TransAlta Stock

TransAlta Corporation (TransAlta) engages in the development, production and sale of electric energy.

The company is one of Canada's largest publicly traded power generators and is among Canada's largest non-regulated electricity generation and energy marketing companies with 6,583 megawatts (‘MW’) of gross installed capacity (including TransAlta Renewables). The company owns, operates and manages a highly contracted and geographically diversified portfolio of assets using a broad range of technologies and fuels that include water, wind, solar, natural gas, energy storage and coal.

The company is focused on generating and marketing electricity in Canada, the United States (‘U.S.’) and Western Australia through the company’s diversified portfolio of facilities.

Strategy

The company’s strategic focus is to invest in clean energy solutions that meet the needs of the company’s customers and communities. To support this strategy, the company maintains a growing pipeline of project opportunities focused on hydro, wind, solar, energy storage and low emissions gas generation.

The company’s strategic priorities are to accelerate growth in customer-centred renewables and storage; realize targeted approach to diversification; define the next generation of power solutions and technologies; and lead in ESG policy development.

Business Segments

The following is a description of the company’s business segments:

The Hydro segment has a net ownership interest of approximately 922 MW of owned hydro electrical-generating capacity. The facilities within this segment are located in Alberta, British Columbia and Ontario.

The Wind and Solar segment has a net ownership interest of approximately 1,878 MW of owned wind and solar electrical-generating capacity, as well as battery storage, and includes facilities located in Alberta, Ontario, New Brunswick and Québec, and the states of Massachusetts, Minnesota, New Hampshire, North Carolina, Pennsylvania, Washington and Wyoming. The company has 678 MW of construction projects underway in this segment that are expected to be completed in 2023.

The Gas segment has a net ownership interest of approximately 2,775 MW of owned gas electrical-generating capacity and includes facilities located in Alberta, Ontario, Michigan and Western Australia. This includes a pipeline located in Western Australia.

The Energy Transition segment has a net ownership interest of approximately 671 MW of owned coal electrical-generating capacity. The segment includes one remaining operating unit at Centralia, the Skookumchuck Hydro facility, the retired Centralia unit, retired Alberta thermal units, and the Highvale mine and the mine reclamation activities.

The Energy Marketing segment is responsible for marketing production through short-term and long-term contracts, for securing cost-effective and reliable fuel supply, and for maximizing margins by optimizing assets as market conditions change. The company’s Energy Marketing segment is actively engaged in the trading of power, natural gas and environmental products across several markets and has allowed the company to obtain more favorable pricing for uncommitted electricity, secure fuel supply on a cost-effective basis and fulfil electricity delivery obligations in the event of an outage.

The Corporate segment supports each of the above segments and includes the company's central finance, legal, human resources, administrative, business development, external affairs and investor relations functions.

TransAlta Renewables

The company is the majority owner of TransAlta Renewables, with an approximate 60 per cent direct and indirect ownership interest as of December 31, 2022. TransAlta Renewables is one of the largest generators of wind power and among the largest publicly traded renewable power generation companies in Canada.

TransAlta Renewables, or one or more of its wholly owned subsidiaries, directly owns certain of the company’s wind, hydro, natural gas and energy storage facilities. TransAlta Renewables also owns economic interests in a number of the company’s other facilities. The company provides all management, administrative and operational services required for TransAlta Renewables to operate and administer its assets and to acquire additional assets pursuant to the Management, Administrative and Operational Services Agreement (the ‘Management Agreement’) and the Governance and Cooperation Agreement (the ‘Governance Agreement’) between TransAlta Corporation and TransAlta Renewables.

TransAlta Renewables realizes specific strategic and financial benefits for TransAlta. The company’s majority ownership of TransAlta Renewables supported implementing the company’s overall strategy of developing, constructing or acquiring additional renewable assets. The company’s strategy has shifted to reduce merchant and natural gas exposure as announced at the company’s September 2021 Investor Day. As such, the strategies of TransAlta and TransAlta Renewables have increasingly converged. TransAlta Renewables will be principally focused on the sustainment of its dividend in 2023 and beyond, with growth opportunities focused on organic expansions of its existing assets through the execution of its rights of first offer with TransAlta or other transactions that could partially offset TransAlta Renewables' tax horizon. TransAlta is positioned as the primary growth vehicle to advance the Clean Electricity Growth Plan of the consolidated TransAlta group.

The company’s Hydro, Wind and Solar, Gas and Energy Transition segments are responsible for operating and maintaining the company’s electrical generation facilities in Canada, the U.S., and Australia. The company’s Energy Marketing segment is responsible for marketing and scheduling the company’s merchant asset fleet in North America (excluding Alberta) along with the procurement of gas, transport and storage for the company’s gas fleet, providing knowledge to support the company’s growth team, and generating a stand-alone gross margin separate from the company’s asset business through a leading North American energy marketing platform. All the segments are supported by a Corporate segment.

Hydro Segment

The Hydro segment holds an interest in 922 net MW. The facilities are located in British Columbia, Alberta and Ontario.

As well as contracting for power, the company enters into long-term and short-term contracts to sell the environmental attributes from the merchant hydro facilities. These activities help to ensure earnings stability from these assets.

Bow River System

Barrier

Barrier is a hydroelectric facility with installed capacity of 13 MW located on the Kananaskis River near Seebe, Alberta. Generation from the facility is sold in the Alberta electricity market and creates Emission Performance Credits (‘EPCs’) under the Alberta Technology Innovation and Emissions Reduction (‘TIER’) system.

Bearspaw

Bearspaw is a hydroelectric facility with installed capacity of 17 MW located on the Bow River in Calgary, Alberta. Generation from the facility is sold in the Alberta electricity market and creates EPCs under the TIER system.

Cascade

Cascade is a hydroelectric facility with installed capacity of 36 MW located on the Cascade River in Banff National Park, Alberta. Generation from the facility is sold in the Alberta electricity market and creates EPCs under the TIER system.

