Transalta Corporation · TSX:TA
Transalta — Investor Presentation (September 2024)
56 slides from Transalta's investor presentation, September 2024
Slide 1: Investor Presentation
Investor Presentation <3 —
Slide 2: Disclaimer and forward-looking statements
Disclaimer and forward-looking statements TransAlta Corporation (“TransAlta” or the “Company”) is not making any offer or competitive advantage; ability to grow the development pipeline to 2028; the domestic and international economic and political developments, including armed invitation of any kin
Slide 3: TransAlta at a glance
TransAlta at a glance 7,000 MW Diversified portfolio 79 generating facilities in Canada, $8.5 billion 113 years United States and Australia Enterprise value Generation experience Strong balance sheet and capital discipline Foundation of our ~$525 million focused strategy 2024 expected free cash flow
Slide 4: Who we are
A leader in clean electricity committed to a sustainable Who we are future and a responsible energy transition Our Strategy Our Values Customer needs Safety Operational excellence Innovation People Sustainability Shareholder value Respect Integrity Castle River, Alberta 4
Slide 5: 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 5
Slide 6: Fleet Overview
Fleet Overview Wind, Solar and Storage 36 Facilities Hydro 25 Facilities Natural Gas 17 Facilities Coal 1 Facility Technology: Wind Solar Hydro Battery Natural Gas Coal 6
Slide 7: 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 +1.8 GW of complementary and solar economic ownership of generation ret
Slide 8: Delivered exceptional results
Since our last Delivered Free Cash Flow 1 Adjusted EBITDA 1 Investor Day exceptional +29% results Free Cash Flow 1 +64% increased by $350 Million EBITDA1 increased by 2021 2023 2021 2023 $370 Million Contractedness 1,2 Emissions reductions Renewable capacity1,2 (MW) (Millions tonnes CO2) (MW) Contra
Slide 9: Electrification presents significant opportunities
Electrification presents significant opportunities 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 10: Balanced approach required for success in energy transition
Balanced approach required for success in energy transition Affordability Energy Transition Reliability Decarbonization 10
Slide 11: 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 12: Clean Electricity Growth Plan to 2028
Clean Electricity Growth Plan to 2028 Up to 1.75 GW $3.5 billion $350 million Clean electricity Growth capex New annual EBITDA 2024 2025 2028 5 GW 10 GW Development pipeline Development pipeline 12
Slide 13: Legacy sites present significant opportunities
Legacy sites present significant opportunities Alberta & Centralia Seattle Thermal Steel in the ground / speed to market Transmission Sundance Edmonton interconnection Keephills Natural gas Fibre optic access Water rights Temperate climate and Seattle existing cooling ponds Skilled workforce availab
Slide 14: Evolution of the company
Evolution of the company Growing our Capacity (MW)1 Adjusted EBITDA (%) renewable generation +67% Renewables +61% 70% 42% Growing our contracted 2023 2028 base 2023 2028 Renewables Gas Renewables Gas Energy transition Energy marketing Energy transition +90% Contracted +177% EBITDA attributable to 72
Slide 15: 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 15
Slide 16: 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 17: 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 18: 2024 performance
2024 performance Horseshoe, Alberta 18
Slide 19: Q2 2024 achievements and strategic initiatives
Q2 2024Atachievements Transaction A Glance and strategic initiatives Results and Growth and customer Strategic initiatives financial position solutions Adjusted EBITDA1 of $312 million Horizon Hill and White Rock East Advancing acquisition of 55% from renewables wind facilities completed Heartland G
Slide 20: TransAlta segmented results
TransAlta segmented results Three months ended June 30, 2024 ($millions) Adjusted EBITDA1 Q2 2024 Q2 2023 Hydro 83 147 Strong Wind and Solar 88 50 performance Gas 146 166 from Wind and Alberta Energy Transition 3 13 gas fleet Energy Marketing 30 43 Corporate (38) (32) Total 312 387 20 1 Adjusted EBI
Slide 21: Alberta electricity portfolio
Alberta electricity portfolio Q2 2024 prices $120 116% AB fleet average realized merchant and contract Asset $100 energy price over spot price optimization in Q2 2024 1 $80 activities $52 29% generated $60 AB Hydro average merchant significant energy price over spot price in Q2 2024 2 premiums $40 o
Slide 22: Strong hedge position through 2026
Strong hedge position through 2026 1,400 Robust hedge 1,200 program to Average MW per hour 1,000 protect 800 earnings and 600 cash flows in 400 low price 200 periods 0 Q3 2024 Q4 2024 2025 2026 Capacity Contract C&I and financial hedges Q3 2024 Q4 2024 Full year 2025 Full year 2026 Hedged Price ($/M
Slide 23: Alberta hydro continues to perform to expectations
Alberta hydro continues to perform to expectations Hydro adjusted EBITDA 1 ($millions) Alberta hydro fleet volumes (GWh) 160 900 140 800 Volume (GWh) 120 700 $ millions 100 600 80 500 60 400 40 300 20 200 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q2 2021 Q2 2022 Q2 2023 Q2 2024 2021 2021 2021 2021
Slide 24: 2024 outlook
2024 outlook Windrise, Alberta 24
Slide 25: 2024 guidance maintained
