Transalta Corporation · TSX:TA
Transalta — Investor Presentation (January 2022)
37 slides from Transalta's investor presentation, Jan 19, 2022
Slide 1: Investor Presentation
Investor Presentation JANUARY 19, 2022 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 at a Glance
TransAlta at a Glance ~8,000 MW $9.2 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 $500 - $560 million 2021 EXPECTED
Slide 4: 2021 Financial Strength
2021 Financial Strength FCF ($MILLIONS) FCF PER SHARE Updated Updated Guidance Guidance $500 - $560 $1.85 - $2.07 $456 $1.68 $367 $379 $358 $328 $1.34 $1.30 $1.28 $1.14 2017 2018 2019 2020 2021 YTD 2017 2018 2019 2020 2021 YTD SENIOR CORPORATE DEBT ($BILLIONS) LIQUIDITY ($BILLIONS) - 58% + 35% $2.6
Slide 5: 2022 Outlook
2022 Outlook 2021 Target ($millions) 2022 Target (as at Q3 2021) Comparable EBITDA $1,065 - $1,185 $1,200 - $1,300 FCF $455 - $555 $500 - $560 Sustaining Capital(1) $150 - $170 $200 - $225 2021 Prices Market 2022 Prices (as at Q3 2021) Alberta Spot $80 to $90 $95 to $105 AECO Gas Price ($/GJ) $3.60
Slide 6: Who We Are
Who Our Vision We Are A leader in clean electricity – committed to a sustainable future A Customer- OUR STRATEGY OUR VALUES Centred Clean Energy Leader Customer Needs Safety Operational Excellence Innovation People Sustainability Shareholder Value Respect Integrity
Slide 7: TransAlta's Core Businesses
TransAlta’s Core Businesses MERCHANT THERMAL ENERGY MARKETING BUSINESS HYDRO GENERATION AND TRADING DEVELOPMENT Diversified and reliable generation with world-class trading and business development teams 7
Slide 8: Fleet Overview
Fleet Overview Coal 1 Facility Wind and Solar 29 Facilities Natural Gas1 15 Facilities Hydro 27 Facilities T ECHNOLOGY W I ND SO L AR HYDRO BATTERY NATURAL G AS CO AL 8 1After suspension of Sundance 5 and retirement of Keephills Unit 1 and Sundance Unit 4
Slide 9: Clean Energy Transition Ahead of Plan
Clean Energy Transition Ahead of Plan CLEAN ENERGY GROWTH CARBON TRANSITION EMISSIONS REDUCTIONS Over 400 MW of renewables and storage 1,600 MW of coal generation retired by end of 2021 CO₂ emissions reduced by 61% from 2005 added, including first utility-scale storage 1,660 MW of conversion
Slide 10: Strategic Accomplishments Led to Dramatic Evolution
Strategic Accomplishments Led to Dramatic Evolution SENIOR CORPORATE DEBT FREE CASH FLOW SHARE PRICE ($ billion) ($ million ) ($ / share) +41%2 $13.09 $500-$560 $1.6 +40%1 -27% $379 $9.28 $1.1 2019 2021 Q3 2019 2021 E 2019 Today 8% annual dividend increase since 2019 10 1Midpoint of 2021 guidance 2A
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: 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 12
Slide 13: 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 13
Slide 14: 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 15: 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 16: 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 17: Development Pipeline (United States)
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 18: Development Pipeline (Canada)
Development Pipeline Total All Stages: 1,465 – 2,080 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 19: Development Pipeline (Australia)
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 20: Windrise
Windrise Project Highlights Location Ft Macleod, Alberta Contracted 100% Size 206 MW Customer AESO Technology SiemensGamesa Term 20 years v4.8 - 145 COD November 2021 EBITDA $20-$22 million Now in commercial operations All turbines commissioned and now in operation Transmission interconnection fully
Slide 21: 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 activities now underway Alberta Utilities Commission permits have been secured for the wind and interc
Slide 22: Northern Goldfields
Northern Goldfields Project Highlights Location Western Australia Contracted 100% Size 48 MW Customer BHP Technology Solar PV & Battery Term 16.3 years COD H2 2022 EBITDA $8-$9 million Construction activities underway Reduces BHP’s Scope 2 emissions by up to 12% at Mount Keith and Leinster Comprised
Slide 23: North Carolina Solar
North Carolina Solar Portfolio Highlights Location North Carolina Contracted 100% Size 122 MW Customer Duke Energy Technology Solar PV Term 12 years Acquisition November 5, 2021 EBITDA US$9 million COD dates ranging from Nov. 2019 to May 2021 Acquisition cost of US$99 million Expected production of
Slide 24: White Rock East and West
White Rock East and West Project Highlights Location Caddo County, OK Contracted 100% Size 300 MW Customer PPA Executed Technology Vestas V162 6.0 - 162 Term TBA Vestas V136 3.45 - 136 COD H2 2023 EBITDA US$44 million On-site construction to begin in later 2022 White Rock East and White Rock West wi
Slide 25: Alberta Business
Alberta Business MAXIMIZE shareholder returns through active management of our diversified merchant portfolio PROVIDE dynamic, cost-effective and low carbon solutions to meet customer power demand and ESG goals IDENTIFY and evaluate market and technological sources for long-term growth TECHNOLOGY W
Slide 26: Alberta Merchant Market is Evolving
Alberta Merchant Market is Evolving • Load growth moderating • Significant supply additions • Strong customer demand for renewables and storage • ~8,500 MW of gas, wind and solar planned • Cost of carbon emissions increasing or under construction • CCS/CCUS solutions costly and uncertain • ~2,500 MW
Slide 27: Price Volatility Expected to Increase
Price Volatility Expected to Increase FORECASTED POWER PRICE LEVELS ($ / 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 >$100 27
Slide 28: Hydro and Unhedged Thermal Realized Prices in Alberta
Hydro and Unhedged Thermal Realized Prices in Alberta 2021 UNHEDGED REALIZED PRICES ($ / MWH) $140 $120 $100 23% $80 ALBERTA HYDRO AVERAGE PREMIUM $60 $40 $20 $0 14% Q1 2021 Q2 2021 Q3 2021 ALBERTA THERMAL AVERAGE PREMIUM Spot Price Alberta Thermal Alberta Hydro 28
Slide 29: 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 30: 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 31: 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 32: 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 Buyback Share Buybacks (3
Slide 33: 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 34: 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 35: 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 36: Our Value Proposition
Diversified and Clean power leader resilient fleet with ESG focus Our Value Proposition ~3 GW Strong growth pipeline financial position 36
Slide 37: Questions & Answers
Questions & Answers Visit us at: www.transalta.com Investor_Relations@TransAlta.com 37