Transalta Corporation · TSX:TA
Transalta — Investor Day (September 2021)
91 slides from Transalta's investor day presentation, Sep 28, 2021
Slide 1: Investor Day
Investor Day SEPTEMBER 28, 2021 1
Slide 2: Disclaimer and Forward-Looking Statements
Disclaimer and Forward-Looking Statements TransAlta Corporation (“TransAlta” or the “Company”) is not making any offer or invitation of any kind by communication of this document to the recipient and under no circumstances is it to be construed as a prospectus or an advertisement. Except where other
Slide 3: TransAlta's Executive Leadership Team
TransAlta’s Executive Leadership Team Kerry O’Reilly Wilks | EVP, Legal, Jane Fedoretz | EVP, People, Commercial and External Affairs Talent and Transformation • Joined in 2018 • Joined in 2018 John Kousinioris | PRESIDENT AND CEO • 20+ years of global experience in natural • Chair of TransAlta’s Eq
Slide 4: Agenda
Agenda 1 Strategic Overview John Kousinioris 2 Leading Decarbonization and ESG Kerry O’Reilly Wilks 3 Accelerating Clean Growth Strategy Aron Willis 4 Optimizing and Maintaining Competitive Advantage in Alberta Blain van Melle 5 Delivering Operational Excellence Michael Novelli 6 Enhancing Value wit
Slide 5: Strategic Overview
Strategic Overview John Kousinioris President and Chief Executive Officer 5
Slide 6: TransAlta at a Glance
TransAlta at a Glance ~8,000 MW $10 billion DIVERSIFIED PORTFOLIO 110 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 $440 - $515 million 2021 EXPECTED
Slide 7: Who We Are
Who Our Vision We Are A leader in clean electricity – committed to a sustainable future A Customer- OUR STRATEGY OUR VALUES Centred Clean Energy Leader Customer Needs Safety Operational Excellence Innovation People Sustainability Shareholder Value Respect Integrity
Slide 8: One Team Driving Operational and Financial Synergies
One Team Driving Operational and Financial Synergies Alberta Legacy Energy Contracted Merchant Thermal Trading and Renewables and Gas Hydro Generation Marketing Generation Expertise Dividends Growth Opportunities Competitive Growth Capital Efficient Operations Asset Valuations Diversified and reliab
Slide 9: Clean Energy Transition Ahead of Plan
Clean Energy Transition Ahead of Plan CLEAN ENERGY GROWTH CARBON TRANSITION EMISSIONS REDUCTIONS Over 400 MW of renewables and storage 1,600 MW of coal generation retired by end of 2021 CO₂ emissions reduced by 61% from 2005 added, including first utility-scale storage 1,660 MW of conversion
Slide 10: Strategic Accomplishments Led to Dramatic Evolution
Strategic Accomplishments Led to Dramatic Evolution SENIOR CORPORATE DEBT FREE CASH FLOW SHARE PRICE ($ billion) ($ million ) ($ / share) $13.05 $1.6 -31% +41%2 +26%1 $9.28 $1.1 $440-$515 $478 $379 2019 2021 Q2 2019 2021E (1) 2021 E 2019 Today 8% annual dividend increase since 2019 10 1Midpoint of 2
Slide 11: The Global Race to Decarbonize is On
The Global Race to Decarbonize is On SIGNIFICANT INVESTMENT REQUIRED TO MEET THE CHALLENGE Global efforts to decarbonize are $0.8 trillion – $1.8 trillion per year accelerating at a rapid pace 2.5x to 6x Strong political support gaining momentum with explicit net zero goals Technology cost of renewa
Slide 12: Canada's Emissions Challenge
Canada’s Emissions Challenge Ambitious • Commitment to reduce GHG emissions 40 – 45% below 2005 levels by 2030 Canadian • GHG emissions down only 1% between 2005 and 2019 Targets • Only nine years to achieve significant energy and economic transition • Escalating carbon price to $170 / tonne by 2030
Slide 13: Alberta's Gap to Net Zero Generation is Significant
Alberta’s Gap to Net Zero Generation is Significant CURRENT ELECTRICITY EMISSIONS PATHWAY IN ALBERTA 2030 ELECTRICITY EMISSIONS BY SOURCE Electricity Historic Emissions 20,000,000 60 Projected Emissions (Internal Forecast) 18,000,000 Coal-to-Gas 50 Canada Healthy Environment, 16,000,000 Healthy Econ
