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Page 1: Investor Presentation January 2018 - TransAlta Renewables...Renewable energy production from wind/hydro assets expected to range from 3,500 to 3,900 GWhincludingeconomic interests.Gas-firedgeneration

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TransAlta Renewables Inc.

Investor Presentation

January 2018

Page 2: Investor Presentation January 2018 - TransAlta Renewables...Renewable energy production from wind/hydro assets expected to range from 3,500 to 3,900 GWhincludingeconomic interests.Gas-firedgeneration

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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 cash outlook for 2017; 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, Antelope Coulee Wind and Goonumbla Solar Farm; 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, 2016. 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

Page 3: Investor Presentation January 2018 - TransAlta Renewables...Renewable energy production from wind/hydro assets expected to range from 3,500 to 3,900 GWhincludingeconomic interests.Gas-firedgeneration

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TransAlta Renewables at a Glance

Note: EBITDA and CAFD are not defined under IFRS. For further information on non-IFRS financial measures we use, see the section entitled “Non-IFRS Measures” contained in our Management

Discussion and Analysis1 Enterprise value calculated as: market capitalization + total debt (book value) + non-controlling interests (book value) - cash and cash equivalents. Balance sheet data as at September 30, 2017

and includes Solomon proceeds 2 Based on closing price on the Toronto Stock Exchange as of January 4, 2018

Enterprise Value1,2 $4.1 Billion

Market Cap.2 $3.3 Billion

2017 EBITDA (guidance) $425 - 450 Million

2017 CAFD (guidance) $235 - $260 Million

Dividend Yield 7.1%

TransAlta’s Ownership 64%

# of

Assets

Net

MW

Percent of

Generation

Cash Flow

Wind 18 1,248 49%

Natural Gas 7 956 47%

Hydro 13 112 4%

Total 38 2,316 100%

Significant Scale Highly Diversified

Page 4: Investor Presentation January 2018 - TransAlta Renewables...Renewable energy production from wind/hydro assets expected to range from 3,500 to 3,900 GWhincludingeconomic interests.Gas-firedgeneration

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Investment Highlights

38 facilities across multiple regions and spanning

various technologiesHighly Diversified

12 year weighted average contract lifeHighly Contracted

Portfolio

1.7x Net Debt/EBITDA

Raised over $0.9 billion of low cost project debt, with

additional capacity

Strong Balance Sheet

and Access to

Competitive Capital

$2.4 billion of acquisitions since IPO

~80% Total Shareholder return since IPO

Proven Track Record of

Growth and Value

Creation

Excellent source of drop-down and third party growth

opportunities

Strong Sponsorship

from TransAlta

Corporation

Page 5: Investor Presentation January 2018 - TransAlta Renewables...Renewable energy production from wind/hydro assets expected to range from 3,500 to 3,900 GWhincludingeconomic interests.Gas-firedgeneration

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Highly Contracted Facilities

Akolkolex, BCSouth Hedland, WA

Kent Hills, NBSummerview 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, BCGaletta, ON

Appleton, ONMoose Rapids, ON

Wolfe Island, ONRagged Chute, ON

Wyoming Wind, WYCastle River, ABMelancthon, ON

Misema, ONParkeston, WA

Upper Mamquam, BCSarnia, ON

McBride Lake, ABSouthern Cross, WA

Pingston, BC

0 5 10 15 20 25 30

Remaining Contracted Years

Average capacity

weighted contract life of

~12 years

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Significant Increase in Cash Available For Distribution

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 3,500 to 3,900

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

$82

$177

$245

$235 - $260

$0

$50

$100

$150

$200

$250

$300

2014 2015 2016 2017 Outlook

Mil

lio

ns

Page 7: Investor Presentation January 2018 - TransAlta Renewables...Renewable energy production from wind/hydro assets expected to range from 3,500 to 3,900 GWhincludingeconomic interests.Gas-firedgeneration

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Strong Performance Since IPO

• ~$2.4 billion in new assets

• Significantly increased dividend and public float

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

• Completed over $0.9 billion of project level financing

-10%

0%

10%

20%

30%

40%

50%

60%

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

RNW S&P TSX

Share Price Performance Since Aug, 2013

Page 8: Investor Presentation January 2018 - TransAlta Renewables...Renewable energy production from wind/hydro assets expected to range from 3,500 to 3,900 GWhincludingeconomic interests.Gas-firedgeneration

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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)

