TransAlta (TA) investor relations material

Strategic priorities and market outlook

• Focus on maximizing value from base business while investing selectively in growth opportunities in Alberta, Ontario, Western U.S., and Western Australia, leveraging regulatory familiarity and scalability.

• Anticipate significant power demand growth from electrification, data centers, and industrial reshoring, with data centers expected to represent 14% of Canadian electricity demand by 2030.

• Strategy emphasizes reliability, affordability, rapid deployment, decarbonization, and financial flexibility, leveraging a diversified generation portfolio and strong energy marketing capabilities.

• Alberta market expected to tighten as data center load ramps up, with a focus on converting merchant cash flows into contracted opportunities.

• Centralia coal-to-gas conversion and Alberta data center projects are key growth drivers, with Centralia expected to add CAD 150 million in annual EBITDA by 2029.

Financial guidance and capital allocation

• 2026 adjusted EBITDA guidance is $950–$1,050 million (approx. CAD 1 billion), with free cash flow of $350–$450 million and potential upside from Alberta load growth and data center ramp-up.

• Free cash flow projected to grow faster than dividends, with a payout ratio expected to decrease toward the end of the decade.

• 75%-85% of free cash flow earmarked for growth opportunities, evaluated on a per-share basis and requiring long-term contracts.

• Share buybacks have returned CAD 366 million to shareholders between 2020 and 2025, with continued focus on disciplined capital allocation.

• Targeting a long-term debt-to-EBITDA ratio of 3-4x, BB+ credit ratings near-term with a path to BBB, and maintaining $1.5 billion in liquidity.

Growth initiatives and portfolio management

• Advancing data center strategy in Alberta with phased development at Keephills, starting with a 230 MW PPA and potential expansion up to 1 GW, targeted for 2027+.

• Centralia coal-to-gas conversion (700 MW) fully contracted for 16 years, COD in H2 2028, expected to drive significant EBITDA uplift by 2029.

• Repowering projects at Sundance Unit 5, Keephills Unit 1, and the Flipi Gas Plant provide up to 2 GW of additional capacity, pending long-term contracts.

• M&A and legacy sites are key to expanding contracted and merchant generation capacity, with recent acquisitions enhancing contractedness and strengthening the balance sheet.

• Technology diversification pursued through investments in renewables, storage, and partnerships like Nova Clean Energy, while remaining open to emerging technologies such as batteries and hydrogen.