2024 guidance maintained ($ millions) 2024 Outlook Confident in our plan Adjusted EBITDA1 1,150 to 1,300 to deliver FCF1 450 to 600 on our 2024 FCF ($/share) 1.47 to 1.96 guidance Sustaining capital 130 to 150 25 1 Adjusted EBITDA, Free Cash Flow, and Free Cash Flow per share are non-IFRS measures,
Slide 26: 2024 share repurchase program enhancing shareholder returns
2024 share repurchase program enhancing shareholder returns $110 million Repurchased 11.8 million Balanced, common shares prudent and $150 disciplined million approach to capital allocation Delivered 74% of up to $150 million 2024 program 26
Slide 27: 2024 in-year priorities
2024 in-year priorities Windrise, Alberta 27
Slide 28: 2024 priorities
2024 priorities Safety, people and culture Financial and operational Improve leading and lagging safety Deliver adjusted EBITDA of $1.15 - $1.3 billion performance, including TRIF of 0.0 Long-term Deliver FCF of $450 - $600 million shareholder Advance leadership and talent development Execute share
Slide 29: Alberta market evolution
Alberta market evolution Big Horn, Alberta 29
Slide 30: 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 31: 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 32: 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 33: 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 34: 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 35: 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 36: Major supply shift continues
Major supply shift continues Alberta installed capacity and peak load (MW) 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 Storage
Slide 37: Prices expected to soften mid-decade with supply
Prices expected to soften mid-decade with supply Annual average power price forecast ($ per MWh) 162 149 102 47 2020 2021 2022 2023 YTD 2024 2025 2026 2027 2028 2029 2030 Actual Forecast Prices to decline before rebounding later in the decade 37
Slide 38: Intraday volatility of renewable supply
Intraday volatility of renewable supply Increasing renewable Renewable generation - maximum hourly change (MW) 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 2,
Slide 39: Wind penetration will increase volatility in price
Wind penetration will increase volatility in price September 2023 wind generation and power price volatility 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 Po
Slide 40: 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) required to meet Alberta demand and reliability Province loses 5.5 GW of capacity on Shortfall low renewable- resource days 1 40 1 Includes cogen NTG, CCGT and SCGT
Slide 41: Growth execution
Growth execution Horizon Hill, Oklahoma 41
Slide 42: Our investment focus to 2028
Our investment focus to 2028 Renewables and Responsive and flexible New technology storage generation for reliability Expand core focus of onshore wind Optimize legacy gas generation Monitor and assess new to maximize cash flow and fund technologies such as storage, Expand position in solar renewabl
Slide 43: 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 43
Slide 44: Development pipeline – United States
Development pipeline Potential development: 2,294 – 2,794 MW United States Project MW Technology State Stage FID Monument Road 152 Wind NE 2025 Swan Creek 126 Wind NE 2025 Dos Rios 242 Wind OK 2025 Old Town 185 Wind IL 2026 Cotton Belle 1 104 Solar TX 2026 Cotton Belle 2 81 Solar TX 2026 Square Top
Slide 45: Development pipeline – Canada
Development pipeline Potential development: 2,014 – 2,864 MW Canada Project MW Technology Location Stage FID On Tempest 100 Wind AB hold On WaterCharger 180 Battery AB hold On Pinnacle 1 and 2 44 Gas AB hold New Brunswick Power 10 Battery NB 2025 Battery Sunhills Solar 170 Solar AB 2026 Pumped Tent
Slide 46: Development pipeline – Australia
Development pipeline Potential Development: 494 MW Australia Project MW Technology Location Stage FID Mt. Keith West N/A Transmission Mt Keith 2025 Network Upgrade Port Boodarie Solar 50 Solar 2024 Hedland Southern Cross 120 Solar/Wind Kalgoorlie TBD Energy Transmission N/A Transmission Various 2024
Slide 47: Enhancing Value with Energy Marketing
Enhancing Value with Energy Marketing Le Nordias, Quebec 47
Slide 48: 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 49: 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 50: EBITDA contribution of over $650 million since 2019
Increasing volatility EBITDA contribution of over $650 across North American markets million since 2019 EBITDA contribution ($ 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-year average Adjusted E
Slide 51: Financial strategy and plan
Financial strategy and plan Brazeau, Alberta 51
Slide 52: Simplified capital allocation
Simplified capital allocation Since 2021 Maintained strong credit metrics Returned $160 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 53: Growth plan is well funded
Growth plan is well funded Consolidated sources and uses 2024 -2028 Growth funding 2024-2028 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 Common
Slide 54: Prudent capital management
Prudent capital management Share Valuation Credit ratings Dividend S&P BB+ $0.24 +10% CAGR $0.22 Moody’s Ba1 $0.20 DBRS BBB (low) $0.18 $0.17 $0.16 Debt/EBITDA 3.0 - 4.0x target 2019 2020 2021 2022 2023 2024 54
Slide 55: Diversified and resilient fleet, clean electricity leader
Diversified and resilient fleet Clean electricity leader High potential legacy energy campuses 5 GW growth pipeline Strong financial position Antrim, New Hampshire 55
Slide 56: Questions & Answers
Questions & Answers Visit us at: www.transalta.com Investor_relations@transalta.com 56