TransAlta has signed an agreement with an affiliate of Energy Capital Partners (ECP) to acquire the entire operations of Heartland Generation in Alberta and British Columbia for $658m.
Heartland owns and operates several power generation assets comprising 507MW of cogeneration and 387MW of contracted and merchant peaking generation.
It also has 950MW of gas-fired thermal generation, transmission capacity and a development pipeline that includes the 400MW Battle River Carbon Hub.
The transaction is expected to be completed in the first half of 2024, subject to customary closing conditions, including receipt of regulatory approvals.
TransAlta intends to finance the acquisition, which includes a purchase price of $390m and $268m of low-cost debt, using cash on hand and credit facilities.
TransAlta president and CEO John Kousinioris said: “With this acquisition, we are pleased to announce the addition of highly flexible and complementary assets to our Alberta portfolio.
“As the energy transition continues to drive new investment in renewables in the province, our assessment is that the market will require low-cost, highly flexible and fast-responding generation, which will be supportive to grid reliability over the coming years.
“This transaction will support us in maintaining our competitive positioning and ensure we have a robust and diversified portfolio, which together with our marketing capabilities, can complement and support a cleaner grid.”
TransAlta said that the transaction provides several benefits, including the expansion of flexible generation capabilities, competitive positioning, near-term synergies, and decarbonisation.
The acquisition is expected to support the responsible energy transition and deliver reliability in the Alberta electricity market in the next 10 to 15 years.
It adds a portfolio of assets at $357/kW, providing a low-cost expansion to deliver reliable generation to the market demands of Alberta.
Upon closing, Heartland’s assets will add around $115m of average annual EBITDA, including synergies, and annual estimated corporate pre-tax synergies of $20m.
In addition, the combined portfolio will enable the Canadian company to further optimise operations and supply chains through scale to achieve additional synergies in the future.
Kousinioris added: “The Heartland portfolio is low-cost and will contribute meaningful cash flows with significant value from synergies. It will also support the energy transition until other zero-emitting solutions are developed.”
ECP partner Andrew Gilbert said: “ECP is proud of the transition progress that Heartland has made since its acquisition in 2019 through our early coal conversions and the advancements of the Battle River Carbon Hub, all the while consistently delivering reliable electricity to the province.
“We are excited for TransAlta to continue advancing the energy transition and meeting the reliability and electricity needs of Alberta.”
