CALGARY - TransAlta (NYSE:TAC) Corporation (TSX: TA) (NYSE: TAC), a leading renewable energy operator, announced today the commencement of commercial operations for its White Rock wind facilities in Caddo County, Oklahoma. The 300 megawatt (MW) project, consisting of White Rock East and White Rock West, has begun supplying electricity to Amazon (NASDAQ:AMZN) Energy LLC under a long-term contract.
The White Rock facilities, which are now the company's largest wind project, mark TransAlta's first venture into Oklahoma's clean energy sector. This addition expands TransAlta's renewable energy capacity in the United States to 820 MW. The project features 51 Vestas wind turbines and is expected to contribute an estimated average annual adjusted EBITDA between US$53 and US$57 million, including sales of production tax credits (PTCs).
On February 22, 2024, TransAlta secured a 10-year agreement to sell about 80% of the expected PTCs from the White Rock facilities to an AA- rated third party. The remaining PTCs are anticipated to be sold through spot transactions or future contracts.
TransAlta's President and CEO, John Kousinioris, expressed satisfaction with the project's completion and highlighted the strategic relationship with Amazon, which aims to power its operations with 100% renewable energy. He also noted the significance of the company's first long-term contract to supply PTCs in the US, which is expected to provide stable long-term cash flows and diversify the company's revenue streams.
The White Rock project is a testament to TransAlta's commitment to sustainable energy generation and aligns with its corporate goals related to the UN Sustainable Development Goals and the Future-Fit Business Benchmark. The company has reported a 66% reduction in greenhouse gas emissions since 2015, aligning its climate change management with international standards.
This news release contains forward-looking statements regarding the anticipated benefits of the White Rock facilities and the expected completion of another wind project in Oklahoma, which would increase TransAlta's US portfolio to over 1 GW. These statements are based on current expectations and are subject to various risks and uncertainties.
The information in this article is based on a press release statement from TransAlta Corporation.
InvestingPro Insights
As TransAlta Corporation (NYSE: TAC) launches its White Rock wind facilities, the company's financial metrics and market performance provide investors with a clearer picture of its current standing. With a market capitalization of $2 billion USD, TransAlta's aggressive share buyback strategy signals management's confidence in the company's value, which is an important consideration for investors.
The company's P/E ratio stands at a low 3.85, which, when compared to the adjusted P/E ratio over the last twelve months as of Q4 2023 at 4.34, suggests that the company is trading at a low earnings multiple. This could indicate that TransAlta's stock is potentially undervalued relative to its earnings, making it an attractive option for value investors.
Despite concerns over a potential sales decline and anticipated drop in net income for the current year, TransAlta has maintained dividend payments for 37 consecutive years, with a dividend yield of 2.71% as of early 2024. This demonstrates a strong commitment to returning value to shareholders and could be a reassuring sign for income-focused investors.
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With the next earnings date scheduled for May 3, 2024, investors will be eagerly awaiting updates on the company's performance and the impact of its renewable energy initiatives on its financial health. The fair value estimates by analysts and InvestingPro stand at $8.93 and $9.55 USD respectively, suggesting potential upside from the previous close price of $6.49 USD.
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