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TransAlta sees end of coal production in sight

The board for the century-old power producer approved a strategy to shut down or convert to gas generation a number of its coal-fired plants.

TransAlta Corporation, a 116-year old Canadian electricity producer, said the high cost of carbon-intensive assets and federal regulations has led to it retiring or converting most of its coal-fired power plants.

In a strategy approved by its board of directors, the Alberta-based company, generating a combined 9GW, said lower carbon emissions, less operating costs, increased flexibility and five-to-10 years of added economic life for plants converted from coal-fired to natural gas led to its decision to fully adopt cleaner energy.

TransAlta currently operates six coal-fired plants – five in Alberta and one in Washington State – generating 4.9GW and C$514 million ($381 million; €351 million) in EBITDA, according to the company’s website. Citing federal regulations that state power plants built before 1975 must cease to operate coal by 2019, it said it would retire the Sundance 1 facility in 2017 and apply for an extension for Sundance 2. Together, the two plants generate 560MW of the Sundance power plant’s 2.1GW.

The company said it will convert Sundance 3,4,5 and 6, and the Keephills 1 and 2 plants, from coal to gas. This will result in a 40 percent reduction in carbon emissions at the plants while maintaining their combined 2.4GW generation capacity.

TransAlta chief financial officer Donald Tremblay said in a statement these conversions represent a C$300 million capital commitment. “These units are expected to provide low-cost capacity and to be very competitive in the upcoming capacity auctions; we expect the first auction to occur in 2019 for 2021,” he said.

“The company is taking steps today that will position us as a leader in clean power generation and improve our competitive position as we consider a future where carbon is a high cost input to power generation,” TransAlta president Dawn Farrell said.

Founded in 1911, TransAlta has in recent years prioritised clean energy as its growth strategy. The company has in its portfolio 1.6GW of gas generation, 1.4GW of wind, 936MW of hydro and 21MW of solar.

In November 2015, the Alberta Investment Management Corporation purchased an 8 percent stake in TransAlta’s renewables development division for C$200 million.