Transalta Corporation · TSX:TA
Transalta — Investor Presentation (May 2022)
40 slides from Transalta's investor presentation, May 13, 2022
Slide 1: Investor Presentation
Investor Presentation MAY 13, 2022 1
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 ~8,000 MW DIVERSIFIED PORTFOLIO $9.5 billion 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 $455 - $555 million 2022 EXPECTED
Slide 4: Financial Strength
Financial Strength ADJUSTED EBITDA 1 ($MILLIONS) FCF 1 ($MILLIONS) 2022 Guidance 2022 Guidance $1,065 - $1,185 $455 - $555 $562 $1,263 $1,123 $984 $927 $379 $367 $358 $266 $115 2018 2019 2020 2021 2022 YTD 2018 2019 2020 2021 2022 YTD FCF PER SHARE 1 $2.07 ~$2 Billion $1.28 $1.34 $1.30 CASH AND AVAI
Slide 5: 2022 Outlook
2022 Outlook ($millions) 2022 Target Adjusted EBITDA $1,065 - $1,185 FCF $455 - $555 Sustaining Capital(1) $150 - $170 Market 2022 Prices (Updated as at Q1) Alberta Spot $90 to $100 AECO Gas Price ($/GJ) $4.50 to $5.50 Alberta Hedging BOY 2022 Assumptions (Updated as at Q1) Hedged Production (GWh) 4
Slide 6: Who We Are
Who Our Vision We Are A leader in clean electricity – committed to a sustainable future A Customer- OUR STRATEGY OUR VALUES Centred Clean Energy Leader Customer Needs Safety Operational Excellence Innovation People Sustainability Shareholder Value Respect Integrity
Slide 7: TransAlta's Core Businesses
TransAlta’s Core Businesses MERCHANT THERMAL ENERGY MARKETING BUSINESS HYDRO GENERATION AND TRADING DEVELOPMENT Diversified and reliable generation with world-class trading and business development teams 7
Slide 8: Fleet Overview
Fleet Overview Coal 1 Facility Wind and Solar 29 Facilities Natural Gas1 15 Facilities Hydro 27 Facilities TECHNOLOGY WIND SOLAR HYDRO BATTERY NATURAL GAS COAL 8 1After suspension of Sundance 5 and retirement of Keephills Unit 1 and Sundance Unit 4
Slide 9: Clean Energy Transition Ahead of Plan
Clean Energy Transition Ahead of Plan CLEAN ENERGY GROWTH CARBON TRANSITION EMISSIONS REDUCTIONS Over 400 MW of renewables and storage 1,600 MW of coal generation retired by end of 2021 CO₂ emissions reduced by 61% from 2005 added, including first utility-scale storage 1,660 MW of conversion
Slide 10: Strategic Accomplishments Led to Dramatic Evolution
Strategic Accomplishments Led to Dramatic Evolution SENIOR CORPORATE DEBT FREE CASH FLOW 1 SHARE PRICE ($ billion) ($ million ) ($ / share) $562 +53%2 $14.19 $1.6 +48% -27% $1.1 $379 $9.28 2019 2021 2019 2021 2019 Today 8% annual dividend increase since 2019 1 Free Cash Flow is a non-IFRS measures.
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 GROWTH CAPEX NEW ANNUAL EBITDA GROWTH 2025 2030 INCREASE IN 5 GW OF GROWTH PIPELINE 2X 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 $50 500
Slide 15: Our Investment Focus: 2021 to 2025
Our Investment Focus: 2021 to 2025 RENEWABLES AND STORAGE GAS GENERATION PARALLEL NEW INVESTMENTS • Expand core focus of onshore wind in • Optimize existing gas generation • Assess parallel ESG or new industry North America with customer-centred to maximize value and cash flows sectors such as water
Slide 16: Our Competitive Advantage: Foundations for Growth
Our Competitive Advantage: Foundations for Growth ESG Strategy • Extensive North American renewables fleet Local Highly Credible Presence Developer • Extensive full lifecycle development, optimization and operational excellence Customer Focus Strong Optimization • Robust balance sheet and competitiv
Slide 17: Development Pipeline: United States
Development Pipeline Total All Stages: 1,275 MW UNITED STATES PROJECT MW FUEL LOCATION STAGE COD RANGE White Rock West 100 Wind OK 2023 White Rock East 200 Wind OK 2023 Horizon Hill 200 Wind OK 2023 Prairie Violet 130 Wind IL 2026 Old Town 185 Wind IL 2024-2025 Big Timber 50 Wind PA 2026 Other US Wi
Slide 18: Development Pipeline: Canada
Development Pipeline Total All Stages: 1,520 – 2,120 MW CANADA PROJECT MW FUEL LOCATION STAGE COD RANGE Garden Plain 130 Wind AB 2022 Tempest 100 Wind AB 2024 Riplinger 300 Wind AB 2025 Willow Creek 1 70 Wind AB 2024-2025 Willow Creek 2 70 Wind AB 2024-2025 WaterCharger 180 Battery AB 2023 SunHills
Slide 19: Development Pipeline: Australia