Slide 14: Alberta Merchant Market is Evolving
Alberta Merchant Market is Evolving • Load growth moderating • Significant supply additions • Strong customer demand for renewables and storage • ~8,500 MW of gas, wind and solar planned • Cost of carbon emissions increasing or under construction • CCS/CCUS solutions costly and uncertain • ~2,500 MW
Slide 15: Alberta Thermal Fleet Decisions
Alberta Thermal Fleet Decisions CONTEXT ACTIONS Regulatory uncertainty around Clean Electricity Standard Suspend Sundance 5 Repowering (2021) and net zero aspirations Retire Keephills Unit 1 (2021) Carbon pricing and performance standard uncertainty Retire Sundance Unit 4 (2022) Mid-to-late decade p
Slide 16: Strategic Clean Electricity Growth Plan
Strategic Clean Electricity Growth Plan Priorities Accelerate growth into customer-centred renewables and to 2025 1 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 17: Accelerating Renewables Growth: 2021 to 2030
Accelerating Renewables Growth: 2021 to 2030 2021 2025 2 GW $3 billion $250 million OF RENEWABLES OF GROW TH CAPEX NEW ANNUAL EBITDA GROW TH 2025 2030 5 GW OF GROW TH PIPELINE 2X INCREASE IN RENEWABLES FLEET 17
Slide 18: Our Clean Energy Evolution
Our Clean Energy Evolution EBITDA EBITDA TODAY 2025 1 11% 5% 35% 25% 30% 70% 24% LEGEND Renewables Energy Marketing Natural Gas Coal EBITDA attributable to renewables will reach 70% by end of 2025 1Post-Centralia retirement 18
Slide 19: Our Investment Focus: 2021 to 2025
Our Investment Focus: 2021 to 2025 RENEWABLES AND STORAGE GAS GENERATION PARALLEL NEW INVESTMENTS • Expand core focus of onshore wind in • Optimize existing gas generation • Assess parallel ESG or new industry North America with customer-centred to maximize value and cash flows sectors such as water
Slide 20: Our Competitive Advantage: Foundations for Growth
Our Competitive Advantage: Foundations for Growth ESG Strategy • Extensive North American renewables fleet Local Highly Credible Presence Developer • Extensive full lifecycle development, optimization and operational excellence Customer Focus Strong Optimization • Robust balance sheet and competitiv
Slide 21: Sustainability Target Highlights
Sustainability Target Highlights ENVIRONMENTAL GOALS SOCIAL GOALS GOVERNANCE GOALS • End coal generation by 2021 in Canada • Support Indigenous communities • 50% female representation on the and 2025 in US Board by 2030 • Reduce safety incidents • 40% female employment across the • Reduce GHG emissi
Slide 22: Leader in Sustainability and ESG since 1994
Leader in Sustainability and ESG since 1994 TransAlta Corporation received a A- which is in the Leadership band. This is (…) higher than the thermal power generation sector average of B.” “ Good forward-looking long-term goals for carbon and year over year performance trends on emissions, effluents,
Slide 23: Leading Decarbonization and ESG
Leading Decarbonization and ESG Kerry O’Reilly Wilks Executive Vice President Legal, Commercial and External Affairs 23
Slide 24: Our Broad Sustainability Framework
Our Broad Sustainability Framework ENVIRONMENT W AT ER LAND W AST E SOCIAL SAF ET Y EQ UAL EDUCAT I O N I NDI G ENO US AW ARENESS T RAI NI NG GOVERNANCE REPRESENT AT I O N EQ UAL PAY ESG DI SCLO SURE 24
Slide 25: Our Emissions Reduction Initiatives to 2030
Our Emissions Reduction Initiatives to 2030 Coal Retirement Coal-to-Gas Growth in New Technology Conversions Renewables End coal generation by end of Complete 2021 in Canada and conversions of coal Grow our by end of 2025 in the plants to gas contracted wind and Grow our battery US solar generation
Slide 26: Leading Carbon Reduction Trajectory to 2030