Ghost

Ghost is a hydroelectric facility with installed capacity of 54 MW located on the Bow River near Cochrane, Alberta. Generation from the facility is sold in the Alberta electricity market and creates EPCs under the TIER system.

Horseshoe

Horseshoe is a run-of-river hydroelectric facility with installed capacity of 14 MW located on the Bow River near Seebe, Alberta. Generation from the facility is sold in the Alberta electricity market and creates EPCs under the TIER system.

Interlakes

Interlakes is a hydroelectric facility with installed capacity of 5 MW located at Kananaskis Lakes, Alberta. Generation from the facility is sold in the Alberta electricity market and creates EPCs under the TIER system.

Kananaskis

Kananaskis is a run-of-river hydroelectric facility with installed capacity of 19 MW located on the Bow River in Seebe, Alberta. Generation from the facility is sold in the Alberta electricity market and creates EPCs under the TIER system.

Pocaterra

Pocaterra is a hydroelectric facility with installed capacity of 15 MW located at Kananaskis Lakes, Alberta. Generation from the facility is sold in the Alberta electricity market and creates EPCs under the TIER system.

Rundle

Rundle is a hydroelectric facility with installed capacity of 50 MW located in Canmore, Alberta, on the Spray system. The facility uses water from the Spray Lakes storage reservoir. Generation from the facility is sold in the Alberta electricity market and creates EPCs under the TIER system.

Spray

Spray is a hydroelectric facility with installed capacity of 112 MW located in Canmore, Alberta, on the Spray system. The plant uses water from the Spray Lakes storage reservoir. Generation from the facility is sold in the Alberta electricity market and creates EPCs under the TIER system.

Three Sisters

Three Sisters is a hydroelectric facility with installed capacity of 3 MW located at the base of the Three Sisters Dam near Canmore, Alberta, on the Spray system. The facility uses water from the Spray Lakes storage reservoir. Generation from the facility is sold in the Alberta electricity market.

Waterton-St. Mary River System

Belly River

The Belly River facility is owned by TransAlta Renewables. Belly River is a run-of-river hydroelectric facility with installed capacity of 3 MW located on the Waterton-St. Mary Headworks Irrigation Canal System, east of the Waterton Reservoir, approximately 75 kilometres southwest of Lethbridge in Southern Alberta. Due to its location along the irrigation canal, Belly River operates from April to October when water is diverted through the canal as part of the St. Mary Irrigation District Water Management Plan. The company acquires the generation from the facility pursuant to a PPA with TransAlta Renewables , and subsequently sell such generation in the Alberta electricity market.

St. Mary

The St. Mary facility is owned by TransAlta Renewables. St. Mary is a run-of-river hydroelectric facility with installed capacity of 2 MW located at the base of the dam impounding the St. Mary Reservoir, near Magrath, in Southern Alberta. The company acquires the generation from the facility pursuant to a PPA with TransAlta Renewables, and subsequently sell such generation in the Alberta electricity market.

Taylor

The Taylor facility is owned by TransAlta Renewables. Taylor is a run-of-river hydroelectric facility with installed capacity of 13 MW and is located adjacent to the Taylor Coulee Chute on the Waterton-St. Mary Headworks Irrigation Canal System, which is owned by the Government of Alberta. The company acquires the generation from the facility pursuant to a PPA with TransAlta Renewables, and subsequently sell such generation in the Alberta electricity market.

Waterton

The Waterton facility is owned by TransAlta Renewables. Waterton is a run-of-river hydroelectric facility with installed capacity of 3 MW located at the base of the Waterton Dam on the Waterton Reservoir, near Hill Spring, southwest of Lethbridge, Alberta. The company acquires the generation from the facility pursuant to a PPA with TransAlta Renewables, and subsequently sell such generation in the Alberta electricity market.

North Saskatchewan River System

Bighorn

Bighorn is a hydroelectric facility with installed capacity of 120 MW located near Nordegg, Alberta. Generation from the facility is sold in the Alberta electricity market and creates EPCs under the TIER system.

Brazeau

Brazeau is a hydroelectric facility with installed capacity of 355 MW located near Drayton Valley, Alberta. Generation from the facility is sold in the Alberta electricity market and creates EPCs under the TIER system.

BC Hydro Facilities

Akolkolex

The Akolkolex facility is owned by TransAlta Renewables. Akolkolex is a run-of-river hydroelectric facility with installed capacity of 10 MW and is located on the Akolkolex River, south of Revelstoke, British Columbia. The output from the facility is sold to British Columbia Hydro and Power Authority (‘BC Hydro’) under a PPA that terminates in 2046.

Bone Creek

The Bone Creek facility is owned by TransAlta Renewables. Bone Creek is a run-of-river hydroelectric facility with installed capacity of 19 MW and is located on Bone Creek, 90 kilometres south of the town of Valemount, British Columbia. The output from the facility is sold to BC Hydro under a PPA that terminates in 2031.

Pingston

Pingston is a run-of-river hydroelectric facility with installed capacity of 46 MW and is located on Pingston Creek, southwest of Revelstoke, British Columbia, and down river of the Akolkolex facility. It has been operating since 2003. TransAlta Renewables owns the facility equally with a subsidiary of Brookfield. The output from the facility is sold to BC Hydro under a 20-year PPA that terminates on April 30, 2023. The Pingston facility is eligible for the BC Hydro Energy Purchase Agreement Renewal Program and the company is engaging with BC Hydro on an extension.

Upper Mamquam

The Upper Mamquam facility is owned by TransAlta Renewables. Upper Mamquam is a run-of-river hydroelectric facility with installed capacity of 25 MW located on the Mamquam River, east of Squamish, British Columbia, and north of Vancouver. The output from the facility is sold to BC Hydro under a PPA that terminates in 2025.

