TransAlta Achieves Commercial Operation of 300 MW White Rock Project and Increases its US Renewables Fleet to 820 MW

Rhea-AI Summary

TransAlta announced the commercial operation of the 300 MW White Rock wind project in Oklahoma, fully contracted to Amazon Energy , increasing its US renewables fleet to 820 MW. The project marks TransAlta's largest wind project to date and includes a long-term agreement for the sale of production tax credits. The company is diversifying its revenue streams and commitment to sustainability, with further expansion in Oklahoma on the horizon.

Positive

• TransAlta successfully achieved commercial operation of the 300 MW White Rock wind project in Oklahoma.
• The project is fully contracted to Amazon Energy , a global leader in renewable energy procurement.
• TransAlta's US renewables portfolio now totals 820 MW, showcasing the company's commitment to clean energy.
• The White Rock project includes a long-term agreement for the sale of production tax credits, securing additional revenue streams.
• With 51 Vestas wind turbines, White Rock is TransAlta's largest wind project completed to date.
• The company is expanding its presence in Oklahoma with another 200 MW wind project underway, aiming to exceed 1 GW in the US.
• TransAlta's CEO highlighted the importance of the project in meeting sustainability and carbon reduction goals.
• The project is expected to contribute to an estimated average annual adjusted EBITDA range between US$53 and US$57 million.
• The weighted-average contract life of TransAlta's renewables portfolio increased to 12 years, demonstrating long-term commitment.
• Overall, the White Rock project signifies a significant milestone for TransAlta in its renewable energy expansion efforts.

Negative

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Insights

Energy Market Analyst

The completion of TransAlta's 300 MW White Rock wind project is a testament to the company's strategic expansion within the renewable energy sector. The significance of a full contracting to Amazon aligns with broader market trends where major corporations are increasingly seeking sustainable energy solutions. Notably, the 820 MW in net operating capacity that TransAlta now holds in the US is a considerable increase, positioning the company as a more substantial player in the renewables market. The operational wind facilities and the secured pricing agreement for 80% of the production tax credits (PTCs) bolster TransAlta's revenue predictability. The PTCs are a key financial mechanism in the US that encourages investment in renewable energy by providing a per-kilowatt-hour tax credit. It's fair to expect that the guaranteed cash flow from such contracts will positively influence TransAlta's financial stability and provide a buffer against market volatility. From an investment standpoint, the expected annual adjusted EBITDA range of US$53 to US$57 million, which includes PTCs sale, is a strong indicator for potential investors regarding the project's profitability.

Renewable Energy Technologist

The deployment of Vestas wind turbines in the White Rock project illustrates TransAlta's commitment to leveraging advanced technology for efficient energy production. The chosen models, Vestas V162 and V136, are part of the newer generation of high-capacity turbines designed for optimal energy capture. The technical specifications, including impressive rotor diameters and turbine heights, suggest high energy yield potential. This technology not only improves the output but may also lower maintenance costs over time due to the reliability of newer turbine models. For investors, the adoption of such technology could signify a long-term strategy to maximize returns on investment through operational efficiency and potentially lower operating costs.

Financial Analyst

The long-term contracted revenues and increased weighted-average contract life of TransAlta's renewables portfolio to 12 years is a significant metric in assessing the company's future revenue streams. A longer contract life generally correlates to stable and predictable cash flows, enhancing the attractiveness of the company to conservative investors seeking longevity in their investments. The 10-year transfer agreement for the PTCs with an AA- rated customer further solidifies the company's financial position by locking in a reliable revenue stream. This move also demonstrates prudent risk management by securing a substantial portion of PTCs with a creditworthy counterpart while leaving room for potential upside through spot transactions or future contracts for the remaining PTCs.

CALGARY, Alberta, April 24, 2024 (GLOBE NEWSWIRE) -- TransAlta Corporation (“TransAlta” or the “Company”) (TSX: TA) (NYSE: TAC) announced today that the combined 300 MW White Rock East and White Rock West wind facilities (“White Rock”), located in Caddo County, Oklahoma, have achieved commercial operation. The White Rock wind facilities are fully contracted to Amazon Energy LLC (“Amazon”) and are currently supplying clean and affordable electricity to our customer. TransAlta’s portfolio in the US now totals 820 MW in net operating renewable energy capacity.

“We are pleased to bring into service our first clean electricity project in Oklahoma, White Rock, which is our largest wind project completed to date. White Rock was made possible through our long-term customer relationship with Amazon and its commitment to power its operations with 100 per cent renewable energy. Amazon is a global leader in procurement of renewable energy to achieve sustainability and carbon reduction objectives, and we are excited to be a trusted supplier to provide clean and affordable electricity as part of Amazon’s decarbonization pledge,” said Mr. John Kousinioris, President and Chief Executive Officer of TransAlta.

“In addition, we are also pleased to announce our first long-term contract to supply production tax credits (“PTCs”) to a taxable counterparty in the US. We have secured favourable pricing on approximately 80% of the expected generation of PTCs, which will provide another stream of contracted revenue that secures long-term cash flows from White Rock and further diversifies the contracted cash flows from our renewable portfolio. We look forward to operating this facility and delivering on our commitments to our customers. As I look ahead, we are nearing completion of our other Oklahoma wind project which will add another 200 MW facility, increasing our US portfolio to more than 1 GW, another key milestone for our company,” added Mr. Kousinioris.

