TransAlta Acquires 303 MW Portfolio TransAlta Corp.

(TransAlta, 23.Dec.2020) — TransAlta Renewables Inc. entered into definitive agreements for the acquisition of three assets from TransAlta Corporation (“TransAlta”) consisting of:

— a 100% direct interest in the 207 MW Windrise wind project located in the Municipal District of Willow Creek, Alberta;

— a 49% economic interest in the 137 MW Skookumchuck wind facility in operation located across Thurston and Lewis Counties in Washington State; and

— a 100% economic interest in the 29 MW Ada cogeneration facility in operation located in Ada, Michigan.

“We are pleased to announce our acquisition of Windrise and economic interests in the Skookumchuck wind and Ada cogeneration assets. This enhances our position in the renewables sector in both Canada and the US, launches on-site generation in the US and further extends the contracted duration of our cashflows for ongoing distributions to our shareholders as we continue to target an 80% to 85% payout ratio for our common share dividends,” said John Kousinioris, President of TransAlta Renewables.

The total acquisition price for the portfolio of assets is CDN$439mn, which includes the remaining construction costs for the Windrise wind project. The company will fund the cash consideration for the acquisition and remaining construction costs with the proceeds from the South Hedland project financing completed earlier this year. The transaction will close in separate tranches early in 2021 subject to the satisfaction of certain closing conditions; however, the economic benefit of the transaction will be deemed effective as of 1 January 2021.

Investment Highlights

— Total acquisition value of CDN$359mn payable as of 31 December 2020 along with the obligation to fund the balance of remaining construction costs for the Windrise wind project;

— Adds 303 MW of net power to installed capacity;

— Long-term contracted portfolio with an average remaining contract life of 19 years with high investment-grade counterparties;

— Increases the average contracted life of the fleet from 10 years to 12 years; and

— Annual EBITDA contribution of the assets to the company is estimated at approximately CDN$45mn, inclusive of production tax credits.

All figures quoted are in Canadian dollars.

Portfolio Overview

Windrise is a 207 MW wind project under construction located in Municipal District of Willow Creek, Alberta. The wind facility has an executed Renewable Support Agreement with the Alberta Electric System Operator to provide wind electricity to the province for a 20-year term. The project is on track to reach commercial operation during the second half of 2021.

Skookumchuck is a 137 MW wind facility in operation located across Thurston and Lewis Counties in Washington State. The wind facility began commercial operations on 7 November 2020 and has a 20-year power purchase agreement with Puget Sound Energy Inc. TransAlta Renewables will acquire an economic interest in the 49% ownership of TransAlta Corporation (net of tax equity) through a tracking share structure. Income distributions to the Company will be net of cash and tax attributes provided to the tax equity investor.

Ada is a 29 MW cogeneration facility in operation located in Ada, Michigan. The cogeneration facility began commercial operations in 1991 and has a power purchase agreement and steam sale agreement for a remaining five-year period with Consumers Energy and Amway. TransAlta Renewables will acquire the economic interest from TransAlta Corporation in the asset through a tracking share structure.

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