Leading Carbon Reduction Trajectory to 2030 TRANSALTA EMISSIONS (MILLION TONNES CO₂) EMISSIONS REDUCTIONS TARGETS 1 BY 2030 41.9 TransAlta: 70% 34.8 32.2 US: 50-52% 16.4 Canada: 40-45% Australia: 26-28% 2005 2010 2015 2020 26 1All 2030 targets emissions reductions from 2005
Slide 27: Pathway to Achieve Carbon Neutrality by 2050
Pathway to Achieve Carbon Neutrality by 2050 New Long-duration Wind/Solar Battery 2021+ 2025+ Large Scale Energy Storage Hydrogen 2030+ 2030+ 27
Slide 28: Robust Carbon and Regulatory Policy Engagement
Robust Carbon and Regulatory Policy Engagement National and Local Policy Engagement Investor and • Predictable regulations and market designs Customer that enable an orderly energy transition Focus Clean, Low-cost • Maintaining competitive costs and and Reliable reliability for our customers Electri
Slide 29: Alberta and Federal Emissions Standards
Alberta and Federal Emissions Standards Electricity Sector Emissions Intensity Standards Generation Resource Alberta TIER Federal OBPS Existing Gas 0.37 t/MWh 0.37 t/MWh 0.8 t/MWh in 2019 declines straight line to Coal/Coal-to-Gas 0.37 t/MWh 0.37 t/MWh in 2030 >50MW 0.37 t/MWh in 2020 declines to Ne
Slide 30: Increasing Policy Risk to Thermal Generation
Increasing Policy Risk to Thermal Generation COAL-TO-GAS NEW COMBINED RENEWABLES CONVERSIONS CYCLE GAS Emissions Performance Standards Carbon Price Risk from Net Zero Policies Legend Low Risk Moderate Risk High Risk 30
Slide 31: Key Takeaways
High Shareholder Value in a Low Carbon Future Key Takeaways Diverse and inclusive organization with a broad set of 1 ESG metrics reducing risk and positioning us to thrive 2 Leading carbon reduction trajectory • Reduced CO₂ emissions by 61% since 2005 • Clear path to reach 70% reduction from 2005 le
Slide 32: Accelerating Clean Growth Strategy
Accelerating Clean Growth Strategy Aron Willis Executive Vice President Growth 32
Slide 33: Positioned to Accelerate our Growth
Positioned to Accelerate our Growth ~3 800 GW MW Teams established Development 2021 announced in each key pipeline in projects and geography and our core advanced-stage focused on geographies development delivery 33
Slide 34: Accelerating Our Clean Growth: Targets
Accelerating Our Clean Growth: Targets DEVELOP AND ACQUIRE NEW ASSETS GROW OUR DEVELOPMENT PIPELINE • Add new assets totaling 2 GW of capacity by 2025 • Increase the size of our development pipeline • Total capital investment of ~$3 billion to 5 GW by 2025 • Sustain pipeline at that level going forw
Slide 35: Customer Competition: Our Difference
Customer Competition: Our Difference Extensive North American Wind Platform • Experienced in delivering customer- focused power solutions across multiple Robust technologies and Growing Construction Pipeline Expertise • Full capabilities to prospect, develop, construct, acquire, operate and optimize
Slide 36: Targeted Market Diversification and Investments
Targeted Market Diversification and Investments UNITED STATES Pacific Northwest Strong RPS mandates Over 3,500 MW of baseload coal retirements by 2030 Utility resource plans calling for PJM ~5 GW of renewables by 2030 Substantial opportunity for renewables driven by very strong wind and solar resour
Slide 37: Targeted Market Diversification and Investments
Targeted Market Diversification and Investments CANADA Alberta Ontario The only open and competitive electricity market in Canada Hybrid market design consisting of both contracted assets and a Excellent wind and solar resources competitive energy market support competitive pricing High retail prici
Slide 38: Targeted Market Diversification and Investments
Targeted Market Diversification and Investments AUSTRALIA Western Australia National Electricity Market Excellent growth opportunities in A large and competitive market with the remote mining sector excellent wind and solar resources Robust demand as industry Significant transition away from coal in
