Joe Colletti
Welcome to Powering Sustainable Ideas, a podcast series from RBC Capital Markets, where we interview the leaders and companies powering the sustainable future. I'm your host for this episode, Joe Colletti. Today we're broadcasting from RBCs, Global Energy, Power and Infrastructure Conference in New York, and we're joined by John Kousinioris, President and CEO of TransAlta Corporation. For more than a century, TransAlta has delivered reliable power across Canada, the United States and Australia, now with a diversified fleet of hydro, gas, wind, solar and battery assets and headline projects like the Brazos pump storage proposal, the company is re-engineering flexibility for a low carbon grid. John, thanks for being here.
John Kousinioris
It's very nice to be here. Thanks for having me.
Joe Colletti
So, TransAlta has been generating electricity since 1911. What drew you to lead this company with this kind of a legacy, and how are you redefining it or reshaping it for the energy transition?
John Kousinioris
Yeah, it's a real opportunity. I grew up in the Calgary area, so a born and raised Calgarian, and having the opportunity to be involved in a company that's actually older than Calgary Stampede, which is, which is quite a thing to be able to say is really unique. The company's evolution really is reflective of the evolution of the province and the growth of the province. We began with a hydro facility west of the city, our Horseshoe Dam, abutting the Stoney Reserve, and really reflecting our history with the indigenous people in that region; and the company has developed over time, from hydro to coal to gas to renewables, and grew as the local community grew. So very exciting to be part of that history, and exciting to be able to shape the evolution of the company going forward. Energy is critically important to the future. Designing a grid and providing power that is affordable, sustainable and reliable is a challenge, and that's something that we take very seriously at our company, and candidly, having the ability to power and empower the communities in which we live is really a great mission. It's a unique thing to be able to say that you do.
Joe Colletti
Over the last five years, you've retired coal, converted to gas and built out renewables and storage. What's the overarching strategic vision that ties these moves together?
John Kousinioris
Yeah, we've been on a pretty significant decarbonization journey. You know, if you go back to 2005, our company was probably responsible for in the range of 5% of Canada's emissions. If you roll forward to where we are today, we've reduced our emissions by approaching 75%. So by the end of 2026 we'll be shutting down at the end of this year our last coal fired plant, and at that point in time, we'll have reduced our emissions profile by over 75% from what it was in 2015. So that journey is something we're very proud of. Having done that, and at the same time, we've evolved our fleet to reflect a balance of different generating types which our customer needs today. So a focus for sure on sustainability, as I mentioned earlier, but also affordability and reliability. So we are half gas these days, half renewables, a leading wind power generator, the largest hydro company in the province of Alberta, and one of the largest gas fired generators in Canada. So a real mix. It continues to evolve, and it's based on our convictions that over time, our customers will want cleaner generation, more sustainable generation. There will be a role, however, for natural gas to provide reliability and support the entire system. So the feathering of all types of generation to meet the growing needs of power as we go forward.
Joe Colletti
Projects like the 900 megawatt Brazo pumped hydro and the water charger battery are designed to turn intermittent renewables into 24/7 capacity. How do they change the economics of your portfolio, but also the reliability equation for the grid?
John Kousinioris
Look, they’re are projects that we're really excited about. The challenge with them right now is the affordability part. So they are projects that candidly we see as being more for the 2030s than today. The other feature of projects like this are, they're effectively a great big battery, so they can act as a battery for the grid, providing ancillary services, enhancing grid reliability, being there to respond quickly when there's any kind of intermittency as the grid becomes greener or more intermittent over time. So we do see a role for them, maybe in a more carbon-constrained world in the future, but today, they're probably a little bit more challenging to be able to be able to get off the ground in the absence of some kind of revenue construct that that is secure going forward.
Joe Colletti
So uncertainty continues to be the theme in the macro environment and energy policy is moving fast, from Canada's clean electricity regulations to market design reforms in Alberta and the US. How do you build and maintain a strategy that stays ahead of regulatory change, rather than always reacting to it.
John Kousinioris
Look, it's, it's a real challenge. I was reflecting on it earlier today with our team. We've actually gotten to a place where we sort of see change as being a bit of a steady state for us. So it's something that we expect to occur all of the time. It almost doesn't matter what market you're in, and we're in Canada, the US and Western Australia. And it's not just like each of the countries is a market. There are submarkets, each of them is in a state of continual evolution. And it's becoming a bit more acute as load is increasing, the demand for power is increasing, and our regulators are really struggling with how not just to incent appropriate types of new generation and transmission and distribution, but also to ensure that the grid remains reliable by having proper pricing signals for legacy generation that is required to meet the transition. The way we deal with it is really twofold. We're fortunate enough because of the diversification we have. One part of the business sort of insulates some of the buffeting effects that may be occurring in another part of the business. It also permits us to take ideas that may resonate in one jurisdiction, but they don't have visibility to in another, and kind of cross pollinate them. And finally, I would say, we believe that electrification is going to continue. We think load will continue to increase. We think our customers, over time are going to want responsible and sustainable, increasingly decarbonized generation. We think reliability will be critical. We think gas fire generation has a long future, and that storage will become critical over time to the future.
