TransAlta announces C$390m acquisition of Heartland Generation

In a definitive move within the energy sector, TransAlta Corporation has entered into a share purchase agreement with Energy Capital Partners, the parent of Heartland Generation Ltd. and Alberta Power (2000) Ltd., to acquire Heartland’s entire business operations in Alberta and British Columbia. The purchase, valued at C$390 million, plus the assumption of C$268 million in debt, will see TransAlta bolster its generation assets by 507 MW of cogeneration, 387 MW of peaking generation, 950 MW of thermal generation, and transmission capacity, along with a development pipeline that includes the cutting-edge 400 MW Battle River Carbon Hub.

Strategic Expansion to Enhance Grid Reliability

This strategic acquisition promises to reinforce TransAlta’s competitive edge in a rapidly evolving energy market, notably in Alberta’s energy-only market, by adding highly flexible and fast-ramping generation assets. President and CEO of TransAlta, John Kousinioris, highlighted the transaction as a significant step towards supporting the province’s energy transition and ensuring grid reliability amidst a surge in renewable energy investments.

TransAlta Corporation to acquire Heartland Generation for Enhanced Energy Capabilities. Photo courtesy of Qyd/Wikimedia Commons.

Heartland Assets: A Boon for TransAlta’s Clean Energy Goals

The transaction is not only a leap forward for TransAlta’s presence in the region but also aligns with its long-term decarbonization goals, as underscored by Kousinioris. With the inclusion of Heartland’s low-cost and high-cash-flow assets, TransAlta expects to enhance its Clean Electricity Growth Plan and remain on track for its 2026 GHG emissions reduction target and 2045 carbon net zero aim.

ECP Partner Andrew Gilbert expressed confidence in TransAlta’s future role in advancing the energy transition, building on Heartland’s progress since its acquisition in 2019.

Fiscal and Environmental Synergies Anticipated

TransAlta anticipates this acquisition to be highly accretive to free cash flow and EBITDA, with near-term corporate pre-tax synergies estimated at $20 million annually. The expanded asset portfolio, including the pioneering Battle River Carbon Hub project, is expected to play a crucial role in the provision of zero-carbon electricity solutions, leveraging existing infrastructure for cost-effective development.

Closing and Future Outlook

The agreement is pending customary closing conditions and regulatory approvals, with the expected transaction completion in the first half of 2024. This move represents a strategic investment for TransAlta, bolstering its ability to deliver reliable generation and support a cleaner, more dynamic electricity market in Alberta and British Columbia.