Slide 39: Development Pipeline
Development Pipeline Total All Stages: 1,195 MW UNITED STATES PROJECT MW FUEL LOCATION STAGE COD RANGE Horizon Hill 200 Wind OK 2023 White Rock East 200 Wind OK 2023 White Rock West 100 Wind OK 2023 Prairie Violet 185 Wind IL 2024-2025 Big Timber 50 Wind PA 2024-2025 Wild Waters 40 Wind MN
Slide 40: Development Pipeline
Development Pipeline Total All Stages: 1,385 – 2,000 MW CANADA PROJECT MW FUEL LOCATION STAGE COD RANGE Riplinger 300 Wind AB 2024-2025 Willow Creek 1 70 Wind AB 2024 Willow Creek 2 70 Wind AB 2024 Tempest 90 Wind AB 2024 Alberta Cogen 15-30 Gas AB 2023 Ontario Cogen 20 Gas ON 2023 Water
Slide 41: Development Pipeline
Development Pipeline Total All Stages: 210 – 270 MW AUSTRALIA PROJECT MW FUEL LOCATION STAGE COD RANGE Mt Keith Capacity 25 - 50 Gas WA 2023 Additions New Mine Supply 25 Gas WA 2024 SCE North Wind 25 - 60 Wind WA 2023 Higginsville Transmission - WA 2024 Supply Line South Hedland 50 Solar WA
Slide 42: Oklahoma Advanced Development Sites
Oklahoma Advanced Development Sites White Rock White Rock Horizon Hill East West 200 MW 200 MW 100 MW 500 MW ~US 2023 Site Control total capacity $750 million Target COD across 3 high investment opportunity Permitting and quality wind sites Environmental Engineering / Geotechnical Horizon Hill Inter
Slide 43: Garden Plain
Garden Plain Project Highlights Location Hanna, Alberta Contracted 77% Size 130 MW Customer Pembina Technology Siemens Gamesa Term 18 years SG5.0-145 COD H2 2022 EBITDA $14-$18 million Construction work packages out for bid Alberta Utilities Commission permits have been secured for the wind and inte
Slide 44: Northern Goldfields Solar
Major equipment orders have been placed Northern Goldfields Solar Project Highlights Location Western Australia Contracted 100% Size 48.2 MW Customer BHP Technology Solar PV + Li-ion Battery Term 16.3 years COD H2 2023 EBITDA $8-$9 million EPC agreement executed with juwi Renewable Energy Pty Ltd Co
Slide 45: BHP Nickel West Case Study
BHP Nickel West Case Study BHP Nickel West TransAlta powers BHP TransAlta and BHP TransAlta defines need to Nickel West mines with Nickel West define team builds solve complex clean, low-cost and optimal solution and commissions challenge reliable electricity 45
Slide 46: Key Takeaways
Key 1 2 GW of new capacity by 2025 Takeaways 2 Investment of $3 billion from 2021 to 2025 3 Delivering renewable power solutions to support customer ESG objectives 4 3 GW of identified growth opportunities 5 GW pipeline by 2025 5 Teams established in core geographies 46
Slide 47: Optimizing and Maintaining Competitive Advantage in Alberta
Optimizing and Maintaining Competitive Advantage in Alberta Blain van Melle Executive Vice President Alberta Business 47
Slide 48: 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 W
Slide 49: Our Fleet Characteristics
Our Fleet Characteristics HYDRO WIND GAS CONVERSIONS BATTERY STORAGE • Low variable cost • Low variable cost • Fully converted by end of • Fast frequency response 2021 • Water is a finite, storable • Price-taker • Time-shift wind and hydro output resource • Higher variable cost • Not correlated to •
Slide 50: Alberta Evolving Market Dynamics
Alberta Evolving Market Dynamics Supply and Demand Fundamentals Carbon Policy and Pricing Evolution Corporate PPA Demand Declining Cost of Renewables Desire for Lower Carbon Emissions 50
Slide 51: Modest Demand Growth Expected
Modest Demand Growth Expected 2020 ALBERTA LOAD RECOVERY AESO LOAD GROWTH FORECAST 1 11,500 11,000 14,000 Alberta Internal Load (MW) 10,500 12,000 Load MW 10,000 10,000 9,500 8,000 6,000 9,000 4,000 8,500 2,000 8,000 - AESO 2021 Long Term Outlook Range Actual AIL AIL with 2019 GDP and Oil Production
