Transalta Corporation · TSX:TA
Transalta — Investor Presentation (November 2022)
48 slides from Transalta's investor presentation, November 2022
Slide 1: Investor Presentation
Investor Presentation November 2022
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: Who We Are
Our Vision A in clean electricity – committed to a Our Strategy Our Values Customer Needs Safety Operational Excellence Innovation Who We Are People Sustainability Shareholder Value Respect Integrity A Customer-Centred 3
Slide 4: 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 4
Slide 5: Fleet Overview
Fleet Overview Wind, Solar and Storage 29 Facilities Hydro 27 Facilities Natural Gas 17 Facilities Coal 1 Facility TECHNOLOGY Wind Solar Hydro Battery Natural gas Coal Wind Under Solar Under Battery Under Construction Construction Construction 5
Slide 6: TransAlta at a Glance
TransAlta at a Glance ~6,600 MW $9.2 billion DIVERSIFIED PORTFOLIO 111 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 $725 - $750 million 2022 expected
Slide 7: Strategic Priorities to 2025
Strategic Clean Electricity Growth Plan Priorities to 2025 1 Accelerate growth into customer-centred renewables and 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 8: Accelerating Renewables Growth 2021 to 2030
Accelerating Renewables Growth 2021 to 2030 2021 2025 2 GW $3 billion $250 million Of Renewables Of Growth CapEx New Annual EBITDA Growth 2025 2030 5 GW Of Growth Pipeline 2X Increase in Renewables Fleet 8
Slide 9: Our Clean Energy Evolution
Our Clean Energy Evolution EBITDA 2020 EBITDA 2025 1 30% 25% 35% 5% 24% 11% 70% Legend Renewables Energy Marketing Natural Gas Coal EBITDA attributable to renewables will reach by end of 2025 1 Post-Centralia retirement 9
Slide 10: Sustainability Target Highlights
Sustainability Target Highlights Environmental Governance Goals Goals • End coal generation by 2021 in • Support Indigenous communities • 50% female representation on the Canada and 2025 in US Board by 2030 • Maintain excellent safety • 40% female employment across • Reduce GHG emissions by 75% perf
Slide 11: 2022 Year-to-date Performance
2022 Year-to-date Performance
Slide 12: 2022 Priorities
2022 Priorities Safety, Reliability Strategic Initiatives and Availability Achieve strong safety performance Secure 400 MW of growth Accelerate CO2 emissions reduction to 75% from 2015 levels by 2026 Complete Garden Plain and Northern Achieve strong fleet availability Goldfields Solar Progress ESG e
Slide 13: Q3 2022 At A Glance
Q3 2022 At Transaction Achievements A Glance Q3 2022 Results and Strategic Financial Position Initiatives Adjusted EBITDA1 of of advanced stage of generation EBITDA from development projects renewables and storage in Q3 2022 versus in 2020 FCF1 of or per share Added to renewables development pipelin
Slide 14: TransAlta Segmented Results
TransAlta Segmented Results 3 and 9 Months Ended September 30, 2022 Q3 2022 Q3 2021 Adjusted EBITDA1 YTD 2022 YTD 2021 245 82 Hydro 394 255 42 55 Wind and Solar 219 186 195 155 Gas 365 385 51 55 Energy Transition 67 96 53 79 Energy Marketing 120 177 (31) (24) Corporate (72) (56) 555 402 Total 1,093
Slide 15: Financial Strength
Financial Strength Adjusted EBITDA 1 ($millions) FCF 1 ($millions) 2022 2022 Updated Guidance Updated Guidance $1,380 to $1,460 $725 to $775 $1,263 $1,093 $646 $927 $562 $358 2020 2021 2022 YTD 2020 2021 2022 YTD FCF Per Share 1 Cash and available credit facility At the midpoint of updated guidance
Slide 16: 2022 Outlook Update
2022 Outlook Update Revised Outlook Previous Outlook as of Change from Previous ($ millions) Q3 2022 Q2 2022 Midpoint Adjusted EBITDA1 $1,380 to $1,460 $1,065 to $1,185 + 26% FCF1 $725 to $775 $445 to $555 + 49% Power and Gas Prices Power and Gas Prices Change from Previous Market 2022 Revised Outlo
Slide 17: Optimizing and Maintaining Competitive Advantage in Alberta
Optimizing and Maintaining Competitive Advantage in Alberta
Slide 18: 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 19: Customer Competition: Our Advantage
Customer Competition: Our Advantage Ancillary Service Leader 110–year extensive operating expertise Over 1,200 Trusted C&I MW Peaking Supplier Capacity Exceptional in-house forecasting and analytical capabilities Optimization Integrated asset optimization and operations Expertise to ensure portfolio
