Windrise, Alberta 29
Slide 30: 2024 priorities
2024 priorities Safety, people and culture Financial and operational Improve leading and lagging safety Deliver top end adjusted EBITDA1 of $1.15 - $1.3 billion performance, including TRIF of 0.0 Long-term Deliver top end FCF1 of $450 - $600 million shareholder Advance leadership and talent developm
Slide 31: Alberta market evolution
Alberta market evolution Big Horn, Alberta 31
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 Technology1:
Slide 33: Hedging and optimization increases our advantage
Hedging and optimization increases our advantage Ancillary services leader 113-year extensive operating expertise Trusted C&I Peaking supplier capacity Exceptional in-house forecasting and analytical capabilities Optimization expertise Integrated asset optimization and operations to ensure portfolio
Slide 34: Alberta regulatory change timeline
Alberta regulatory change timeline Restructured Energy Market Renewables (“REM”) industry REM design REM pause consultation and approval implementation implemented and design process Aug 2023 Feb 2024 Jul 1, 2024 2025 2026 Nov 30, 2027 Renewables Interim Interim pause ended Regulations in regulation
Slide 35: Alberta interim regulations
Alberta interim regulations July 1, 2024 to November 30, 2027 1 Icon Market power mitigation regulation 2 Icon Here Supply cushion regulation Do not expect the interim Requires the AESO to direct long lead time regulations to Creates offer limit for only gas-fired resources with offer control ≥ 5% a
Slide 36: Restructured Energy Market update
Restructured Energy Market update Icon Icon Here State of play Here TransAlta’s positioning Market requires Mandatory day-ahead market Changing energy landscape requires a long- low-cost Strategic energy bidding mechanisms term focus flexible Review of the current price ceiling and floor Market rede
Slide 37: Merchant electricity market evolution
Merchant electricity market evolution Higher average Lower average pricing pricing 2020 2025 2030 Moderate volatility Higher volatility Baseload generation Peaking generation and fleet diversity Lower carbon footprint Higher carbon footprint Optimization Hedging and optimization Grid reliability ser
Slide 38: Major supply shift continues
Major supply shift continues Alberta installed capacity and peak load (MW)1 35,000 +185% Expected supply 30,000 growth in renewables 25,000 20,000 +140% 15,000 10,000 Expected supply growth in combined 5,000 cycle gas 0 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Cogeneration Renewables Storag
Slide 39: Prices expected to soften mid-decade with supply
Prices expected to soften mid-decade with supply Annual average power price forecast ($ per MWh)1 162 134 102 63 47 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Actual Forecast Prices to rebound later in the decade 39 1 Forecast is as of and sourced from TransAlta’s 2023 Investor Day prese
Slide 40: Intraday volatility of renewable supply
Intraday volatility of renewable supply Increasing renewable Renewable generation - maximum hourly change (MW) 1 generation Increasing renewable generation will result in larger hour-to-hour changes in outputwill – challenging the reliability of the electricity system. result in larger hour-to-hour
Slide 41: Wind penetration increases volatility in price
Wind penetration increases volatility in price September 2023 wind generation and power price volatility1 900 High Low High 3,000 Supply surplus ($0/MWh) wind wind wind 800 2,500 Wind generation (MWh) Power price ($ per MWh) 700 600 2,000 500 1,500 400 300 1,000 200 500 100 0 0 Wind Generation Power
Slide 42: Thermal gas required when renewable resources are low
Thermal gas required when renewable resources are low Thermal gas capacity is Estimated thermal gas generation required (MW)1 required to meet Alberta demand and 9,640 7,815 reliability Province loses 5.5 GW of capacity on low Shortfall renewable- -6,735 -358 0 resource 1,825 -454 -268 days1 AIES Ge
Slide 43: Enhancing Value with Energy Marketing
Enhancing Value with Energy Marketing Le Nordias, Quebec 43
Slide 44: Aligning Growth and Energy Marketing
Aligning Growth and Energy Marketing Asset valuation Proprietary trading Aligned global team committed Pipeline management Market Asset optimization to accelerating interpretation value delivery of Specialty products Customer high-quality relationships portfolio through Growth Energy Marketing cross
Slide 45: Energy marketing capabilities
Energy marketing capabilities Electricity Natural Gas Emissions NWPP, CAISO, SPP, SWPP, IESO, Markets ISO-NE, NYISO, PJM, MISO, ERCOT Canada and US Canada and US Execution for TransAlta and third-party assets Diverse product Origination and knowledge base structured products provides key Real-time t
Slide 46: Adjusted EBITDA contribution of over $650 million since 2019
Increasing volatility Adjusted EBITDA1 contribution of across North American markets over $650 million since 2019 Adjusted EBITDA1 contribution ($ million) Positioned to 183 deliver value in all market conditions 166 109 103 89 Tightly managed risk profile $135 million 2019 2020 2021 2022 2023 4-yea
Slide 47: Financial strategy and plan
Financial strategy and plan Brazeau, Alberta 47
Slide 48: Simplified capital allocation
Simplified capital allocation Since 2021 Maintained strong credit metrics Returned $230 million in dividends Maintain balance sheet Dividend increased by 10% annually Fund the dividend Free Cash Deployed $1.4 billion towards the Clean Flow Electricity Growth Plan Execute on growth Invested $1.4 bill
Slide 49: Growth plan is well funded
Growth plan is well funded Consolidated sources and uses 2024-20281 Growth funding 2024-20281 6,000 5,000 Operating Debt cash flow will issued for growth fund equity 4,000 Clean Electricity requirements Growth $3.5 for growth Plan billion program $ millions 3,000 2,000 Free cash flow Heartland Commo
Slide 50: Prudent capital management
Prudent capital management Share Valuation Credit ratings Dividend S&P BB+ $0.24 +10% CAGR2 $0.22 Moody’s Ba1 $0.20 DBRS BBB (low) $0.18 $0.17 $0.16 Adjusted Net 3.0 - 4.0x Debt/Adjusted EBITDA target 2019 2020 2021 2022 2023 2024 50 1 Adjusted net debt and adjusted EBITDA are non-IFRS measures, cer
Slide 51: Diversified and resilient fleet
Diversified and resilient fleet Clean electricity leader High potential legacy energy campuses ~5 GW growth pipeline Strong financial position Antrim, New Hampshire 51
Slide 52: Questions & Answers
Questions & Answers Visit us at: www.transalta.com Investor_relations@transalta.com 52