Development Pipeline Total All Stages: 228 MW AUSTRALIA PROJECT MW FUEL LOCATION STAGE COD RANGE Northern Solar and 48 WA 2022 Goldfields Solar Battery Mt Keith 132kV N/A Transmission WA 2023 Expansion SCE Capacity 40 Gas WA 2023 Expansion Goldfields Wind, Solar, 90 WA 2024 Expansions Gas South Hedl
Slide 20: Clean Electricity Growth Plan Execution
Clean Electricity Growth Plan Execution Capital EBITDA MW Location PPA Term Customer COD ($ millions) ($ millions) Pembina and Garden Plain Wind 130 Hanna, AB $190 - $200 17 years1 investment-grade $14 - $18 H2 2022 customer Northern Goldfields Solar 48 Western Australia AU$69 - $73 16 years BHP AU$
Slide 21: Windrise
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 Now in commercial operations All turbines commissioned and now in operation Transmission interconnection fully complete a
Slide 22: Garden Plain
Garden Plain Project Highlights Location Hanna, Alberta Contracted 100% Size 130 MW Customer Pembina and Investment -grade Technology Siemens Gamesa Term 17 years COD H2 2022 EBITDA $14-$18 million Construction activities now underway Alberta Utilities Commission permits have been secured for the wi
Slide 23: 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 24: 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 25: White Rock East and West
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$44 million On-site construction to begin in later 2022 White Rock East and White Rock West will collectively be TransAlta’s largest
Slide 26: Horizon Hill Wind
Horizon Hill Wind Project Highlights Location Logan County, OK Contracted 100% Size 200 MW Customer Meta Technology Vestas EBITDA US$27-30 million COD H2 2023 Term Long-term On-site construction to begin in Q4 2022 ~90% of project capital fixed Provides a significant step towards 2 GW target Consist
Slide 27: Mt. Keith Transmission Expansion
Mt. Keith Transmission Expansion Project Highlights Location W. Australia Contracted 100% Customer BHP EBITDA AU$6-7 million COD H2 2023 Term 15 years On-site construction underway Supports BHP’s operations Facilitates the connection of additional generating capacity to our network Building our rela
Slide 28: Alberta Business
Alberta Business MAXIMIZE shareholder returns through active management of our diversified merchant portfolio PROVIDE dynamic, cost-effective and low carbon solutions to meet customer power demand and ESG goals IDENTIFY and evaluate market and technological sources for long-term growth TECHNOLOGY WI
Slide 29: Alberta Merchant Market is Evolving
Alberta Merchant Market is Evolving • Load growth moderating • Significant supply additions • Strong customer demand for renewables and storage • ~8,500 MW of gas, wind and solar planned • Cost of carbon emissions increasing or under construction • CCS/CCUS solutions costly and uncertain • ~2,500 MW
Slide 30: Price Volatility Expected to Increase
Price Volatility Expected to Increase FORECASTED POWER PRICE LEVELS ($ / MWH) 100% 90% 80% 70% • Number of $0 hours expected to increase 60% 50% 40% • TransAlta well-positioned to compete 30% in $50+ zone 20% 10% 0% 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 $0 <$50 $50-$100 >$100 30
Slide 31: Alberta Electricity Portfolio
Alberta Electricity Portfolio Q1 2022 Realized Prices $130 20% $110 ALBERTA HYDRO AVERAGE PREMIUM IN Q1 2022 $90 Average $70 Spot Price in Quarter $50 14% $30 GAS AND ENERGY TRANSITION Hydro Gas and Energy Wind AVERAGE PREMIUM IN Q1 2022 Transition Demonstrating the value of our diversified fleet in
Slide 32: 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 33: 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 34: 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 35: 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 36: 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 37: 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 emissions
Slide 38: Strategic Priorities to 2025
Strategic Clean Electricity Growth Plan Priorities 1 Accelerate growth into customer-centred renewables and to 2025 2 storage 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 39: Our Value Proposition
Diversified and Clean power leader resilient fleet with ESG focus Our Value Proposition ~3 GW Strong growth pipeline financial position 39
Slide 40: Questions & Answers
Questions & Answers Visit us at: www.transalta.com Investor_Relations@TransAlta.com 40