Slide 20: Alberta Merchant Market is Evolving
Alberta Merchant Market is Evolving • Load growth moderating • Significant supply additions • Strong customer demand for renewables and • ~8,500 MW of gas, wind and solar storage planned or under construction • Cost of carbon emissions increasing • ~2,500 MW of storage planned or • CCS/CCUS solution
Slide 21: Our Evolving Position in the Alberta Market
Our Evolving Position in the Alberta Market 2020 Reported 2025 With Growth 1 and Retirements 265 MW 10 MW 1,724 MW 1,250 MW 2,666 MW 1,967 MW 190 MW LEGEND: Renewables Battery Natural Gas Coal Well-positioned to perform in energy-only market 21 1Growth includes Windrise, Garden Plain, Riplinger, Sun
Slide 22: Alberta Electricity Portfolio
Alberta Electricity Portfolio Q3 2022 Realized Merchant Prices 11% 19% Alberta Hydro average Gas and Energy Transition 2022 Balance of Year Hedging premium in Q3 2022 average premium in Q3 2022 1 Average Volume $250 Hedge Price $230 Energy 1,850 GWh ~$95 / MWh $210 $190 Natural Gas 98%2 $3.62 / GJ $
Slide 23: Alberta Hydro Exceeds Expectations
Alberta Hydro Exceeds Expectations Hydro Adjusted EBITDA 1 ($millions) Hydro Volumes (GWh) 450 900 400 800 350 300 700 $ millions 250 600 200 500 150 400 100 300 50 0 200 2020 2021 2022 YTD Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 TA EBITDA Payment under Hydro PPA Ancillary Service Energy Rea
Slide 24: Price Outlooks
Price Outlooks Alberta Pool Price Forecast 1 ($ / MWH) Price Forecast Distributions $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 2023 2024 2025 2026 2027 2028 2029 2030 EDC Minimum EDC Maximum TransAlta’s Price Expectations Pricing headwinds in the middle part of the decade 1 Source: EDC Quarterly Fo
Slide 25: Price Volatility Expected to Increase
Price Volatility Expected to Increase Forecasted Power Price Levels ($/MWh) 100% 90% 80% 70% Number of $0 hours expected to increase 60% 50% 40% TransAlta well-positioned to 30% compete in $50+ zone 20% 10% 0% 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 $0 <$50 $50-$100 >$100 25
Slide 26: Accelerating Clean Growth Strategy
Accelerating Clean Growth Strategy
Slide 27: Our Investment Focus: Renewables and Storage
Renewables and Storage • Expand core focus of onshore wind in North America with customer-centred greenfield development • Establish position in solar targeting the United States, Canada and Australia markets through acquisition • Establish position in storage, targeting Alberta to meet future grid
Slide 28: Our Competitive Advantage: Foundations for Growth
Our Competitive Advantage: Foundations for Growth ESG Strategy Extensive North American renewables fleet Highly Local Credible Presence Developer Extensive full lifecycle development optimization and operational excellence Customer Robust balance sheet and competitive cost of Focus capital with Tran
Slide 29: Development Pipeline: United States
Development Pipeline: United States Total All Stages: 1,994 MW – 2,244 MW Project MW Fuel Location Stage COD Range White Rock West 100 Wind OK 2023 White Rock East 200 Wind OK 2023 Horizon Hill 200 Wind OK 2023 Prairie Violet 130 Wind IL 2026 Old Town 185 Wind IL 2025 Big Timber 50 Wind PA 2026 Trap
Slide 30: Development Pipeline: Canada
Development Pipeline: Canada Total All Stages: 2,017 MW – 2,867 MW COD Project MW Fuel Location Stage Range Garden Plain 130 Wind AB 2022 Tempest 100 Wind AB 2024 WaterCharger 180 Battery AB 2023 Riplinger 300 Wind AB 2025 Willow Creek 1 70 Wind AB 2024-2025 Willow Creek 2 70 Wind AB 2024-2025 Red R
Slide 31: Development Pipeline: Australia
Development Pipeline: Australia Total All Stages: 310 MW COD Project MW Fuel Location Stage Range Northern Solar and 48 WA 2022 Goldfields Solar Battery Mt Keith 132kV N/A Transmission WA 2023 Expansion SCE Capacity 42 Gas WA 2023 Expansion Goldfields Wind, Solar, 170 WA 2024 Expansions Gas South He
Slide 32: Clean Electricity Growth Plan Execution
