TransAlta Gas Goal Edges Closer as Unit’s Profit Exceeds Coal

TransAlta Corp. inched closer to a future of more natural gas and less coal as a source of power generation and profit.

The Canadian utility posted a better operating gain from its gas business than from coal in the second quarter as a recently commissioned pipeline in Australia, where it has three gas-fired plants, helped improve margins. The 150-megawatt South Hedland gas power station that it’s building in the country will provide an additional boost to earnings when it’s complete, Chief Executive Officer Dawn Farrell said on an conference call Wednesday.

“You’ll start to see gas really creeping up there,” Farrell said. “Our growth plan is around gas and renewables, and coal will start to diminish if we get more growth.”

TransAlta, which still relies on coal for more than half its global generation capacity, is investing in gas, wind and solar projects as countries from Canada to China phase out coal use for electricity.

The company’s second-quarter earnings before interest, taxes, depreciation and amortization at its gas division rose 6.9 percent to C$77 million ($60 million) in the second quarter, more than the Canadian coal division’s C$71 million, the company said Wednesday.

In Alberta, the Calgary-based company is working with the provincial government to find a way to maintain jobs and economic growth while lowering carbon emissions. Accelerating a phase-out of coal plants in the province, known for its oil-sands industry, will result in more gas projects in the coming years rather than more wind or solar power, Farrell said.

“If the province is trying to go from coal to renewables and storage, that cost structure comes into play in 2025 or 2030,” she said.

Carbon Policy

The company still needs to see the proposed carbon policy from the provincial government before deciding to build a high-efficiency natural gas plant called Sundance 7 for 2020, Farrell added.

TransAlta will increase its global electricity output from gas, which is currently at about a third of coal-fired generation, by almost 60 percent with capacity set to come online, for a total of 2,676 megawatts, according to data on its website.

The company also produces 1,271 megawatts from wind turbines, and it recently purchased its first solar farm “to put a toe in the water,” Farrell said.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE