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TransAlta (TAC) to Build 300 MW Wind Plant, Eyes 2 GW Target

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TransAlta Corporation TAC inked two long-term power purchase agreements (PPAs) for the offtake of 100% energy generated from 300-MW (megawatt) White Rock Wind Power Project in Caddo County. With this project, TAC moves closer to its Clean Electricity Growth Plan of delivering 2 gigawatt of capacity by 2025.

Details of the Wind Project

The construction of the project will begin in late 2022 with a targeted operations date in the second half of 2023. The estimated capital needed will be $460-$470 million, which is likely to be financed with TransAlta’s existing liquidity and tax equity.

The wind project will likely generate total annual earnings before interest, taxes, depreciation and amortization of $44 million including production tax credits. TransAlta will be responsible for the construction, operation and ownership of the facility, which will consist of 51 Vestas turbines.

Emission-Reduction Initiatives

In the September quarter, TAC started constructing the 130 MW Garden Plain wind project while its 206-MW Windrise wind project reached the final stages of commissioning. With its focus on wind energy, TransAlta acquired 122 MW North Carolina solar portfolio and issued a full notice to proceed on the 48 MW Northern Goldfields solar project.

Apart from expanding its renewables, TAC is retiring coal-fired projects. In the third quarter of 2021, TransAlta announced plans to suspend the Sundance Unit 5 repowering project and retirethe Keephills Unit 1 at the end of 2021 and the Sundance Unit 4 in 2022, with 1,200 MW of coal-fired capacity. TransAlta aims to reduce emissions by 70% within 2030 from its 2005 base levels and reach full carbon-neutrality by 2050.

Peer Moves

Other electric utilities also adopting measures to supply clean and reliable energy to their customers include Duke Energy DUK, Xcel Energy XEL and Alliant Energy LNT, all carrying a Zacks Rank#3 (Hold) at present. All three stocks are planning to provide absolute clean energy by 2050.

The long-term (three-five) earnings growth rate for DUK, XEL and LNT is pegged at 5.3%, 6.4% and 6.1% each. The dividend yield of Duke Energy, Xcel Energy and Alliant Energy is 3.8%, 2.7% and 2.7%, respectively.

Earnings surprise delivered by DUK, XEL and LNT in the last four quarters is 2.3%, 2.1% and 4.4% each, on average. The Zacks Consensus Estimate for 2022 earnings of Duke Energy has moved 0.2% up in the past 60 days while that of Xcel Energy and Alliant Energy has remained stable.

Zacks Rank & Price Performance

In the past year, shares of TransAlta, presently a Zacks #3 Ranked player, have gained 50.6%, outperforming the industry’s rise of 8.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

One Year’s Price Performance

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