White Rock comprises a total of 51 Vestas wind turbines and is the first of the Company’s two wind projects in Oklahoma to achieve commercial operations. On Feb. 22, 2024, the Company entered into a 10-year transfer agreement with an AA- rated customer for the sale of approximately 80 per cent of the expected PTCs to be generated from the White Rock wind facilities. The remaining PTCs are expected to be sold through spot transactions or contracted at a later date.

White Rock Project Highlights

• Long-term contracted revenues from Amazon; an investment-grade customer;
  
  
• 10-year transfer agreement of PTCs, which are subject to an annual inflation adjustment factor, with an AA- rated third-party customer;
  
  
• 49 Vestas V162 6.0 MW and 2 Vestas V136 3.45 MW turbines that are 119 metres and 105 metres in height with total rotor diameters of 162 metres and 136 metres, respectively;
  
  
• Estimated average annual adjusted EBITDA range between US$53 and US$57 million, including third-party sales of PTCs; and
  
  
• TransAlta weighted-average contract life of renewables portfolio¹ increased to 12 years.

(1) The weighted-average remaining renewables portfolio contract life does not include our merchant renewables assets. For power generated under long-term power purchase agreements ("PPAs") and other long-term contracts, the weighted-average remaining contract life is based on long-term average gross installed capacity.

About TransAlta Corporation:

TransAlta owns, operates and develops a diverse fleet of electrical power generation assets in Canada, the United States and Australia with a focus on long-term shareholder value. TransAlta provides municipalities, medium and large industries, businesses and utility customers with clean, affordable, energy efficient and reliable power. Today, TransAlta is one of Canada’s largest producers of wind power and Alberta’s largest producer of hydro-electric power. For over 112 years, TransAlta has been a responsible operator and a proud member of the communities where we operate and where our employees work and live. TransAlta aligns its corporate goals with the UN Sustainable Development Goals and the Future-Fit Business Benchmark, which also defines sustainable goals for businesses. Our reporting on climate change management has been guided by the International Financial Reporting Standards (IFRS) S2 Climate-related Disclosures Standard and the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. TransAlta has achieved a 66 per cent reduction in GHG emissions or 21.3 million tonnes CO2e since 2015 and received an upgraded MSCI ESG rating of AA.

For more information about TransAlta, visit our web site at transalta.com.

Cautionary Statement Regarding Forward-Looking Information

This news release contains “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 Securities Litigation Reform Act of 1995 (collectively referred to herein as “forward-looking statements). In some cases, forward-looking statements can be identified by terminology such as “plans”, “expects”, “proposed”, “will”, “anticipates”, “develop”, “continue”, and similar expressions suggesting future events or future performance. In particular, this news release contains, without limitation, statements pertaining to the anticipated benefits arising from the White Rock facilities (defined above); expected generation of PTCs (defined above) to be sold through spot transactions or contracted to customers; estimated average annual adjusted EBITDA range for the White Rock facilities; expected completion date of the Corporation's other Oklahoma wind project; and the expected total renewable generation by the Corporation in the US. These forward-looking statements are not historical facts but are based on TransAlta’s belief and assumptions based on information available at the time the assumptions were made, including, but not limited to the political and regulatory environments; and the condition of the financial markets not changing significantly. These statements are subject to a number of risks and uncertainties that may cause actual results to differ materially from those contemplated by the forward-looking statements. Some of the factors that could cause such differences include: changes in market power and gas prices; supply chain disruptions impacting major maintenance and growth projects; cybersecurity breaches; negative impacts to our credit ratings; legislative or regulatory developments and their impacts; increasingly stringent environmental requirements and their impacts; increased competition; global capital markets activity (including our ability to access financing at a reasonable cost or at all); changes in prevailing interest rates, currency exchange rates and inflation levels; armed hostilities; general economic conditions in the geographic areas in which TransAlta operates; and other risks and uncertainties discussed in the TransAlta’s materials filed with the securities regulatory authorities from time to time and as also set forth in the TransAlta’s MD&A and Annual Information Form for the year ended Dec. 31, 2023. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect TransAlta’s expectations only as of the date of this news release. The purpose of the financial outlooks contained in this news release are to give the reader information about management’s current expectations and plans and readers are cautioned that such information may not be appropriate for other purposes and is given as of the date of this news release. TransAlta disclaims any intention or obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

For more information:

Investor Inquiries:	Media Inquiries:
Phone: 1-800-387-3598 in Canada and US	Phone: 1-855-255-9184
Email: investor_relations@transalta.com	Email: ta_media_relations@transalta.com

FAQ

What is the name of the 300 MW wind project recently completed by TransAlta in Oklahoma?

The 300 MW wind project completed by TransAlta in Oklahoma is called White Rock.

Which company is the White Rock project fully contracted to?

The White Rock project is fully contracted to Amazon Energy

What is the total capacity of TransAlta's US renewables fleet after the completion of the White Rock project?

TransAlta's US renewables fleet totals 820 MW after the completion of the White Rock project.

What type of agreement did TransAlta enter into regarding the sale of production tax credits from the White Rock project?

TransAlta entered into a 10-year transfer agreement with an AA- rated customer for the sale of approximately 80 per cent of the expected production tax credits from the White Rock project.

How many wind turbines are included in the White Rock project?

The White Rock project comprises a total of 51 Vestas wind turbines.

What is the estimated average annual adjusted EBITDA range expected from the White Rock project?

The estimated average annual adjusted EBITDA range from the White Rock project is between US$53 and US$57 million.

What is the weighted-average contract life of TransAlta's renewables portfolio after the completion of the White Rock project?

The weighted-average contract life of TransAlta's renewables portfolio increased to 12 years after the completion of the White Rock project.