CALGARY, Alberta (October 29, 2021) – TransAlta Renewables Inc. (“TransAlta Renewables” or the “Company”) (TSX: RNW) announced today further operational updates in respect of the 167 MW Kent Hills wind facility in Kent Hills, New Brunswick (the “Facility”) owned by its indirect subsidiary, Kent Hills Wind LP (“KHW”), in which Natural Forces Technologies owns a 17% interest.  The Facility was completed in three phases and consists of 50 turbines at Kent Hills 1 and Kent Hills 2, which achieved commercial operation in December 2008 and November 2010, respectively; and five turbines at Kent Hills 3, which began commercial operations in October 2018.   As a result of a tower collapse at the Kent Hills 2 site, the turbines at the Kent Hills 1 and Kent Hills 2 sites have been taken offline pending a satisfactory independent engineering and safety assessment. 

 

The independent engineering and safety assessment, which is ongoing, has identified sub-surface crack propagation at several of the foundations of the turbines located at the Kent Hills 1 and Kent Hills 2 sites.  This suggests that certain foundations will likely need repair or replacement.  As a result, further inspection and testing will be required for each of the turbines at Kent Hills 1 and 2 to determine the required remediation plan, if any, on a turbine-by-turbine basis.  It is our goal to safely return to service those turbines that are deemed acceptable following this further inspection and testing, while concurrently performing remediation on those foundations that are identified as requiring repairs or replacement.  It is currently estimated that the cost of replacing a turbine foundation, if required, could be $1.5 million to $2.0 million per foundation and it is our current expectation that the the remediation plan would be implemented during the course of 2022.  The foundation issues at the Kent Hills 1 and Kent Hills 2 sites are unique to the design of those sites and there is no indication of any foundation issue at the Kent Hills 3 site or the Company’s other wind sites. 

 

“The Company is committed to working with our customer and other stakeholders as we remediate the foundations.  We are focused on returning the wind turbines back to service as soon as reasonably practicable while adhering to the highest standards of safety and prudent operating practice”, said Todd Stack, President of TransAlta Renewables.  

 

KHW will not collect any payments from New Brunswick Power Corporation (“NB Power”) in respect of those wind turbines at the Kent Hills 1 and Kent Hills 2 sites until such time that they return to service and generate wind energy output.  This outage is expected to result in foregone revenue of approximately $3.7 million per month for so long as all 50 turbines are offline, based on average historical wind production, with incremental revenue expected to be earned as wind turbines are returned to service.   The Kent Hills 3 power purchase agreement and site remain unimpacted and the turbines at that site continue to operate and generate revenue.  KHW has been in contact with NB Power to keep them informed of developments and to ensure the safety of the site.        

 

As a result of the expected foregone revenue through the remainder of 2021, the Company now forecasts its key 2021 financial targets and related assumptions to be slightly lower relative to its previous guidance range, as set forth below: 

 

Measure (C$ millions)(1)

Revised Outlook

Previous Outlook

Comparable EBITDA

$450 to $480

$470 to $500

Adjusted funds from operations

$300 to $330

$310 to $340

Cash available for distribution

$250 to $270

$260 to $290

(1) These items are not defined and have no standardized meaning under IFRS. Refer to the Discussion of Consolidated Financial Results section of the Company’s MD&A for period ended June 30, 2021 for further discussion of these items, including, where applicable, reconciliations to measures calculated in accordance with IFRS. See also the Additional IFRS measures and Non-IFRS Measures section of the Company’s MD&A for the period ended June 30, 2021.

 

About TransAlta Renewables Inc.

 TransAlta Renewables is among the largest of any publicly traded renewable independent power producers (“IPP”) in Canada. Our asset platform and economic interests are diversified in terms of geography, generation and counterparties and consist of interests in 24 wind facilities, 13 hydroelectric facilities, eight natural gas generation facilities, one solar facility, one natural gas pipeline, and one battery storage project, representing an ownership interest of 2,633 megawatts of owned generating capacity, located in the provinces of British Columbia, Alberta, Ontario, Québec, New Brunswick, the States of Pennsylvania, New Hampshire, Wyoming, Massachusetts, Michigan, Minnesota, Washington and the State of Western Australia. Our objectives are to (i) provide stable, consistent returns for investors through the ownership of, and investment in, highly contracted renewable and natural gas power generation and other infrastructure assets that provide stable cash flow primarily through long-term contracts with strong counterparties; (ii) pursue and capitalize on strategic growth opportunities in the renewable and natural gas power generation and other infrastructure sectors; (iii) maintain diversity in terms of geography, generation and counterparties; and (iv) pay out 80 to 85 per cent of cash available for distribution to the shareholders of the Company on an annual basis.

 

Cautionary Statement Regarding Forward-looking Information

This news release contains “forward-looking information” and “future oriented financial information” within the meaning of applicable Canadian securities laws, and “forward-looking statements”, within the meaning of applicable United States securities laws, including the United States Private Securities Litigation Reform Act of 1995 (collectively referred to herein as “forward-looking statements”). In some cases, forward-looking statements can be identified by terminology such as “plans”, “expects”, “proposed”, “will”, “anticipates”, “develop”, “continue”, and similar expressions suggesting future events or future performance. In particular, this news release contains, without limitation, statements pertaining to the incident at the Kent Hills wind farm and the Company’s actions in response to such incident; the outcome of the engineering safety assessment; the timing and cost of remediation; impacts under the power purchase agreement with NB Power; the impact on revenue and other financial metrics; and the updated financial guidance.  The forward-looking statements contained in this news release are based on current expectations, estimates, projections and assumptions, having regard to the Company’s experience and its perception of historical trends, and includes, but is not limited to, expectations based on preliminary assessments of the Company’s internal and third-party engineers. The forward-looking statements are subject to a number of risks and uncertainties that may cause actual results to differ materially from those contemplated by the forward-looking statements. Some of the factors that could cause such differences include: supply chain disruptions; regulatory delays in respect of any remediation plan; effects of weather, catastrophes and public health crises, including COVID-19; labour availability; the results of the further testing for the foundations being worse than expected; the material costs associated with repairing and/or replacing the foundations, failure to obtain necessary regulatory approvals in a timely fashion, or at all; and other risks and uncertainties discussed in the Company’s materials filed with the securities regulatory authorities from time to time and as also set forth in the Company’s MD&A and Annual Information Form for the year ended December 31, 2020. The financial guidance has been prepared by management to provide an outlook of the Company’s activities and results, and such information may not be appropriate for other purposes.  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 news release. TransAlta Renewables 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.

 

For more information:

Investor Inquiries:

Media Inquiries:

Phone: 1-800-387-3598 in Canada and U.S.

Phone: Toll-free media number: 1-855-255-9184

Email: investor_relations@transalta.com

Email: ta_media_relations@transalta.com

Our Investor Relations team is here to answer any questions you have about investing in our company.