Investor Presentation September 2018 - TransAlta Renewables › wp-content › ... · 3 Investment in TransAlta Renewables 1 Based onclosing price the Toronto Stock Exchange asof

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TransAlta Renewables Inc.

Investor Presentation

September 2018

22

This presentation may include forward-looking statements or information (collectively referred to herein as “forward-looking statements”) within the meaning of

applicable securities legislation. All forward-looking statements are based on TransAlta Renewables Inc.’s (the “Company”) beliefs as well as assumptions based

on information available at the time the assumptions were made and on management’s experience and perception of historical trends, current conditions, and

expected future developments, as well as other factors deemed appropriate in the circumstances. Forward-looking statements are not facts, but only predictions

and generally can be identified by the use of statements that include phrases such as “may”, “will”, “believe”, “expect”, “anticipate”, “intend”, “plan”, “project”,

“foresee”, “potential”, “enable”, “continue”, or other comparable terminology. These statements are not guarantees of the Company’s future performance and are

subject to risks, uncertainties, and other important factors that could cause our actual performance to be materially different from that projected. In particular, this

presentation contains forward-looking statements pertaining to, without limitation, the following: ability to realize drop-downs and third party growth opportunities;

the continued support and sponsorship of TransAlta Corporation; the EBITDA and CAFD outlook for 2018; the Kent Hills expansion, including the costs and

timing of completion; the forecasted government policies and regulations, competitiveness, customer requirements and diversified system expected to contribute

to future growth and the Company’s ability to benefit from such factors; the Company’s strategic focus and potential sources of capital; the Company’s ability to

develop and construct the identified Canadian wind and Australian solar projects and the capital costs associated with such projects, including Garden Plains

Wind, Cowley Ridge Wind Repower and Antelope Coulee Wind; and the development and construction of Brazeau Energy Storage, including the size, timing

and costs thereof.

These forward-looking statements are not historical facts but reflect current expectations concerning future plans, actions and results. These statements are

subject to a number of risks and uncertainties that could cause actual plans, actions and results to differ materially from current expectations including, but not

limited to: changes in tax, environmental, and other laws and regulations; the regulatory and political environments in the jurisdictions in which we operate;

adverse regulatory developments, including unanticipated impacts on existing generation; environmental requirements and changes in, or liabilities under, these

requirements; changes in general economic conditions including interest rates; operational risks involving our facilities, including unplanned outages at such

facilities; disruptions in the transmission and distribution of electricity; disputes with counterparties, including as it pertains to the commercial operation at South

Hedland; the effects of weather; disruptions in the source of fuels, water, or wind required to operate our facilities; risks pertaining to our relationship with

TransAlta Corporation; competitive factors in the power industry; operational breakdowns, failures, or other disruptions; changes in economic and market

conditions; potential delay in construction and commissioning of the Kent Hills expansion; and other risks and uncertainties discussed in the Company's

materials filed with the Canadian securities regulatory authorities from time to time and as also set forth in the Company’s MD&A and the Annual Information

Form for the year ended December 31, 2017. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect the

Company's expectations only as of the date of this presentation. The purpose of the financial outlooks contained herein is 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. The Company

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.

The Company evaluates its performance and the performance of our business segments using a variety of measures. Certain of the financial measures

discussed in this presentation are not defined under International Financial Reporting Standards (IFRS) and, therefore, should not be considered in isolation or

as an alternative to IFRS measures when assessing the financial performance or liquidity of the Company. These non-IFRS measures may not be comparable to

similar measures presented by other issuers and should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS. Refer

to the Company’s MD&A, which is available on the Company’s website or under the Company’s profile on www.sedar.com for further discussion of these Items,

including, where applicable, reconciliations to measures calculated in accordance with IFRS.

Unless otherwise specified, all dollar amounts are expressed in Canadian dollars.

Forward Looking Statements

33

Investment in TransAlta Renewables

1 Based on closing price on the Toronto Stock Exchange as of July 31, 2018. Balance sheet data as at June 30, 2018.

Enterprise Value1 $4.2 Billion

Market Cap.1 $3.2 Billion

2018 EBITDA (guidance) $400 - $420 Million

2018 CAFD (guidance) $260 - $290 Million

Dividend Yield 7.8%

TransAlta’s Ownership 61%

# of

Assets

Owned

MW

Percent of

Generation

Cash Flow

Wind 20 1,318 46%

Natural Gas 7 956 47%

Hydro 13 112 5%

Solar 1 21 2%

Total 41 2,407 100%

Significant Scale Highly Diversified

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Investment Highlights

41 facilities across multiple regions and spanning

various technologiesHighly Diversified

12 year weighted average contract lifeHighly Contracted

Portfolio

2.4x Net Debt/EBITDA

Raised over $0.9 billion of low cost project debt

Material debt capacity

Strong Balance Sheet

and Access to

Competitive Capital

$3.1 billion of acquisitions since IPO

Total shareholder return of 68% since IPO in 2013

Proven Track Record of

Growth and Value

Creation

Excellent source of drop-down and third party growth

opportunities

Strong Sponsorship

from TransAlta

Corporation

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Highly Contracted Facilities

