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TransAlta (TAC) Unfolds Renewable Plans, Hikes 2022 Dividend

TransAlta (TAC) unveils plans to lower emissions by 70% within 2030 from its 2005 levels and become carbon-neutral by 2050. Also, it ups 2022 dividend...

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TransAlta Corporation TAC announces its strategic growth plans that will position it as a leader in delivering clean electricity. It aims to add 2 Gigawatt (GW) of capacity to its portfolio by developing, constructing and acquiring assets via investments worth $3 billion by the end of 2025.

The company has a customer-centered renewable electricity and storage plan in place. It aims to expand its storage by enhancing its 3 GW development pipeline and further increasing it to 5 GW by 2025 to double the renewable fleet within 2030. Currently, it has a development pipeline of 1.2 GW in the United States, nearly 2 GW in Canada and 270 megawatt (MW) in Australia.

It announced building new projects and undertaking buyouts worth 300 MW capacities and has 500 MW of electricity in advanced-stage development. Also, the utility’s already announced acquisition of solar projects with 122- MW capacity in North Carolina, expected to close in mid-October, will be another significant addition to its renewable portfolio.

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Zero-Carbon Emission Goal

A clear transition is evident in the utility space with the operating participants making changes to their generation portfolio to cut down on emission. The focus is on using more clean renewable sources and trimming the usage of coal to generate electricity.

TransAlta is also undertaking necessary steps to retire the old generating power units and restructure its portfolio. After proper evaluation, it determined that increasing costs, regulatory risks, changes in supply and demand along with power price forecasts in the Alberta market make the Sundance Unit 5 repowering project unsuitable. Hence, it decided to suspend its operations, and use its capital to fund other renewable projects.

Based on the future market conditions, the company’s focus on renewable energy solutions and the age of the facilities, the utility will retire the Keephills Unit 1 on Dec 31, 2021 and the Sundance Unit 4 effective Apr 1, 2022. Besides, it provided a retirement notice to the Alberta Electric System Operator. Its efforts include ceasing all coal-fired generation in Canada by the end of the current year and across its entire fleet by the late 2025.

TransAlta aims to reduce emissions by 70% within 2030 from its 2005 base levels and reach full carbon-neutrality by 2050. Other utilities that already decided to curb 100% carbon emissions by 2050 from their operations include Alliant Energy LNT, Exelon Corporation EXC and FirstEnergy Corp. FE.

Dividend Update

The utility also raised its dividends by 11% to reach an annual tally of 20 cents per share, marking the third dividend hike in the past two years. The new quarterly dividend of 5 cents per share is payable Jan 1, 2022 to its shareholders of record on Dec 1, 2021.

Price Performance

Shares of this utility have gained 10.1% in the past six months against the industry’s decline of 2.1%.

Six Months Price Performance

Zacks Investment ResearchImage Source: Zacks Investment Research

Zacks Rank

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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