11

On Track to be Canada’s Clean Energy Leader

Investor Day

December 6th, 2017

22

This presentation includes forward-looking statements or information (collectively referred to herein as “forward-looking statements”) within the meaning of applicable securities legislation. All forward-looking

statements are based on our beliefs as well as assumptions based on available information and on management’s experience and perception of historical trends, current conditions, and expected future

developments, as well as other factors deemed appropriate in the circumstances. Forward-looking statements are not facts, but only predictions and generally can be identified by the use of statements that

include phrases such as “may”, “will”, “can”, “believe”, “expect”, “anticipate”, “intend”, “plan”, “project”, “forecast”, “foresee”, “potential”, “enable”, “continue”, or other comparable terminology. These statements

are not guarantees of our future performance and are subject to risks, uncertainties, and other important factors that could cause actual results or outcomes to be materially different from those set forth in the

forward-looking statements. In particular, this presentation contains forward-looking statements pertaining to: our business strategy and goals, including those specific to becoming Canada’s leading clean

energy company; our expectation of transitioning to 100% clean energy by 2025; anticipated government actions, including a regulatory environment that will incent clean and renewable power, carbon pricing,

green credit and coal to gas life extension; expected provincial credits for existing wind and hydro in Alberta; expected federal regulations supporting coal to gas conversions; initial carbon tax of $30/tCO2

effective January 1, 2018, potentially climbing to $50/tCO2 by 2022; expected $30 million to $50 million to be received annually in credits for TransAlta’s existing renewable generation; the structure of the

Alberta capacity market, including the expectation that the first auction will occur in 2021; TransAlta’s position to compete in the Alberta capacity market; the forecasted capacity price and medium term price

forecast; the extension of plant life following coal to gas conversion and the impact on free cash flow (“FCF”); expected capacity requirements in Alberta; forecasted Alberta prices for both capacity and energy;

ability to realize Gas and Renewables’ strategic objectives, including realizing more than $150 million annually in potential upside from the Hydro assets starting in 2021 and gaining capacity payments for wind

and hydro in the capacity market; average free cash flow (“FCF”) for the remainder of 2017 and the period from 2018 to 2020; industry trends, including the continued reduction in the cost of renewables, the

abundant supply of low cost natural gas and value of hydro-based power storage; ability to realize life extension and growth opportunities, including the Brazeau Pumped Storage Facility and the Bighorn

Facility expansion and the timing and costs associated therewith; increase in cash flows and EBITDA from the Alberta hydro assets following the expiry of the applicable Alberta power purchase arrangement;

increase in wind revenue going forward; Ontario’s long-term energy needs, including the anticipated supply gap in the mid-2020s; the mothballing of Sundance Units 3, 4 and 5; the conversion to gas-fired

generation of Sundance Units 3 to 6 and Keephills Units 1 to 2, including the associated timing and expected benefits to be realized; the expected gas supply required for converted units; the construction by

Tidewater of a pipeline to TransAlta’s Sundance and Keephills facilities with a capacity of 130 million cubic feet of gas per day by 2020 and expansion capability to 340 million cubic feet of gas per day; the

terms of any definitive agreement with Tidewater in regard to the pipeline expected to be constructed from the Brazeau River Complex to TransAlta’s Sundance and Keephills facilities; the anticipated benefits

of converting units to gas; the incremental FCF from the extended fleet life; ability to reduce operating and maintenance costs; improving operating flexibility; potential 70% reduction in carbon costs;

construction of two or more pipelines to minimize risk of supply disruptions at the converted units; cumulative life extension and incremental cash flow associated therewith; expected portfolio benefit to be

realized from price volatility attributable to active portfolio management; expected $50 million to $60 million of EBITDA from energy marketing; he anticipated benefits from Project Greenlight; key aspects of

TransAlta growth strategy, including potentially partnering with financial players; system benefits attributable to the Brazeau Pumped Storage Facility; the continued relationship with TransAlta Renewables,

including the potential drop down of assets to TransAlta Renewables; capital allocation from 2018 to 2020; 2018 outlook, including Comparable EBITDA, FCF and dividend payout ratio; increase in FCF

through lower sustaining capital, reduction in interest expense and stable EBITDA; and steady improvement of credit metrics by 2020.

Factors that may adversely impact our forward-looking statements include risks relating to: legislative or regulatory developments, including as it pertains to the Alberta capacity market; the Federal and/or

Provincial governments not implementing legislation or regulations facilitating the conversion from coal generation to gas generation; the Federal and/or Provincial governments adopting different carbon prices

rules; changes in economic and competitive conditions; inability to secure natural gas supply and the construction of a natural gas pipeline on terms satisfactory to the Company; the introduction of disruptive

sources of energy or capacity; changes in the price for natural gas; decreased demand for energy or capacity; availability of financing; fluctuations in market prices, including deviations of Alberta spot and Mid-

C spot prices relative to stated assumptions; the availability of fuel supplies required to generate electricity, including the costs of natural gas within Alberta; wind and hydro resources being less than long term

average; reduction to the Canadian coal capacity factor; our ability to contract our generation for prices that will provide expected returns; risks associated with development projects and acquisitions, including

permitting, labour and engineering risk associated with the coal to gas conversions; increased costs or delays in the construction or commissioning of pipelines to the converted units. The foregoing risk factors,

among others, are described in further detail in the Risk Management section of our Management Discussion and Analysis and under the heading “Risk Factors” in our Annual Information Form. Readers are

urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements

included in this document are made only as of the date hereof and we do not undertake to publicly update these forward-looking statements to reflect new information, future events or otherwise, except as

required by applicable laws. Readers are cautioned not to place undue reliance on forward-looking statements, which reflect the Corporation's expectations only as of the date of this presentation. The purpose

of the financial outlooks contained in this presentation is to give the reader information about management's current expectations and plans and readers are cautioned that such information may not be

appropriate for other purposes. In light of these risks, uncertainties, and assumptions, the forward-looking events might occur to a different extent or at a different time than we have described, or might not

occur at all. We cannot assure that projected results or events will be achieved.