Annual Dividend Per Share

Page 9: Investor Presentation January 2018 - TransAlta Renewables...Renewable energy production from wind/hydro assets expected to range from 3,500 to 3,900 GWhincludingeconomic interests.Gas-firedgeneration

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Attractive Dividend Yield

0% 2% 4% 6% 8%

1 Based on the closing price as of January 4, 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 (~5.1%)

RNW Peers²

Dividend Yield

Page 10: Investor Presentation January 2018 - TransAlta Renewables...Renewable energy production from wind/hydro assets expected to range from 3,500 to 3,900 GWhincludingeconomic interests.Gas-firedgeneration

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Proven Growth Track Record

$2.4 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

Page 11: Investor Presentation January 2018 - TransAlta Renewables...Renewable energy production from wind/hydro assets expected to range from 3,500 to 3,900 GWhincludingeconomic interests.Gas-firedgeneration

1111

South Hedland Power Station

150 MW Combined Cycle Gas Power

Station in Western Australia

• Commercial operation began in July

2017

• Highly contracted until 2042 with

Horizon Power (AA+ rating)

• Expected to generate ~$80 million

of EBITDA on an annualized basis

Page 12: Investor Presentation January 2018 - TransAlta Renewables...Renewable energy production from wind/hydro assets expected to range from 3,500 to 3,900 GWhincludingeconomic interests.Gas-firedgeneration

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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

Page 13: Investor Presentation January 2018 - TransAlta Renewables...Renewable energy production from wind/hydro assets expected to range from 3,500 to 3,900 GWhincludingeconomic interests.Gas-firedgeneration

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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

Page 14: Investor Presentation January 2018 - TransAlta Renewables...Renewable energy production from wind/hydro assets expected to range from 3,500 to 3,900 GWhincludingeconomic interests.Gas-firedgeneration

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U.S. Opportunity

• Wind and solar represent only ~10% of US capacity

• Natural gas generation needed to replace coal with dispatchable generation

390328

312

447

0

200

400

600

800

1,000

1,200

2002 2016

Generation capacity US (GW)

Coal/Other Nuclear Hydro Solar Wind Gas

Decline in

coal

Wind & Solar

only 10%

Significant

Growth in

Natural Gas

Source: US Dept. of Energy, Staff Report on electricity Markets and Reliability, August 2017

Page 15: Investor Presentation January 2018 - TransAlta Renewables...Renewable energy production from wind/hydro assets expected to range from 3,500 to 3,900 GWhincludingeconomic interests.Gas-firedgeneration

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Growth & Financing Strategy

• Primarily focused on North

America and Australia

• Renewables and gas fired

generation

• Highly contracted facilities

• Greenfield, brownfield and

acquisitions

• Early staged projects are often

less competitive and provide

higher returns

Strategic Focus

• $500 million of project debt

potentially available from

existing assets

• Proceeds from Solomon

handback

• Internally generated excess

cash flow

• New assets can support project

debt

• $500 million credit facility put in

place at RNW

• Partners

• New equity

Potential Source of Capital

Page 16: Investor Presentation January 2018 - TransAlta Renewables...Renewable energy production from wind/hydro assets expected to range from 3,500 to 3,900 GWhincludingeconomic interests.Gas-firedgeneration

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Significant Growth Opportunities

Actively Evaluating with TransAlta over $5 billion in Opportunities

Greenfield

• Near-term: Renewable calls in Alberta and

Saskatchewan, and opportunities in Australia and Pacific

Northwest

• Long-term: Over 5,000 MW of additional renewables

potential in Western Canada

Third-party Acquisitions

• Attractive opportunities in North America

• Strong cost of capital and balance sheet to compete

• Proceeds from Solomon can be used to fund growth

Potential Drop-downs

from TransAlta

• 800 MW of hydro in Alberta

• 400 MW of gas in Alberta & Ontario

• 90 MW wind and solar in Eastern Canada and the U.S.

• $2.5 billion Alberta Brazeau pumped hydro project

Page 17: Investor Presentation January 2018 - TransAlta Renewables...Renewable energy production from wind/hydro assets expected to range from 3,500 to 3,900 GWhincludingeconomic interests.Gas-firedgeneration

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Alberta wind projects remain candidates for future REP procurements or third party

contracting; Antelope Coulee prepared for up-coming Saskatchewan RFP.