Slide 52: Significant Supply Growth Expected
Significant Supply Growth Expected ALBERTA CAPACITY AND LOAD (MW) 30,000 25,000 20,000 Expected Renewables 15,000 Growth 2021 to 2025 10,000 ~150% 5,000 - 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Cogen Renewables Storage Imports Thermal Peak Load Large portion of load will be served by coge
Slide 53: Price Outlooks
Price Outlooks ALBERTA POOL PRICE FORECAST 1 ($ / MWH) PRICE FORECAST DISTRIBUTIONS $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 2023 2024 2025 2026 2027 2028 2029 2030 EDC Minimum EDC Maximum TransAlta’s Price Expectations Pricing headwinds in the middle part of the decade 53 1Source: EDC Quarterly
Slide 54: Intermittency Expected to Drive Increase in Volatility
Intermittency Expected to Drive Increase in Volatility JULY 2021 WIND GENERATION AND PRICE VOLATILITY 1600 Low Wind High Wind $1,200 1400 Hourly Wind Generation (MW) $1,000 1200 Hourly Price ($/MWh) $800 1000 800 $600 600 $400 400 $200 200 0 $- Hourly Wind Generation Price Renewables build-out drive
Slide 55: Price Volatility Expected to Increase
Price Volatility Expected to Increase FORECASTED POWER PRICE LEVELS ($ / MWH) 100% 90% 80% • Number of $0 hours expected 70% to increase 60% 50% 40% • TransAlta well-positioned to compete 30% in $50+ zone 20% 10% 0% 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 $0 <$50 $50-$100 >$100 55
Slide 56: Hydro and Unhedged Thermal Realized Prices in Alberta
Hydro and Unhedged Thermal Realized Prices in Alberta 2021 UNHEDGED REALIZED PRICES ($ / MWH) $140 $120 $100 28% $80 ALBERTA HYDRO AVERAGE PREMIUM $60 $40 $20 $0 14% Q1 2021 Q2 2021 ALBERTA THERMAL AVERAGE PREMIUM Spot Price Alberta Thermal Alberta Hydro 56
Slide 57: Performance Standard Change Makes CTG More Competitive
Performance Standard Change Makes CTG More Competitive MARGINAL COST UNDER EVOLVING PERFORMANCE STANDARD $90 $80 Marginal Cost ($/MWh) $70 $60 $50 $40 $30 $20 $10 $0 2022 2025 2030 Existing CCGT Converted Gas Proposed New CCGT (Unabated) Converted gas (CTG) to have lower variable costs under more st
Slide 58: Alberta Thermal Actions
Alberta Thermal Actions INVESTMENT SUNDANCE 5 SUNDANCE 4 KEEPHILLS 1 RISKS REPOWER Capital Cost Oversupply in Market COST OF CARBON CAPTURE AND STORAGE Regulatory Uncertainty 795 Asset - - 518 Competitiveness 427 CCS Cost - - 152 102 83 CCS Technology - - Vendor A Vendor B TA Estimate Capital Cost (
Slide 59: 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 1,724 MW 1,967 MW 2,666 MW 110 MW LEGEND: Renewables Battery Natural Gas Coal Well-positioned to perform in energy-only market 1Growth includes Windrise, Garden Plain, Riplinger, SunH
Slide 60: Alberta Opportunities
Alberta Opportunities Riplinger Wind Farm SunHills Solar Park Watercharger Project Type Wind Solar Battery Location Waterton Parkland County Alberta Hydro Capital Cost ~$480 M ~$115 M ~$120 M Capacity 300 MW 80 MW 100 MW / 200 MWh Status / COD Early Development / 2025 Early Development / 2023 Early
Slide 61: Customer Competition: Our Advantage
Customer Competition: Our Advantage Ancillary Service Leader • 110-year extensive operating expertise Over 1,200 Trusted MW Peaking C&I Supplier Capacity • Exceptional in-house forecasting and analytical capabilities Optimization Expertise • Integrated asset optimization and Largest Experienced oper
Slide 62: Key Takeaways
Key 1 Suspend Sundance 5 repowering Takeaways 2 Retire Sundance Unit 4 and Keephills Unit 1 3 Optimize generation portfolio 4 Advance customer-centred renewables projects 5 Advance grid reliability product opportunities 6 Assess new technologies for post-2025 deployment 62
Slide 63: Delivering Operational Excellence