Ontario Hydro Facilities

Misema

The Misema facility is owned by TransAlta Renewables. Misema is a run-of-river hydroelectric facility with installed capacity of 3 MW located on the Misema River, close to Englehart, in northern Ontario. Generation from this facility is sold to the IESO under a contract that terminates on May 3, 2027.

Moose Rapids

The Moose Rapids facility is owned by TransAlta Renewables. Moose Rapids is a run-of-river hydroelectric facility with installed capacity of 1 MW located on the Wanapitei River, near Sudbury, in northern Ontario. Generation from this facility is sold to the IESO under a contract that terminates on Dec. 31, 2030.

Ragged Chute

The Ragged Chute facility is owned by TransAlta Renewables. Ragged Chute is a run-of-river hydroelectric facility with installed capacity of 7 MW located on the Montréal River, south of Temiskaming Shores, in northern Ontario. The company leases this facility from Ontario Power Generation Inc. Generation from this facility is sold to the IESO under a contract that terminates on June 30, 2029.

Wind and Solar segment

As at Dec. 31, 2022, the Wind and Solar segment held interests in approximately 1,878 MW of net wind generating capacity. This capacity consists of 12 wind facilities in Western Canada, four in Ontario, two in Québec, three in New Brunswick and five in the U.S., more specifically in the states of Washington, Wyoming, Minnesota, Pennsylvania and New Hampshire. The company also holds a 10 MW utility-scale battery storage facility in Alberta and 143 MW of solar facilities in the states of Massachusetts and North Carolina.

As well as contracting for the sale of the power generated, the company also enters into long-term and short-term contracts to sell the environmental attributes from the merchant wind and solar facilities. These activities help to ensure earnings consistency from these assets.

Alberta Wind Facilities

Ardenville

The Ardenville facility is owned by TransAlta Renewables. Ardenville is a 69 MW wind facility that consists of 23 3.0 MW Vestas V90 wind turbines on 80-metre towers, and is located approximately 14 kilometres south of Fort Macleod, Alberta. The company constructed the project, which began commercial operations on Nov. 10, 2010. In 2018, the Ardenville wind facility was granted an extension to create offset credits under TIER until Oct. 31, 2023 and thereafter the facility will become an opt-in facility under TIER. An opt-in facility is not considered a large emitter of GHGs and as such the company elect to participation in TIER. The company acquires the generation from the facility pursuant to a PPA with TransAlta Renewables, which terminates in 2033, and subsequently sell such generation in the Alberta electricity market.

Blue Trail and Macleod Flats

The Blue Trail facility is owned by TransAlta Renewables. Blue Trail is a 66 MW wind facility that consists of 22 3.0 MW Vestas V90 wind turbines on 80-metre towers, is located in Southern Alberta and began commercial operations in November 2009. The Blue Trail wind facility created carbon offset credits under TIER until Sept. 16, 2022, at which time the facility became an opt-in facility under TIER. The company acquires the generation from the facility pursuant to a PPA with TransAlta Renewables that terminates in 2033 and subsequently sell such generation in the Alberta electricity market.

The Macleod Flats facility is owned by TransAlta Renewables. Macleod Flats consists of a single 3.0 MW Vestas V90 wind turbine on a 67-metre tower, and is located near Fort Macleod. This facility generates renewable credits. The company acquires the generation from the facility pursuant to a PPA with TransAlta Renewables that terminates in 2033 and subsequently sell such generation in the Alberta electricity market.

Castle River

The Castle River facility is owned by TransAlta Renewables. Castle River is a 40 MW wind facility that consists of 66 Vestas wind turbines (three Vestas V44 600 kW wind turbines and 63 Vestas V47 660 kW wind turbines) on 50-metre towers, and is located southwest of Pincher Creek, Alberta. This facility also includes an additional six turbines, totalling 4 MW, that are located individually in the Cardston County and Hill Spring areas of south-western Alberta. This facility began commercial operations in stages from November 1997 through to July 2001. This facility generates EPCs under the TIER system. The company acquires the generation from the facility pursuant to a PPA with TransAlta Renewables that terminates in 2033, and subsequently sells such generation in the Alberta electricity market.

Cowley North

The Cowley North facility is owned by TransAlta Renewables. Cowley North is a 20 MW wind facility that consists of of 15 1.3 MW Nordex N60 wind turbines on 50-metre towers, and is located near the towns of Cowley and Pincher Creek, in Southern Alberta. The Cowley North facility creates EPCs under the TIER system. The company acquires the generation from the facility pursuant to a PPA with TransAlta Renewables that terminates in 2033 and subsequently sell such generation in the Alberta electricity market.

McBride Lake

The McBride Lake facility is co-owned by TransAlta Renewables and ENMAX Energy Corporation (‘ENMAX’). The 75 MW McBride Lake wind facility that consists of 114 Vestas V47 (660 kW) wind turbines on 50-metre towers, and is located south of Fort Macleod, Alberta. Generation from this facility is sold under a 20-year PPA with ENMAX that terminates in 2024. This facility generates EPCs under the TIER system.

Oldman

The Oldman facility is owned by TransAlta Renewables. The 3.6 MW Oldman facility that consists of two Vestas V80 turbines with an installed capacity of 3.6 MW, and is located east of the Oldman River Dam, near Pincher Creek in Southern Alberta. Interconnection of the facility is through the Fortis Alberta distribution grid. In 2021, TransAlta Renewables acquired 100 per cent of the project from a subsidiary of Boralex. This facility sells energy into the Alberta merchant market and generates EPCs under the TIER system.

Sinnott

The Sinnott facility is owned by TransAlta Renewables. The 7 MW Sinnott facility that consists of five 1.3 MW Nordex N60 wind turbines on 65-metre towers, and is located directly east of the Cowley North wind facility and north of Pincher Creek, Alberta. The Sinnott wind facility creates EPCs under the TIER system. The company acquires the generation from the facility pursuant to a PPA with TransAlta Renewables and subsequently sell such generation in the Alberta electricity market.

