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RNW TransAlta Renewables begins restoring Kent, extends PPA


Canada StockWatch  

 

    TransAlta Renewables Inc (TSX:RNW)

    Shares Issued 266,863,741

    Last Close 6/1/2022 $17.08

    Thursday June 02 2022 - News Release

    Mr. Todd Stack reports

    TRANSALTA RENEWABLES ANNOUNCES REHABILITATION PLAN FOR KENT HILLS, EXECUTES 10-YEAR CONTRACT EXTENSION WITH NEW BRUNSWICK POWER, AND RECEIVES WAIVER FROM PROJECT BONDHOLDERS

    TransAlta Renewables Inc.'s indirect subsidiary, Kent Hills Wind LP, has amended and extended its current power purchase agreements (PPA) with New Brunswick Power Corp. in respect of each of the Kent Hills 1, 2 and 3 facilities, representing total generating capacity of 167 megawatts (MW). The amending agreements provide for a blend-and-extend of the PPAs for an additional 10-year period through to December, 2045. Kent Hills Wind is proceeding with its rehabilitation plan to replace the foundations at Kent Hills 1 and 2 and restore the sites to full operation, which is expected to occur in mid-2023.

    "Our extended partnership with New Brunswick Power reflects our commitment to our customers and maintains our reputation as a supplier of choice for clean electricity," said Todd Stack, president. "Our team has created a solution that meets the needs of New Brunswick Power for both the near and long term, has received the consent of our lenders and allows us to commence site rehabilitation to restore an important source of renewable energy to the region," added Mr. Stack.

    "We are pleased to be extending our relationship with TransAlta to ensure that our customers and grid can continue to rely on the zero-emitting generation of the Kent Hills wind facilities to provide sustainable and affordable energy while also supporting our transition towards a net-zero economy," said Keith Cronkhite, president and chief executive officerof New Brunswick Power.

    The PPAs have been extended 10 years to Dec. 31, 2045, and New Brunswick Power has also been provided with an effective 10-per-cent reduction to the current contract price until 2033. During the extended period after 2033, the contract price in the agreements have been set to align with current competitive pricing for wind generation and include escalators intended to reflect inflation. In addition, both parties have agreed to work in good faith to evaluate the installation of a battery energy storage system at Kent Hills and to consider a potential repowering of Kent Hills at the end of life in 2045. Kent Hills Wind has also reached an agreement with New Brunswick Power regarding the rehabilitation plan that is expected to see the site return to service in mid-2023 in a safe and responsible manner. Kent Hills Wind expects to work closely with New Brunswick Power throughout the rehabilitation process.

    As a result of the determination that all 50 turbine foundations at the Kent Hills 1 and 2 sites require replacement, as well as certain resulting amendments to applicable insurance policies, Kent Hills Wind provided notice to BNY Trust Company of Canada as trustee for the approximately $219-million outstanding non-recourse project bonds secured by, among other things, the Kent Hills 1 and 2 wind sites, that events of default may have occurred under the trust indenture governing the terms of the bonds. Following engagement with the trustee and holders of the bonds, Kent Hills Wind has been able to secure an acceptable waiver of those events of default and has also entered into a supplemental indenture that amends the bond indenture and facilitates the rehabilitation of the Kent Hills 1 and 2 sites.

    Kent Hills Wind is now proceeding with its rehabilitation plan, which consists of dismantling all 49 remaining turbines, demolishing and removing all existing tower foundations, replacing them with newly-designed foundations, reassembling the wind turbine towers and generators, replacing the wind turbine that collapsed, and testing each wind turbine generator before returning it to service. Kent Hills Wind has entered into agreements with Bird Construction Industrial Services Ltd. and Vestas-Canadian Wind Technology Inc. to complete the rehabilitation.

    Rehabilitation for the Kent Hills 1 and 2 sites is targeted to be completed by mid-2023. Each turbine at Kent Hills 1 and 2 will be re-energized and returned to service as soon as its foundation is replaced and the turbine is reassembled and tested. The current estimate of the total rehabilitation expenditures is approximately $120-million, net of insurance proceeds and inclusive of contingency. The company and Kent Hills Wind intend to pursue claims to recover costs and related damages from third parties.

    The 167-megawatt Kent Hills facilities are located near Moncton, in Albert county, New Brunswick, and were completed in three phases consisting of 50 turbines at Kent Hills 1 and Kent Hills 2, which achieved commercial operations in December, 2008, and November, 2010, respectively; and five turbines at Kent Hills 3, which began commercial operations in October, 2018. Natural Forces Technologies Inc. owns a 17-per-cent interest in respect of each of the Kent Hills 1, 2 and 3 facilities through its ownership interest in Kent Hills Wind.

    About TransAlta Renewables Inc.

    TransAlta Renewables is among the largest of any publicly traded renewable independent power producers (IPP) in Canada. The company's asset platform and economic interests are diversified in terms of geography, generation and counterparties, and consist of interests in 26 wind facilities, 13 hydroelectric facilities, eight natural gas generation facilities, two solar facilities, one natural gas pipeline and one battery storage project, representing an ownership interest of 2,968 megawatts of owned generating capacity, located in the provinces of British Columbia, Alberta, Ontario, Quebec and New Brunswick, and the states of Pennsylvania, New Hampshire, Wyoming, Massachusetts, Michigan, Minnesota, Washington, North Carolina and Western Australia.

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