Delivering Operational Excellence Mike Novelli Executive Vice President Generation 63
Slide 64: OneGeneration: Our Advantage
OneGeneration: Our Advantage Bottom-up Innovation Culture • Focused on exceeding customer expectations while supporting their ESG 110+ Year goals Operating Standardized Excellence Operations • Maximize operational efficiencies through bottom-up innovation and Operational shared services to ultimatel
Slide 65: Fleet Overview
Fleet Overview Coal 1 Facility Wind and Solar 27 Facilities Natural Gas1 15 Facilities Hydro 27 Facilities T ECHNOLOGY W I ND SO L AR HYDRO BATTERY NATURAL G AS CO AL 65 1After suspension of Sundance 5 and retirement of Keephills Unit 1 and Sundance Unit 4
Slide 66: Operational Excellence: Safety, Org Health, Diversity
Operational Excellence: Safety, Org Health, Diversity TOTAL SAFETY REPORT FREQUENCY ORGANIZATIONAL HEALTH 10,000 8.0 L E ADI NG I NDI C AT O R 2016 2020 Reports Per Employee 7.0 8,000 6.0 Total Reports Bottom Quartile Second Quartile 6,000 5.0 4.0 4,000 3.0 37 72 2.0 2,000 1.0 - - 2017 2018 2019 202
Slide 67: Operational Excellence: Where We Are Going
Operational Excellence: Where We Are Going AVAILABILITY GENERATION OM&A 94% 92% +3% $400 - 23% 90% $350 88% $300 86% $250 84% 82% $200 2017-2020 Average 2022-2026 Average 2017-2020 Average 2022-2026 Average SUSTAINING CAPEX GENERATION STAFFING LEVELS $200 1400 - 25% - 49% $150 1100 $100 800 $50 500
Slide 68: Committed to Successful Stewardship
Committed to Successful Stewardship Whitewood Mine and Wabamun Plant Mississauga Centralia Mine SunHills Mine Proven track record of delivering historical and ongoing reclamation activities with manageable annual costs 68
Slide 69: Near-Term Commercial Focus
Near-Term Commercial Focus Facilities with contracts expiring before 2025 Sarnia is our near-term re-contracting priority CUSTOMER/FACILITY CONTRACT RENEGOTIATIONS CONTRACT EXPIRATION • 4 industrial customers support this facility • 1 PPA extension signed with significant customer BHP Nickel West 20
Slide 70: Key Takeaways
Business as usual operations and turnarounds during Key 1 COVID-19 pandemic Takeaways 2 5 Coal-to-Gas conversions and cessation of mining at SunHills 3 Successful Alberta merchant transition 4 Contract extensions and integration of new assets 5 Operational excellence - sustainable improvements in al
Slide 71: Enhancing Value with Energy Marketing
Enhancing Value with Energy Marketing Todd Stack Executive Vice President, Finance and Chief Financial Officer President, TransAlta Renewables Inc. 71
Slide 72: Energy Marketing Fulfils Key Roles
Energy Marketing Fulfils Key Roles Manages commodity Provides market Generates strong risk for owned assets insights for growth segment free cash flow 72
Slide 73: A Leading Trading Platform
A Leading Trading Platform Eastern US Western US Natural Gas Emissions and Ontario FRONT OFFICE MID OFFICE BACK OFFICE trading, origination, scheduling and analysis risk, credit, trade confirms and trading compliance finance, settlements and legal 73
Slide 74: How Energy Marketing Makes Money
How Energy Marketing Makes Money EASTERN US AND WESTERN US NATURAL GAS EMISSIONS ONTARIO Northwest, CAISO, IESO, ISO-NE, Canada and US Canada and US Markets Southwest, SPP and NYISO, PJM, MISO, ERCOT Southeast and SPP Execution for TransAlta and Third-Party Assets Real Time Trading - Term Trading Co
Slide 75: Significant EBITDA Contribution
Significant EBITDA Contribution EBITDA CONTRIBUTION • Marketing team positioned to deliver value in all market conditions and supported by product and market diversification $140 • Recent performance is among strongest $89 $113 delivered since start of the business $43 $33 • Tightly managed risk pro
Slide 76: Key Takeaways