Soderglen

The Soderglen facility is co-owned by TransAlta Renewables and CNOOC Petroleum North America ULC. Soderglen is a 71 MW facility that consists of 47 1.5 MW GE SLE wind turbines on 65-metre towers, and is located southwest of Fort Macleod. The Soderglen wind facility creates EPCs under the TIER system. The company acquires 50 per cent of the generation from the facility pursuant to a PPA with TransAlta Renewables that terminates in 2033 (which excludes that portion of generation that is owned by CNOOC Petroleum North America ULC) and subsequently sell such generation in the Alberta electricity market.

Summerview 1

The Summerview 1 facility is owned by TransAlta Renewables. Summerview 1 is a 68 MW wind facility that consists of 38 1.8 MW Vestas V80 wind turbines on 67-metre towers, and is located approximately 15 kilometres northeast of Pincher Creek, Alberta. The company constructed Summerview and it began commercial operations in Sept. 2004. The company acquires the generation from the facility pursuant to a PPA with TransAlta Renewables that terminates in 2033, and subsequently sell such generation in the Alberta electricity market. The Summerview 1 facility creates EPCs under the TIER system.

Summerview 2

The Summerview 2 facility is owned by TransAlta Renewables. Summerview 2 is a 66 MW wind facility that consists of 22 3.0 MW Vestas V90 wind turbines on 80-metre towers, and is located approximately 15 kilometres northeast of Pincher Creek, Alberta. This facility began commercial operations in February 2010. The company acquires the generation from the facility pursuant to a PPA with TransAlta Renewables that terminates in 2033, and subsequently sell such generation in the Alberta electricity market. The Summerview 2 wind facility created carbon offset credits under TIER until November 2022, at which time the facility became an opt-in facility under TIER.

Windrise

The Windrise facility is owned by TransAlta Renewables. Windrise is a 206 MW wind facility situated on 11,000 acres of land located in the county of Willow Creek. The Windrise wind project consists of 43 Siemens Gamesa 4.8-145 turbines. The Windrise facility is the company's largest wind farm to date. Generation from the facility is sold to the AESO under a 20-year PPA that terminates in 2041. Commercial operation of the Windrise wind facility was achieved on Nov. 10, 2021.

Alberta Battery Energy Storage

WindCharger

The WindCharger facility is owned by TransAlta Renewables. WindCharger is Alberta's first utility-scale battery storage facility. The WindCharger battery storage facility consists of a lithium-ion battery using Tesla Megapack technology. The facility has a nameplate capacity of 10 MW and a total storage capacity of 20 MWh. WindCharger is located in Southern Alberta in the Municipal District of Pincher Creek next to the existing Summerview wind facility substation. The energy storage project achieved commercial operations on Oct. 15, 2020. WindCharger stores energy produced by the nearby Summerview 2 wind facility and is discharged for ancillary services, the facility is an opt-in facility under TIER. The project received co-funding support from Emissions Reduction Alberta. The company executed a 20-year battery storage usage contract with TransAlta Renewables, whereby the company pays a fixed monthly capacity charge for the exclusive right to operate and dispatch the battery in the Alberta electricity market.

Eastern Canada Wind Facilities

Kent Breeze

The Kent Breeze facility is owned by TransAlta Renewables. Kent Breeze is a 20 MW wind facility that consists of eight 2.5 MW GE wind turbines on 85-metre towers, and is located in Thamesville, Ontario. This facility began commercial operations in 2011. Generation from this facility is sold to the IESO.

Kent Hills 1

The 96 MW Kent Hills 1 wind facility, in which TransAlta Renewables has an 83 per cent interest, consists of 32 3.0 MW Vestas V90 wind turbines on 80-metre towers, and is located near Moncton, New Brunswick. This facility began commercial operations in December 2008. Natural Forces Technologies Inc., a wind developer based in Atlantic Canada, co-developed this project with TransAlta and exercised its option to purchase 17 per cent of the Kent Hills 1 facility in May 2009. Generation from this facility is sold under a PPA with NB Power. On June 2, 2022, the company announced the extension of the PPA for an additional 10-year period through to December 2045. NB Power has also been provided with an effective 10 per cent reduction to the current contract price until 2033.

On June 2, 2022, the company announced the rehabilitation plan for the wind facilities, associated with the single tower failure that occurred at Kent Hills 2 facility in September 2021, which consists of dismantling all 49 remaining turbines, demolishing and removing all existing tower foundations, replacing them with newly designed foundations, reassembling the wind turbine towers and generators, replacing the wind turbine that collapsed, and testing each wind turbine generator before returning it to service. Kent Hills Wind LP has entered into agreements with Bird Construction Industrial Services Ltd. and Vestas-Canadian Wind Technology, Inc. to complete the rehabilitation.

Rehabilitation for the Kent Hills 1 and 2 sites is targeted to be completed by second half of 2023. Each turbine at Kent Hills 1 and 2 will be re-energized and returned to service as soon as its foundation is replaced and the turbine is reassembled and tested. The company and Kent Hills Wind LP intend to pursue claims to recover costs and related damages from third parties.

Kent Hills 2

The 54 MW Kent Hills 2 wind facility expansion, in which TransAlta Renewables has an 83 per cent interest, consists of 18 3.0 MW Vestas V90 wind turbines on 80-metre towers, and is located near Moncton, New Brunswick. Natural Forces Technologies Inc. owns the remaining 17 per cent interest. The facility began commercial operations in November 2010. On June 2, 2022, the company announced the extension of the previous 2035 PPA term for an additional 10-year period through to December 2045. NB Power has also been provided with an effective 10 per cent reduction to the current contract price until 2033.