Clean Electricity Growth Plan Execution Capital EBITDA MW Location PPA Term Customer COD ($ millions) ($ millions) North Carolina Solar 122 North Carolina US$99 11 years Duke US$9 In service Pembina and Garden Plain Wind 130 Hanna, AB $190 - $200 17 years1 investment-grade $14 - $15 Q4 2022 customer
Slide 33: Garden Plain
Project Highlights Location Hanna, Alberta Contracted 100% Size 130 MW Customer Pembina and Investment-grade Technology SiemensGamesa Term 17 years COD Q4 2022 EBITDA $14-$15 million Turbine erection and commissioning now underway Fully contracted On track to be completed on schedule Garden Plain Ou
Slide 34: Northern Goldfields
Project Highlights Location Western Australia Contracted 100% Size 48 MW Customer BP Technology Solar PV & Battery Term 16 years COD H1 2023 EBITDA AU$9-$10 million Solar panel installation is nearing completion Construction underway and on track to be completed in early 2023 Northern Goldfields Our
Slide 35: North Carolina Solar
Project Highlights Location North Carolina Contracted 100% Size 122 MW Customer Duke Energy Technology Solar PV Term 12 years COD November 5, 2021 EBITDA US$9 million Expected production of ~195,000 MWh per year 20 operating facilities across North Carolina ranging in size from 3.2 MW to 6.7 MW Long
Slide 36: 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$48-$52 million All major equipment and EPC agreements executed, detailed design and final permitting on track Provides a significant step towards 2 GW targe
Slide 37: Horizon Hill
Project Highlights Location Logan County, OK Contracted 100% Size 200 MW Customer Meta Technology Vestas Term Long-term COD H2 2023 EBITDA US$30-$33 million All major equipment and EPC agreements executed Provides a significant step towards 2 GW target Wind turbine component deliveries in-progress a
Slide 38: Mt. Keith Transmission Expansion
Project Highlights Location Western Australia Contracted 100% Term 15 years Customer BHP COD H2 2023 EBITDA AU$6-$7 million EPC agreement executed Facilitates the connection of additional generating capacity to our network On track to be completed on schedule Mt. Keith Transmission Expansion Buildin
Slide 39: Enhancing Value with Energy Marketing
Enhancing Value with Energy Marketing
Slide 40: Energy Marketing Fulfils Key Roles
Energy Marketing Fulfils Key Roles Manages commodity Provides market Generates strong risk for owned assets insights for growth segment free cash flow 40
Slide 41: A Leading Trading Platform
A Leading Trading Platform WESTERN US EASTERN US AND ONTARIO NATURAL GAS EMISSIONS Northwest, CAISO, IESO, ISO-NE, NYISO, PJM, Markets Canada and US Canada and US Southwest, SPP and ERCOT MISO, Southeast and SPP Execution for TransAlta and Third- Party Assets Real Time Trading - Term Trading Congest
Slide 42: Significant EBITDA Contribution
Significant EBITDA Contribution EBITDA Contribution ($millions) • Marketing team positioned to deliver value in various market conditions and is supported by product and market $137 diversification $113 • Recent performance is among strongest $89 delivered since start of the business • Tightly manag
Slide 43: Financial Strategy and Plan
Financial Strategy and Plan
Slide 44: Disciplined Capital Allocation
Disciplined Capital Allocation Factors Impacting Risk Premium Project Development Technology Economies of Scale Future Business Synergies Future Value Enhancement Operational Synergies Counterparty Quality • Tax Optimization • Operational and Platform Contract Tenor • Commercial Merchant Exposure •
Slide 45: Prudent Capital Allocation
Prudent Capital Allocation Deconsolidated FFO 1 5-Year Trend Improving performance provides increased allocation Amortizing Debt (6-8%) to: Preferred Dividends (8-10%) Common Dividends (10-15%) Growth Sustaining Capital (25-35%) Dividends Growth Capital Debt Reduction Share Buyback Share Buybacks (3
Slide 46: Growth Plan is Fully Funded
Growth Plan is Fully Funded Consolidated Sources and Uses 2021-2025 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 with cash flow and
Slide 47: Our Value Proposition
Diversified and Clean electricity Our resilient fleet leader with ESG focus Value Proposition 3.5+ GW Strong growth pipeline financial position
Slide 48: Questions and Answers
Questions and Answers Visit us at: www.transalta.com Investor_relations@transalta.com