Key 1 Delivers value across the fleet Takeaways 2 Provides industry intelligence and insights in support of growth 3 Generates strong segment free cash flow 76
Slide 77: Financial Strategy and Plan
Financial Strategy and Plan Todd Stack Executive Vice President, Finance and Chief Financial Officer President, TransAlta Renewables Inc. 77
Slide 78: Positioned for Growth
Positioned for Growth FINANCIAL TRANSITION EXCEPTIONALLY WELL-POSITIONED PRUDENT CAPITAL ALLOCATION COMPLETE TO FUND ACCELERATED MAXIMIZES SHAREHOLDER RENEWABLES GROWTH VALUE • Senior debt targets achieved • Strong balance sheet • Deliver value to shareholders through growth + dividend + • Realizing
Slide 79: Financial Transformation Complete
Financial Transformation Complete SENIOR CORPORATE DEBT ($ BILLION) FCF PER SHARE Updated Guidance $1.63 - $1.91 $2.6 $1.34 $1.30 $1.28 $1.8 $1.14 $1.6 $1.3 $1.1 2017 2018 2019 2020 2021 Q2 2017 2018 2019 2020 2021 2021YTD E 8% annual dividend increase since 2019 79
Slide 80: Disciplined Capital Allocation
Disciplined Capital Allocation Factors Impacting Risk Premium Project Development Technology Economies of Scale Future Optimizations and Synergies Future Business Synergies Operational Synergies • Tax Optimization Counterparty Quality • Operational and Platform Contract Tenor • Commercial • Financin
Slide 81: Prudent Capital Allocation
Prudent Capital Allocation DECONSOLIDATED FFO 1 5-YEAR TREND Improving performance provides increased allocation to: Amortizing Debt (6-8%) Preferred Dividends (8-10%) Common Dividends (10-15%) Growth Sustaining Capital (25-35%) Dividends Growth Capital Debt Reduction Share Share Buybacks Buyback (3
Slide 82: Growth Plan is Fully Funded
Growth Plan is Fully Funded CONSOLIDATED SOURCES AND USES 2021-2025 RNW Equity & Other 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
Slide 83: Senior Debt Levels Remain Unchanged
Senior Debt Levels Remain Unchanged SENIOR CORPORATE OBLIGATIONS 1 NON-RECOURSE FINANCING STABLE CREDIT RATINGS 2020 2025 2 2020 2025 Credit Ratings S&P BB+ Brookfield Moody’s Ba1 Investment DBRS BBB (low) Asset-level Preferred Shares Preferred Shares Financing Asset-level Financing Senior Recourse
Slide 84: Key Takeaways
Key 1 Plan in place to fund $3 billion in renewables growth Takeaways 2 Maintain disciplined capital allocation and targeted investment returns 3 Balance sheet well-positioned to support growth strategy 4 Focus on growing shareholder value 84
Slide 85: Our People and Culture
Our People and Culture Jane Fedoretz Executive Vice President People, Talent and Transformation 85
Slide 86: 2021 Culture Framework
2021 Culture Framework Our Culture Goal: What we are working towards Purpose Learning Results A leader in safe low- Spark creativity and Execute our corporate cost, reliable clean power human strategy and deliver electricity – Improving potential strong results our communities Organizational Health:
Slide 87: Our People
Our People CREATING A PROFESSIONAL RETENTION PAY AND DYNAMIC, HIGH- DEVELOPMENT RECOGNITION PERFORMING AND CULTURE SUCCESSION ED&I strategy focused on Develop talent pipeline through Offer flexibility through Full-time Review market data annually to “belonging and inclusion” Career and Succession Pl
Slide 88: Closing Remarks Q&A
Closing Remarks Q&A John Kousinioris President and Chief Executive Officer 88
Slide 89: Strategic Priorities to 2025
Strategic Clean Electricity Growth Plan Priorities Accelerate growth into customer-centred renewables and to 2025 1 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 90: Our Value Proposition
Diversified and Clean power leader resilient fleet with ESG focus Our Value Proposition ~3 GW Strong growth pipeline financial position 90
Slide 91: Questions & Answers
Questions & Answers Visit us at: www.transalta.com Investor_Relations@TransAlta.com 91