Kent Hills 3

TransAlta Renewables has an 83 per cent interest in the Kent Hills 3 facility. Kent Hills 3 consists of five 3.45 MW Vestas V126 turbines. It began commercial operations on Oct. 19, 2018, and added five 3.45 MW turbines to the Kent Hills fleet for an additional 17.25 MW at the site, bringing total generating capacity of the three Kent Hills facilities to 167 MW. On June 2, 2022, the company announced the extension of the previous 2035 PPA term for an additional 10-year period through to December 2045. NB Power has also been provided with an effective 10 per cent reduction to the current contract price until 2033.

Le Nordais

The Le Nordais facility is owned by TransAlta Renewables. The 98 MW Le Nordais wind facility is located at two locations: Cap-Chat with 55.5 MW of installed capacity consisting of 74 750 kW NEG Micon wind turbines on 55 metre towers; and Matane with 42 MW of installed capacity consisting of 56 750 kW NEG Micon wind turbines on 55 metre towers. Le Nordais is located on the Gaspé Peninsula of Québec. It began commercial operations in 1999. Generation from this facility is sold to Hydro-Québec pursuant to an energy supply agreement that terminates in 2033, and the facility generates Renewable Energy Certificates (‘RECs’) for sale.

Melancthon 1

The Melanchthon I facility is owned by TransAlta Renewables. Melancthon 1 is a 68 MW wind facility that consists of 45 1.5 MW GE wind turbines on 80-metre towers and is located in Melancthon Township near Shelburne, Ontario. This facility began commercial operations in March 2006. Generation from this facility is sold to the IESO pursuant to a PPA that expires in 2026, and was awarded a new capacity contract with the IESO that will commence on May 1, 2026, and terminate on April 30, 2031.

Melancthon 2

The Melancthon 2 facility is owned by TransAlta Renewables. Melancthon 2 is a 132 MW wind facility consisting of 88 1.5 MW GE wind turbines on 80 metre towers, and is located adjacent to Melancthon 1, in the Melancthon and Amaranth townships, Ontario. This facility began commercial operations in November 2008. Generation from this facility is sold to the IESO pursuant to a PPA that terminates in 2028.

New Richmond

The New Richmond facility is owned by TransAlta Renewables. New Richmond is a 68 MW wind facility consisting of 27 2.0 MW and six 2.3 MW Enercon E82 wind turbines on 100 metre towers, and is located in New Richmond, Québec. This facility began commercial operations in March 2013. Generation from this facility is sold under a 20-year electricity supply agreement with Hydro-Québec Distribution that terminates in 2033.

Wolfe Island

The Wolfe Island facility is owned by TransAlta Renewables. Wolfe Island is a 198 MW wind facility consisting of 86 2.3 MW Siemens SWT 93 wind turbines on 80 metre towers, and is located on Wolfe Island, near Kingston, Ontario. This facility began commercial operations in June 2009. Generation from this facility is sold to the IESO pursuant to a PPA that terminates in 2029.

The U.S. Wind and Solar Facilities

Antrim

The Antrim facility is a 29 MW wind facility located in Antrim, New Hampshire. The wind facility was constructed by the company and was commissioned in December 2019. The wind facility is fully operational and contracted under two long-term PPAs until 2039 with Partners Healthcare and New Hampshire Electric. On Feb. 28, 2018, TransAlta Renewables acquired tracking preferred shares from the company that provide TransAlta Renewables with an economic interest in the wind facility.

Big Level

The Big Level facility is a 90 MW wind facility located in Potter County, Pennsylvania. The wind facility was constructed by the company and commissioned in December 2019. The wind facility is fully operational and contracted under a long-term PPA until 2034 with Microsoft. On Feb. 28, 2018, TransAlta Renewables acquired tracking preferred shares from the company that provides TransAlta Renewables with an economic interest in the wind facility.

Lakeswind

The Lakeswind facility is a 50 MW wind facility located near Rollag, Minnesota. The wind facility is fully operational and contracted under a long-term PPA until 2034 with several high-quality counterparties. On May 31, 2018, TransAlta Renewables acquired tracking preferred shares from the company that provides TransAlta Renewables with an economic interest in the wind facility.

Mass Solar

The Mass Solar facility is a 21 MW solar portfolio consisting of multiple sites located in Massachusetts. The solar facility is contracted under a long-term PPA with several high-quality counterparties. In addition to revenue generated under the PPA, the project generates solar RECs that expire in 2024. On May 31, 2018, TransAlta Renewables acquired tracking preferred shares from the company that provides TransAlta Renewables with an economic interest in the solar facility.

North Carolina Solar

The North Carolina Solar facility is a 122 MW solar portfolio consisting of 20 sites located in North Carolina. The facilities are all operational and were commissioned between November 2019 and May 2021. The facilities are secured by long-term PPAs with two subsidiaries of Duke Energy, which at the time of purchase had an average remaining term of 12 years and are automatically extended unless terminated by either party. In November 2021, TransAlta Renewables acquired tracking preferred shares from the company that provides TransAlta Renewables with an economic interest in the solar facility.

Skookumchuck

The Skookumchuck facility is a 137 MW wind facility located in Lewis and Thurston counties, Washington. It consists of 38 Vestas V136 wind turbines. Skookumchuck began commercial operations on Nov. 7, 2020, and has a 20-year PPA with Puget Sound Energy Inc. On Dec. 1, 2020, the company acquired a 49 per cent equity interest in the wind facility from Southern Power Company, a subsidiary of Southern Company. On April 1, 2021, TransAlta Renewables acquired the economic interest in Skookumchuck wind facility.

Wyoming

The Wyoming facility is a 140 MW wind facility located near Evanston, Wyoming. It was acquired in December 2013 from an affiliate of NextEra Energy Resources, LLC. The wind facility is contracted under a long-term PPA until 2028 with an investment-grade counterparty. TransAlta Renewables holds tracking preferred shares from the company that provide TransAlta Renewables with an economic interest in the wind facility.

