TransAlta Renewables
TransAlta Renewables Reports Second Quarter 2017 Results

Aug 10, 2017

TransAlta Renewables Inc. ("TransAlta Renewables" or the "Company") (TSX: RNW) announced its 2017 second quarter financial results, with Comparable EBITDA(1) of $98 million, a $9 million increase over last year, driven primarily by strong generation from our wind portfolio and unrealized mark-to-market gains on our gas supply contracts that represent an economic hedge but do not qualify for hedge accounting. For the year-to-date, Comparable EBITDA totalled $209 million compared to $203 million for the comparative period, up $6 million, mainly due to increased Comparable EBITDA from our wind portfolio and strong performance from all other business segments.

Cash available for distribution(1) ("CAFD") increased $5 million and $6 million for the three and six months ended June 30, 2017, respectively, compared to the same period in 2016. The increase is primarily due to increased Comparable EBITDA and lower current income taxes. Net earnings increased $37 million and $100 million for the three and six months ended June 30, 2017, respectively, compared to last year. The impact to net earnings attributable to the decrease in the fair market value of our class B shares, was $22 million and $42 million for the three and six month periods, respectively. Year-to-date, foreign exchange gains increased earnings by $63 million, offset by higher depreciation. 

During and subsequent to the quarter, the final stages of construction and commissioning of our South Hedland facility were completed. The facility achieved commercial operations on July 28, 2017 and is expected to contribute approximately $80 million of EBITDA on an annualized basis from 25-year power purchase agreements ("PPA"). The project was completed on budget and, as a result of commissioning of the facility, we announced an increase of the monthly dividend by approximately 7 per cent effective September 29, 2017.

"TransAlta Renewables delivered another quarter of continued solid performance from our portfolio of highly contracted assets," said Brett Gellner, President and Chief Executive Officer. "The successful commissioning of South Hedland and expansion of our Kent Hills wind farm demonstrates our ongoing focus to invest in highly contracted assets with strong counterparties."

Second Quarter Highlights and Subsequent Events

  • Achieved commercial operations of the 150 MW South Hedland natural gas fired power station, located in the Pilbara Region of Western Australia.
  • Announced the investment of approximately $37 million in five new towers, adding 17 MW of capacity to the existing Kent Hills wind farm. The expansion is supported by a long-term contract with New Brunswick Power Corporation, and will bring total operating capacity of the Kent Hills wind farm to approximately 167 MW. In conjunction with the expansion, New Brunswick Power Corporation has extended the term of the initial PPA for Kent Hills from 2033 to 2035. We expect the Kent Hills wind farm to support between $240 and $275 million of project financing. Construction of the expansion is expected to begin in the spring of 2018.
  • Entered into a syndicated credit agreement giving us access to $500 million in direct borrowings. In conjunction with the new credit agreement, the existing $350 million credit facility provided by TransAlta Corporation was cancelled.
  • Fortescue Metals Group ("FMG") announced that, in their view, the South Hedland power station has not yet satisfied the requisite performance criteria under FMG's contract to declare commercial operation, which was declared by Horizon Power on July 28, 2017. FMG has a long-term PPA with TransAlta, for approximately 25% of the generation from South Hedland effective upon commissioning. In our view, all conditions to establish commercial operations, have been fully satisfied under the terms of the PPA with FMG. We continue to confer with FMG on the issue.
  • Received notice that FMG intends to repurchase the Solomon power station from TEC Pipe Pty Ltd., a wholly owned subsidiary of TransAlta Corporation, a right that FMG has under the PPA. Gross proceeds to TransAlta Renewables from the repurchase is estimated to be approximately US$335 and will be utilized to repay the credit facility used to fund the development of the South Hedland power station, for other future growth opportunities, and for general corporate purposes.

Click here to read the full press release.

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TransAlta Renewables Inc.

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