Remaining Contracted Years

- 5.0 10.0 15.0 20.0 25.0 30.0

Akolkolex, BCSouth Hedland, WA

Kent Hills, NBLakeswind, MN

Summerview 1, ABSummerview 2, AB

Ardenville, ABBlue Trail, AB

Soderglen, ABMacleod Flats, AB

Le Nordais, QCNew Richmond, QC

Taylor, ABBelly River, AB

Waterton, ABSt. Mary, AB

Cowley North, ABSinnott, AB

Bone Creek, BCKent Breeze, ON

Galetta, ONAppleton, ON

Moose Rapids, ONWolfe Island, ON

Ragged Chute, ONWyoming Wind, WY

Mass Solar, MACastle River, ABMelancthon, ON

Misema, ONParkeston, WA

Upper Mamquam, BCSarnia, ON

McBride Lake, ABSouthern Cross, WA

Pingston, BC

Average capacity

weighted contract life of

~12 years

66

Significant Increase in Cash Available For Distribution

Note: Cash Available for Distribution refers to the amount of cash generated from operations after deducting sustaining capital and distributions to non-controlling interests, excluding the effects of timing and working capital on distributions from subsidiaries of TransAlta in

which the Company holds an economic interest and less principal repayments of amortizing debt. Outlook based on expected revenues from PPAs and the sale of green attributes. Renewable energy production from wind/hydro assets expected to range from 3,400 to

3,800 GWh including economic interests. Gas-fired generation provides compensation for capacity and production is not a significant indicator of this business.

$82

$177

$245

$284 $260 - $290

$0

$50

$100

$150

$200

$250

$300

2014 2015 2016 2017 2018 Outlook

Mil

lio

ns

77

Strong Total Shareholder Return Since IPO

~$3.1 billion in new assets

Significantly increased dividend and public float

Added to the S&P/TSX Composite Index in 2016

Total Shareholder Return Since August 2013 IPO

-20%

0%

20%

40%

60%

80%

100%

Aug-13 Aug-14 Aug-15 Aug-16 Aug-17 Aug-18

RNW S&P TSX

88

Strong Dividend Growth

$0.75 $0.77

$0.84 $0.88

$0.94

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

At IPO 2014 2015 2016 2017

~9%

Australian

Assets

~5%

Three

Canadian

Projects

~7%

South

Hedland

~3%

Wyoming

Wind

(Aug 2013)

Annualized Dividend Per Share

99

0% 2% 4% 6% 8% 10%

Attractive Dividend Yield

1 Based on the closing price as of July 31, 2018.2 Other companies include Algonquin Power, Brookfield Renewables, Enbridge Income Fund, Innergex, Northland Power, NRG Yield, NextEra Energy Partners, Pattern Energy. Source: FactSet

Average (~5.6%)

RNW Peers²

Dividend Yield

1010

Proven Growth Track Record

$3.1 billion in investments

2014 144 MW Wyoming wind acquisition

575 MW Australian Assets investments

2015

506 MW Sarnia gas investment

98 MW Le Nordais wind investment

7 MW Ragged Chute hydro investment

2017 150 MW South Hedland gas

17 MW Kent Hills 3 wind expansion

2018

90 MW Big Level wind investment

29 MW Antrim wind investment

21 MW Solar investment

50 MW Lakeswind wind investment

20 MW Kent Breeze wind investment

1111

Kent Hills 3

Expansion of the existing Kent Hills

Wind Farm in New Brunswick

Five additional turbines adding 17 MW

of capacity, bringing total capacity to

167 MW

The entire wind farm is now fully

contracted until 2035 with New

Brunswick Power

Issued $260 million project level debt

secured by cash flows

1212

US Wind Development Projects

All three counterparties have S&P credit ratings of A+ or better

Commercial operation expected during the second half of 2019 for both projects

Antrim - 29 MW New Hampshire

project

Two 20-year PPAs

Construction began in July 2018

Capital cost of ~US$80 million

Big Level - 90 MW Pennsylvania

project

One 15-year PPA

Early stage construction underway

Capital cost of ~US$160 million

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Drivers of Future Growth

Renewable targets

Carbon pricing

Thermal environmental regulations

Government Policies

and Regulations

Low gas prices and abundant supply

More cost competitive renewables

Technological improvements

Competitiveness

Desire for renewable energy

Behind-the-fence needs

Customer

Requirements

Highly dispatchable generation to complement growth

in intermittent generation

Minimize exposure to any one technology or fuel type

Diversified System

1414

Investment Highlights

Strong Core Business

with a proven track

record

Positioned for growth

and further valuation

creation

Diversified: Hydro, Wind, Solar, Gas; Canada, U.S.

and Australia

12 year weighted average contract life

2.4x Net Debt/EBITDA

Raised $0.9 billion of low cost project debt, with

additional capacity

$3.1 billion of acquisitions since IPO

~68%Total Shareholder Return since IPO in 2013

Access to growth capital

Source of growth opportunities with TransAlta

Corporation sponsorship

U.S. market fundamentals will drive development and

acquisition opportunities