Facilities Under Construction

The company has internal development expertise with teams that are able to manage every aspect and every stage of new project development from resource assessment to site control, permitting, contracting, engineering, construction and project management.

Alberta Facility

Garden Plain

The Garden Plain wind project is under construction and is located approximately 30 kilometres north of Hanna, Alberta. The facility will consist of 26 Siemens-Gamesa SGRE SG-145 turbines with a nameplate capacity of 130 MW and has a target commercial operation date in the first half 2023. Pembina and TransAlta have entered into an 18-year PPA for 100 MW, commencing on the commercial operation of Garden Plain. The remaining 30 MW of the facility has been contracted to a commercial customer. Under a separate agreement, Pembina Pipeline Corporation (‘Pembina’) has the option to purchase a 37.7 per cent equity interest in the project. The option can be exercised no later than 30 days after Pembina receives notice of the commercial operation date.

Australian Facilities

Mount Keith 132kV Expansion

The Mount Keith 132kV transmission project is under construction and is located in Western Australia. Southern Cross Energy, an entity in which TransAlta Renewables owns an indirect economic interest, had agreed to expand the Mt. Keith 132kV transmission system in Western Australia to support the Northern Goldfields-based operations of BHP Nickel West (‘BHP’). The project is being developed under the existing PPA with BHP, which has a term of 15 years. The project will facilitate the connection of additional generating capacity to the company’s network to support BHP’s operations and increase their competitiveness as a supplier of low-carbon nickel. It is expected to be completed in the second half of 2023.

Northern Goldfields Solar

In 2021, SCE, a subsidiary of the company and an entity in which TransAlta Renewables owns an indirect economic interest, reached an agreement to provide BHP with renewable electricity to its Goldfields-based operations through the construction of the Northern Goldfields solar project. The project consists of the 27 MW Mount Keith solar Farm, 11 MW Leinster solar Farm, 10MW / 5MWh Leinster Battery Energy Storage System and interconnecting transmission infrastructure, all of which will be integrated into the company’s existing 169 MW SCE North remote network in Western Australia. The combined solar and energy storage facility has a target commercial operation date in the first half of 2023.

The U.S. Facilities

Horizon Hill

The 200 MW Horizon Hill wind project is located in Logan County, Oklahoma. 100 per cent of the generation offtake from the project will be taken by Meta, formerly known as the Facebook company, under a long-term PPA. Under this agreement, Meta will receive both renewable electricity and environmental attributes. The facility will consist of a total of 34 Vestas turbines with a target commercial operation date in the second half of 2023. TransAlta will construct, operate and own the facility.

White Rock East and White Rock West

The White Rock East and White Rock West wind projects are under construction and are located in Caddo County, Oklahoma. On Dec. 22, 2021, TransAlta executed two long-term Power PPAs for the offtake of 100 per cent of the generation from its 300 MW White Rock East and White Rock West wind power projects. The White Rock wind projects will consist of a total of 51 Vestas turbines with a target commercial operation date in the second half of 2023. TransAlta will construct, operate and own the facilities. See the ‘General Development of the Business’ section of this AIF for further details.

Gas segment

The Gas segment holds a net capacity ownership interest in 2,775 MW. The facilities are located in Alberta, Ontario, Michigan and Western Australia.

Alberta Gas Facilities

Fort Saskatchewan

The company has a net ownership interest of 30 per cent in the Fort Saskatchewan facility. The 118 MW natural gas-fired combined-cycle cogeneration Fort Saskatchewan facility is owned by TA Cogen and Prairie Boys Capital Corporation. The contract at the facility has an initial 10-year term, which began on Jan. 1, 2020, with the option for two five-year extensions. The contract allows the company’s customer to continue to benefit from the operational flexibility of the facility.

Keephills 2

The Keephills 2 facility is located approximately 70 kilometres west of Edmonton, Alberta, and is wholly owned by TransAlta. Keephills 2 is a 395 MW gas-fired unit that completed its conversion to natural gas in the spring of 2021 and commercial operation was announced on July 19, 2021. The end of regulatory life for this unit is set for 2037.

Keephills 3

The Keephills 3 facility is located approximately 70 kilometres west of Edmonton, Alberta, and is wholly owned by TransAlta. Keephills 3 is a 463 MW gas-fired unit that completed its conversion to natural gas in the second half of 2021 and commercial operation was announced on Dec. 29, 2021. The end of regulatory life for this unit is set for 2039.

Poplar Creek

The Poplar Creek cogeneration facility is located in Fort McMurray, Alberta. On Aug. 31, 2015, the company restructured its contractual arrangement for the facility's power generation services. The Poplar Creek cogeneration facility had been built and contracted to provide steam and electricity to Suncor's oil sands operations. Under the terms of the arrangement, Suncor acquired the company's two steam turbines with an installed capacity of 126 MW and certain transmission interconnection assets. In addition, Suncor assumed full operational control of the cogeneration facility and has the right to use the full 230 MW capacity of the company's gas generators until Dec. 31, 2030. The ownership of the entire Poplar Creek cogeneration facility will transfer to Suncor on Dec. 31, 2030.

Sheerness 1 and 2

The Sheerness facilities are located approximately 200 kilometres northeast of Calgary, Alberta, and are jointly owned by TA Cogen and Heartland Generation Ltd. (‘Heartland’). Heartland is responsible for the operation and maintenance of these units. On April 4, 2020, Sheerness Unit 2 was converted to natural gas and the unit capacity was increased from 390 MW to 400 MW following a generator rewind and final testing. On March 31, 2021, Sheerness Unit 1 was converted to natural gas. The Sheerness facility received its last coal shipment in the first quarter of 2021, with the coal stock being fully depleted in July 2021. On Nov. 9, 2021, Heartland announced that it had completed the transition off coal at Sheerness. The end of regulatory life for these units is set for 2037.