Canadian Wind Projects

Edmonton

Calgary

Saskatoon

Regina

Hanna

Pincher Creek

Swift Current

Garden Plains Wind

Location30 km north of Hanna, Alberta

Capacity 130MW

Proposed

In-Service Date

Future Alberta REP calls or third

party contracting

Capital Costs $260 mm

Other Details Wind resource data dating back

to 2009

Partnerships with landowners

since 2011

Antelope Coulee Wind

Location 35 km southwest of Swift

Current, Saskatchewan

Capacity Up to 200MW

Proposed

In-Service DateApril 2021

Capital Costs $400 mm

Other Details Wind resource data dating back

to 2008

Cowley Ridge Wind Repower

Location Northwest of Pincher Creek,

Alberta

Capacity 20MW

Proposed

In-Service Date

Future Alberta REP calls or

third party contracting

Capital Costs $40 mm

Other Details Site of original Cowley Ridge

Wind Farm which was built in

1993 and dismantled in 2016

Long-term understanding of

wind resource

Page 18: Investor Presentation January 2018 - TransAlta Renewables...Renewable energy production from wind/hydro assets expected to range from 3,500 to 3,900 GWhincludingeconomic interests.Gas-firedgeneration

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Australian Growth

TransAlta continues to build on its already significant Australian presence

Perth

Sydney

AUSTRALIA

Goonumbla

Goonumbla Solar Farm

Location350km North-West of Sydney in New South

Wales

Capacity 70MW

Proposed

In-Service

Date

2019

Capital

Costs$140 mm

Other Details

Site is permitted under the New South

Wales Major Project Planning

Development process

Engaged Tier 1 EPC contractor to

undertake construction and operation

and maintenance

Interconnection agreements are in place

Currently securing offtake agreements

Page 19: Investor Presentation January 2018 - TransAlta Renewables...Renewable energy production from wind/hydro assets expected to range from 3,500 to 3,900 GWhincludingeconomic interests.Gas-firedgeneration

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Edmonton

Bonnyville

Grande Prairie

Hinton

Camrose

Wetaskiwin

Red Deer

Drumheller

Calgary

Lethbridge

Medicine Hat

Ft. McMurray

100 km

60 mi

Big Horn 1&2 – 120MW

Abraham

Lake

Rocky

Mountain House

Brazeau Dam

355MW

Brazeau Gorge

Brazeau

Canal

Brazeau

Reservoir

Edmonton

Water Flow

Water Flow

Water Flow

Brazeau Energy Storage

SIGNIFICANT VALUE

Unique one-of-a-kind pumped storage

hydro project

Up to 900 MW/5,000 MWh

Investment of $2.5 billion

Significant economic and employment

benefits

Targeting 2025/2026 operating date

Requires long-term contract

Page 20: Investor Presentation January 2018 - TransAlta Renewables...Renewable energy production from wind/hydro assets expected to range from 3,500 to 3,900 GWhincludingeconomic interests.Gas-firedgeneration

2020

Brazeau Pumped Hydro – Significant System Benefits

Brazeau Pumped Hydro

Storage

Fast Ramping

Load Following

Wind Firming

Avoided Curtailment

Voltage and Inertia Support

Supports Transition to Clean Energy and a Low Cost, Reliable Electricity

System

Page 21: Investor Presentation January 2018 - TransAlta Renewables...Renewable energy production from wind/hydro assets expected to range from 3,500 to 3,900 GWhincludingeconomic interests.Gas-firedgeneration

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TransAlta’s Brazeau Pumped Hydro Opportunity

Leverages existing infrastructure

Existing power house

Proposed pumped hydro

Page 22: Investor Presentation January 2018 - TransAlta Renewables...Renewable energy production from wind/hydro assets expected to range from 3,500 to 3,900 GWhincludingeconomic interests.Gas-firedgeneration

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Brazeau: Significant Work Completed and Underway

Engaged Owner’s Engineer, providing Class 5 Estimate

Conducted initial geotechnical work

Started engagement with First Nations

Started environmental field studies

Engaged with Governments, Communities, Unions, Regulators and NGOs

Page 23: Investor Presentation January 2018 - TransAlta Renewables...Renewable energy production from wind/hydro assets expected to range from 3,500 to 3,900 GWhincludingeconomic interests.Gas-firedgeneration

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Investment Highlights

Strong Core Business

with a proven track

record

Positioned for growth

and further valuation

creation

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

Australia

12 year weighted average contract life

1.7x Net Debt/EBITDA

Raised $0.9 billion of low cost project debt, with

additional capacity

$2.4 billion of acquisitions since IPO

~80% Total Shareholder Return since IPO

Access to growth capital

Source of growth opportunities with TransAlta

Corporation sponsorship

U.S. market fundamentals will drive development and

acquisition opportunities


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