TransAlta Renewables Inc. Investor Presentation September 2018

Transcription

1 TransAlta Renewables Inc. Investor Presentation September

2 Forward Looking Statements 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, 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 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. 2

3 Investment in TransAlta Renewables Significant Scale Enterprise Value 1 $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% Highly Diversified # of Assets Owned MW Percent of Generation Cash Flow Wind 20 1,318 46% Natural Gas % Hydro % Solar % Total 41 2, % 1 Based on closing price on the Toronto Stock Exchange as of July 31, Balance sheet data as at June 30,

4 Investment Highlights Highly Diversified 41 facilities across multiple regions and spanning various technologies Highly Contracted Portfolio 12 year weighted average contract life Strong Balance Sheet and Access to Competitive Capital 2.4x Net Debt/EBITDA Raised over $0.9 billion of low cost project debt Material debt capacity Proven Track Record of Growth and Value Creation $3.1 billion of acquisitions since IPO Total shareholder return of 68% since IPO in 2013 Strong Sponsorship from TransAlta Corporation Excellent source of drop-down and third party growth opportunities 4

5 Highly Contracted Facilities Pingston, BC Southern Cross, WA McBride Lake, AB Sarnia, ON Upper Mamquam, BC Parkeston, WA Misema, ON Melancthon, ON Castle River, AB Mass Solar, MA Wyoming Wind, WY Ragged Chute, ON Wolfe Island, ON Moose Rapids, ON Appleton, ON Galetta, ON Kent Breeze, ON Bone Creek, BC Sinnott, AB Cowley North, AB St. Mary, AB Waterton, AB Belly River, AB Taylor, AB New Richmond, QC Le Nordais, QC Macleod Flats, AB Soderglen, AB Blue Trail, AB Ardenville, AB Summerview 2, AB Summerview 1, AB Lakeswind, MN Kent Hills, NB South Hedland, WA Akolkolex, BC Average capacity weighted contract life of ~12 years Remaining Contracted Years 5

6 Millions Significant Increase in Cash Available For Distribution $300 $284 $260 - $290 $250 $245 $200 $177 $150 $100 $82 $50 $ Outlook 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. 6

7 Strong Total Shareholder Return Since IPO Total Shareholder Return Since August 2013 IPO 100% 80% 60% 40% 20% 0% -20% Aug-13 Aug-14 Aug-15 Aug-16 Aug-17 Aug-18 RNW S&P TSX ~$3.1 billion in new assets Significantly increased dividend and public float Added to the S&P/TSX Composite Index in

8 Strong Dividend Growth Annualized Dividend Per Share $1.00 $0.80 $0.60 $0.40 $0.75 ~3% Wyoming Wind $0.77 ~9% Australian Assets $0.84 ~5% Three Canadian Projects $0.88 ~7% South Hedland $0.94 $0.20 $0.00 At IPO (Aug 2013) 8

9 Attractive Dividend Yield Dividend Yield RNW Peers² Average (~5.6%) 0% 2% 4% 6% 8% 10% 1 Based on the closing price as of July 31, Other companies include Algonquin Power, Brookfield Renewables, Enbridge Income Fund, Innergex, Northland Power, NRG Yield, NextEra Energy Partners, Pattern Energy. Source: FactSet 9

10 Proven Growth Track Record MW Wyoming wind acquisition 575 MW Australian Assets investments 506 MW Sarnia gas investment 98 MW Le Nordais wind investment 7 MW Ragged Chute hydro investment 150 MW South Hedland gas 17 MW Kent Hills 3 wind expansion 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 $3.1 billion in investments 10

11 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 11

12 US Wind Development Projects Big Level - 90 MW Pennsylvania project One 15-year PPA Early stage construction underway Capital cost of ~US$160 million Antrim - 29 MW New Hampshire project Two 20-year PPAs Construction began in July 2018 Capital cost of ~US$80 million All three counterparties have S&P credit ratings of A+ or better Commercial operation expected during the second half of 2019 for both projects 12

13 Drivers of Future Growth Government Policies and Regulations Renewable targets Carbon pricing Thermal environmental regulations Competitiveness Low gas prices and abundant supply More cost competitive renewables Technological improvements Customer Requirements Desire for renewable energy Behind-the-fence needs Diversified System Highly dispatchable generation to complement growth in intermittent generation Minimize exposure to any one technology or fuel type 13

14 Investment Highlights Strong Core Business with a proven track record 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 Positioned for growth and further valuation creation ~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 14