Since Jan. 1, 2021, each owner separately offers their share of generation into the Alberta electricity market.

Sundance 6

The Sundance 6 facility is located approximately 70 kilometres west of Edmonton, Alberta, and is wholly owned by TransAlta. Sundance 6 is a 401 MW gas-fired unit that completed its conversion to gas in the first half of 2021 and announced its commercial operation on Jan. 31, 2021. The end of regulatory life for this unit is set for 2037.

Off-Coal Agreement

On Nov. 24, 2016, the company entered into the Off-Coal Agreement with the Government of Alberta pertaining to the company’s cessation of coal-fired emissions from the Keephills 3 and Sheerness coal-fired facilities. Under the Off-Coal Agreement the company is entitled to receive annual cash payments of approximately $37.4 million, net to TransAlta, from the Government of Alberta commencing in 2017, and terminating in 2030, subject to satisfaction of certain terms and conditions including the company’s cessation of all coal-fired emissions on or before Dec. 31, 2030. Other conditions include maintaining prescribed spending on investment and investment-related activities in Alberta, maintaining a significant business presence in Alberta (including through the maintenance of prescribed employment levels), maintaining spending on programs and initiatives to support the communities surrounding the facilities and the employees of the company negatively impacted by the phase-out of coal generation, and the fulfillment of all obligations to affected employees, in each case as prescribed by the Off-Coal Agreement.

Eastern Canada and the U.S. Gas Facilities

Ada

Ada is a 29 MW contracted cogeneration facility located in Ada, Michigan. The facility has been in operation since 1991, and produces approximately 18,000 tonnes of steam hourly. The electricity and steam output of the facility are fully contracted until 2026 with Consumers Energy and Amway. TransAlta completed the acquisition to own and operate the facility on May 19, 2020. On April 1, 2021, TransAlta Renewables acquired the economic interest in the facility.

Ottawa

The Ottawa facility is owned by TA Cogen. See the ‘Business of TransAlta — Non-Controlling Interests’ section of this AIF for further details. It is a 74 MW combined-cycle cogeneration facility. On Aug. 30, 2013, the company announced the recontracting of the facility with the IESO for a 20-year term, effective January 2014. The Ottawa facility also provides thermal energy to the member hospitals and treatment centres of the Ottawa Health Sciences Centre and the National Defence Medical Centre. The thermal energy contract with the Ottawa Health Sciences Centre has a term to Dec. 31, 2033, with an automatic renewal of a 5-year term unless terminated by either party.

Sarnia

The Sarnia cogeneration facility is a 499 MW combined-cycle cogeneration facility located in Sarnia, Ontario, that provides power and/or steam to nearby industrial facilities owned by ARLANXEO Canada Inc. (formerly LANXESS AG, successor to Bayer Inc.), Nova Chemicals Corporation (Canada) Ltd. (‘NOVA’), INEOS Styrolution Canada Ltd., a styrene production facility formerly owned by NOVA, Suncor Energy Products Partnership and three new industrial customers. The contracts with the new customers are with respect to loads that had previously been supplied to and resold by ARLANXEO Canada Inc. The facility also provides electricity to the IESO under a contract that terminates on April 30, 2031.

Windsor

The Windsor facility is owned by TA Cogen. See the ‘Business of TransAlta — Non-Controlling Interests’ section of this AIF for further details. It is a 72 MW combined-cycle cogeneration facility. Effective Dec. 1, 2016, the Windsor facility began operating under an agreement with the IESO with a 15-year term for up to 72 MW of capacity. The Windsor facility also provides thermal energy to FCA Canada Inc. in Windsor under a contract that expires in 2028, with a series of six successive renewal terms of one year each.

Australian Gas Facilities

Fortescue River Gas Pipeline

In 2014, the company established the Fortescue River Gas Pipeline joint venture with AGI Fortescue River Pty Limited. The joint venture (of which TransAlta is a 43 per cent partner) was successfully awarded the contract to design, build, own and operate the 270-kilometre Fortescue River Gas Pipeline to deliver natural gas to FMG's Solomon facility. The pipeline was completed in the first quarter of 2015 and operates under a take-or-pay gas transport agreement with a subsidiary of FMG for an initial term of 20 years. The 16-inch diameter pipeline has an initial free-flow capacity of 64 terajoules per day. Under the gas tariff agreement, FMG has the option to purchase the Fortescue River Gas Pipeline commencing March 2020. FMG maintains its option and the joint venture continues to deliver natural gas transportation to the Solomon facility. TransAlta Renewables acquired tracking preferred shares from the company that provides TransAlta Renewables with an economic interest in the Fortescue River Gas Pipeline.

Parkeston

The Parkeston facility is a 110 MW dual-fuel natural gas and diesel-fired power station, which the company owns in partnership through a 50/50 joint venture with Northern Star (NPK) Pty Ltd, a subsidiary of Northern Star Resources Limited. The Parkeston facility primarily supplies energy to Kalgoorlie Consolidated Gold Mines pursuant to a supply contract that extends to October 2026, with options for early termination available to either party. The company is evaluating potential opportunities to renew or extend the supply contract. Any merchant capacity and energy are sold into Western Australia's wholesale electricity market. TransAlta Renewables acquired tracking preferred shares from the company that provides TransAlta Renewables with an economic interest in the Parkeston facility.

South Hedland

The South Hedland Power Station is a 150 MW combined-cycle power station located near South Hedland, Western Australia. Construction began in early 2015 and the plant achieved commercial operation on July 28, 2017. The facility is contracted with two customers. Capacity of 110 MW is contracted to Horizon Power to 2042. Horizon Power is the state-owned electricity supplier in the region. The second customer is the port operations of Fortescue Metals Group Ltd. (‘FMG’) for 35 MW of capacity. TransAlta Renewables acquired tracking preferred shares from the company that provides TransAlta Renewables with an economic interest in the South Hedland Power Station.