Joe Colletti
Recently in Canada, you issued a $450 million green note that was nearly three times oversubscribed. How does that positive response from investors influence your funding mix and risk appetite going forward?
John Kousinioris
I think it had been our first time back in the Canadian debt capital market since 2013, so, it's kind of amazing to me. It was very well received. We were pleased with how it played out. We're very disciplined, from a financial perspective, very much focused on having strength in our balance sheet. And if we have a good project that creates value for our shareholders, we'll be able to get the funding, whether it's through cash flow or debt. So no significant change to the way that we're looking at the financial construct of the company at this point.
Joe Colletti
You're talking to a lot of investors at the conference. What are some of the milestones from TransAlta, whether they're operational, financial regulatory, that you think they should be keeping an eye on, or that might help gage your momentum in the months ahead?
John Kousinioris
We've got four. The first one would be our Keephills 2 data center project that we're working through. That's something that we're working on, de-risking and commercializing in a very real way this year, in year. So that's a real focus for us. So that would be number one. Number two would be our Centralia coal fire plant. That plant is scheduled to shut down at the end of 2025 and we are in discussions to convert it to natural gas, to actually enhance the reliability of the grid in the Pacific Northwest for an extended period of time. So what's interesting about the first two projects is they're very much a reimagining, adding value to legacy assets that the company had with strong returns and in a way that really meet the needs of our customers. Also with the view to commercializing that this year, in terms of providing certainty of what we're doing. The third thing that we're focusing on is, candidly, M&A. We see a lot of opportunities for assets, and our focus is, at least at present, much more oriented towards the western United States. We have a significant energy marketing team. They do a lot of prop trading optimization throughout the western US, and it's an area that we have particular expertise. We're the largest trader of power in mid sea, for example. A lot of people don't realize that, so we're really focused on looking at acquiring assets, that we could take the ability of our trade floor and actually extract greater value through, throughout that region. And candidly, it's a lot, I think more cost effective to buy existing steel in the ground today than to actually build new. The fourth thing, and this is maybe the decade beyond. We just announced the transaction with Nova Clean Energy. It's a renewables developer based out of Chicago, and we've lent them up to $175 million US, and in exchange for that, they are going to be focused on developing and expanding their pipeline of renewables. Our focus primarily wind and storage in the Western United States in a way that, if we can bring their front end of the development cycle, with our construction, operating and kind of trading expertise together to create better returns, better value for our shareholders from those projects. So it's not about the loan, it's about what the loan enables us to do as we look at the renewable side of the equation in the balance of this decade and in the early part of the decade beyond.
Joe Colletti
So if we take a step back, one thing we've been talking to people about is, if you look at the next 12, 18, 24, months, even maybe a little beyond that. Are there some other inflection points, whether technological policy related market driven. We mentioned AI, clearly that's one of them, and the impact that's having in the data center space. Are there other things you think corporates or investors should be watching or paying more attention to?
John Kousinioris
I mean, there's a lot, but I'll try to maybe bucket it into three sort of elements. The first one is, absolutely, we are seeing an increase in load, and we are seeing an increase in demand, pretty much in every market that we operate in. And it's great. It's a great tailwind for not just our company, but our industry as a whole. That will require energy solutions, grid management solutions, smarter grids, all of the above to be able to meet the needs, and it will be still a challenge to be able to flex up, given the supply chain constraints that we have today, and frankly, even transmission constraints that we have to be able to kind of meet the needs of our communities and economies going forward. So that's one, and I don't see that changing anytime soon. I think that continues. Two, we're still seeing issues around, and I mentioned it like, tariffs, some of the trade turbulence, supply chain – can take you years to get a transformer, years to get a turbine. There are elements of uncertainty over pricing, whether it's steel tariffs, aluminum, what is the price of the turbine going to be? So there's some friction points that make building new to be more challenging than maybe it was in the past. Three we see a lot of policy uncertainty. So in Canada, you mentioned it in your introduction, the clean electricity regulations. Where does carbon pricing go? Those are initiatives that are challenging for some geographies like our home province of Alberta, and need to be, need to rethink, candidly, and even in the United States, we look at the Big Beautiful Act and the IRA and what does that mean in terms of things going forward. So there's policy and stability going from going forward. The days of building things easily, without local opposition to things, have changed. The more that the footprint of generation kind of touches the communities in which people live. We're seeing greater concerns being articulated, and just the time to develop things and really engage with local communities to make sure that they understand and are accepting of and that things are being built in a responsible way is going to increase over time. And that's something that our industry needs to be very much aware of and mindful.
Joe Colletti
I think that's a great point to end on. Jon, thank you so much for being here. We hope you'll come back next year.
John Kousinioris
I’d be a real pleasure. Thank you so much.
Joe Colletti
That's it for our conversation today. Thanks again for listening to Powering Sustainable Ideas. Brought to you by RBC Capital Markets. This episode was recorded on June 4, 2025. Please remember to subscribe to get more great content and be alerted about future episodes. See you all next time.
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This content is based on information available at the time it was recorded and is for informational purposes only. It is not an offer to buy or sell or a solicitation, and no recommendations are implied. It is outside the scope of this communication to consider whether it is suitable for you and your financial objectives.