Southern Cross

Southern Cross consists of four natural gas and diesel-fired generation facilities with a combined capacity of 245 MW. On Oct. 22, 2020, SCE amended the PPA with BHP, which became effective Dec. 1, 2020, and replaced the previous contract that was scheduled to expire on Dec. 31, 2023. The amendment to the PPA extended the term to Dec. 31, 2038, and provides SCE with the exclusive right to supply thermal and electrical energy from the SCE facilities for BHP's mining operations located in the Goldfields region of Western Australia. TransAlta Renewables acquired tracking preferred shares from the company that provides TransAlta Renewables with an economic interest in the four natural gas and diesel-fired generation facilities.

The PPA supports BHP's future power requirements and emission reduction targets by providing BHP participation rights in integrating renewable electricity generation, including solar, wind and energy storage technologies into BHP's mining operations located in the Goldfields region, subject to the satisfaction of certain conditions. New-build projects are already in progress under this contract and include the Northern Goldfields solar and battery project in Mount Keith and Leinster.

Evaluation of additional renewable energy supply and carbon emissions reduction initiatives under the extended PPA with BHP are underway.

Energy Transition segment

The Energy Transition segment holds a net ownership interest in 671 MW. The two facilities are located in the United States.

Centralia

The Centralia coal-fired facility is located in Washington, the U.S., and consists of one 670 MW unit.

On July 25, 2012, the company entered into an 11-year PPA to provide electricity from the company’s Centralia thermal facility to Puget Sound Energy. The contract terminates in 2025 when the facility is scheduled to stop burning coal. Under the agreement, Puget Sound Energy purchases 380 MW of base-load power to December 2024 and 300 MW in 2025. The coal used to fuel the Centralia facility is sourced from the Powder River Basin in Montana and Wyoming. The Centralia facility has coal contracts in place that expire at the end of 2025.

The company sells electricity from the Centralia thermal facility into the Western Electricity Coordinating Council and, in particular, on the electricity market in the U.S. Pacific Northwest energy market. The company’s strategy is to balance contracted and non-contracted sales of electricity to manage production and price risk.

Skookumchuck Hydro

The company owns a 1 MW hydroelectric generating facility that is located on the Skookumchuck River near Centralia, Washington, and related assets that are used to provide water supply to the company’s generation facilities in Centralia. On Dec. 7, 2020, the company entered into a PPA with Puget Sound Energy for the Skookumchuck hydro facility to provide power until 2025.

Reclamation Activities

Centralia Mine

The company owns a coal mine adjacent to the Centralia facility, although mining operations were discontinued at the Centralia coal mine on Nov. 27, 2006. The mine is in the reclamation phase and the company continues to perform reclamation and associated work.

Highvale Mine

The company owns the Highvale mine that supplied coal to the previously coal-fired Sundance and Keephills facilities. Furthering the Clean Electricity Growth Plan, the company discontinued all mining operations at Highvale mine at the end of 2021 and is in the reclamation phase as of Jan. 1, 2022.

Coal Retirements

In aggregate, TransAlta has retired 4,464 MW of coal-fired generation capacity since 2018 while converting 1,659 MW to cleaner-burning natural gas. The following seven units have been retired: Centralia Thermal No. 1, Keephills 1, and Sundance 1, 2, 3, 4 and 5. The retirements remain consistent with the company’s strategy to transition to clean electricity. Pursuant to the Bill, Centralia Unit 2 will retire effective Dec. 31, 2025.

Energy Marketing segment

The company’s Energy Marketing segment provides a number of strategic functions, including the following:

Gathering and analyzing market trends to enable more effective strategic planning and decision-making;

Negotiating and entering into contractual agreements with customers for the sale of output from the company’s generation assets, including electricity, steam or other energy-related commodities;

Actively engaging in the trading of power, natural gas and environmental products across a variety of markets; and

Negotiating and managing fuel supply arrangements with third parties for the company’s generation assets, including scheduling, billing and settlement of physical deliveries of natural gas and other fuels.

The Energy Marketing segment also derives additional revenue by providing fee-based asset management services to third parties, earning margins on third-party gas and power transactions, and by trading electricity and other energy commodities (i.e., fuels). The origination and trading activities are primarily focused on the existing assets and customers of the company.

Corporate segment

The company’s Corporate segment includes its finance, legal, human resources, administrative, business development and investor relations functions.

Non-Controlling Interests

The company’s subsidiaries and operations in which the company has non-controlling interests are as follows:

TransAlta Renewables

As at Dec. 31, 2022, the company held, directly and indirectly, approximately 60 per cent of the issued and outstanding common shares in TransAlta Renewables. The company remain committed to maintaining the company’s position as the majority shareholder of TransAlta Renewables.

The company provides all management, administrative and operational services required for TransAlta Renewables to operate and administer its assets and to acquire additional assets pursuant to the Management Agreement.

TA Cogen

The company holds a 50.01 per cent limited partnership interest in TA Cogen, which is an Ontario limited partnership. The remaining 49.99 per cent ownership is held by Canadian Power Holdings Inc., a subsidiary of CK Infrastructure Holdings Limited.

TA Cogen holds a 50 per cent interest in the 800 MW Sheerness dual-fuel generating facility in Alberta and a 60 per cent interest in the 118 MW Fort Saskatchewan natural-gas-fired cogeneration facility in Alberta. TA Cogen also holds an interest in two natural-gas-fired cogeneration facilities located in Ontario: the 74 MW Ottawa plant; and the 72 MW Windsor plant.

Dispositions

Appleton and Galetta Disposition

On Dec. 2, 2022, the company sold its interest in the Appleton and Galetta hydro facilities located in Ontario.

History

TransAlta Corporation was founded in 1909. The company was incorporated in 1985.