Certain financial information contained in this presentation, including Comparable EBITDA, FFO and FCF, may not be standard measures defined under International Financial Reporting Standards (“IFRS”)

and may not be comparable to similar measures presented by other entities. These measures should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS. For

further information on non-IFRS financial measures we use, see the section entitled “Reconciliation of Non-IFRS Measures” contained in our most recently filed Management's Discussion and Analysis, filed

with Canadian securities regulators on www.sedar.com and the Securities and Exchange Commission on www.edgar.com.

Unless otherwise specified, all dollar amounts are expressed in Canadian dollars.

Forward Looking Statements

33

TransAlta Investor Day Agenda

9:30 am Dawn Farrell, President and Chief Executive Officer

Introduction and Strategic Overview

John Kousinioris, Chief Legal & Compliance Officer

Regulatory & Market Overview

Aron Willis, Senior Vice President, Gas & Renewables

Gas & Renewables

Wayne Collins, Executive Vice President, Coal & Mining

Transitioning our Coal Fleet

Jennifer Pierce, Senior Vice President, Trading and Marketing

Trading & Marketing

15 minutes Break

Nipa Chakravarti, Chief Transformation Officer

Corporate Transformation

Brett Gellner, Chief Investment Officer

Growth & Reinvestment in the Future

Donald Tremblay, Chief Financial Officer

Financial Summary

Dawn Farrell, President and Chief Executive Officer

Closing Remarks

Q&A

Ending at 1:30 pm Lunch

44

Executive Team

Dawn Farrell

President and Chief

Executive Officer

John Kousinioris

Chief Legal &

Compliance Officer

Aron Willis

Senior Vice

President, Gas

and Renewables

Wayne Collins

Executive Vice

President, Coal &

Mining

Jennifer Pierce

Senior Vice

President, Trading

& Marketing

Nipa Chakravarti

Chief

Transformation

Officer

Brett Gellner

Chief Investment

Officer

Donald Tremblay

Chief Financial

Officer

Dawn de Lima

Chief

Administrative

Officer

55

BC

WA

ON

WY

QC

NB

MN

AB

MA

TransAlta Today

Significant generator with 8,546 MW of capacity

Highly contracted (75%) with upside to Alberta market

1 Comparable EBITDA less sustaining capital and excludes Energy Marketing and Corporate Segments 2 Excludes the $80 million adjustment to provisions in the fourth quarter of 2016 relating to our

Keephills 1 outage in 2013

Diversified operations with over 65 facilities in three countries

AUSTRALIACoal / Future CTG

Hydro

Gas

Solar

Wind

Corporate Offices

30%

42%

22%

6%

$830 mm

Coal(2)

Gas

Wind / Solar

Hydro

2016 CASH FLOW FROM GENERATION(1)

66

Significant Achievements

Signed the Alberta MOU to advance:

▪ CTG conversions

▪ Credits for existing renewables

▪ Level playing field for incumbents from capacity market

Off-coal agreement with Alberta Government totaling $524 million

Development of a capacity market in Alberta

Proposed federal regulations support coal to gas conversions

Public Policy

Developments

Increased

Financial

Flexibility

Strategic

Contracted

Growth

Re-contracting

and Life

Extension

Reduced net debt by approximately $0.8 billion since December 2015

Increased liquidity to $1.7 billion

Raised $1.1 billion in project level debt

Raised $0.6 billion through asset sales and drop downs

Maintained investment grade credit rating with three rating agencies

Commissioned South Hedland in July 2017

Expanded Kent Hills Wind Farm

Australia gas pipeline

Mass Solar, Lakeswind and Kent Breeze acquisitions

Advancing CTG conversions which will extended the life and value of

these assets

Extended contracts on 408 MW of owned generation

77

$3.50

$4.50

$5.50

$6.50

$7.50

$8.50

$9.50

$10.50

$11.50

$12.50

$13.50

Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17

TransAlta Corporation

Value is Beginning to be Recognized

Source: FactSet

Note: Pricing as at November 27, 2017.

~100% increase in share price

since January 2016

Policy uncertainty Improved clarity on policy

Off-coal policy

discussions

Off-coal agreement

and MOU

Climate

Leadership Plan

Announcement

Dividend

reduction

88

Canada’s Leading Clean Energy Company

100% clean energy by 2025

Customers want clean, low cost, reliable, firm generationCustomers

Governments are supporting clean power generation

Regulatory environment is incenting clean and renewable

power

Actions include coal phase out, carbon pricing, green credits,

CTG life extensions and long term contracts

Governments

Increasing interest in clean and renewable power generators

Creation and expansion of clean and renewable specific fundsInvestors

99

Emerging Industry Trends

TransAlta well positioned to capitalize on emerging trends

Move away from coalDe-carbonization

Growth in renewables as a source of low carbon generation

Cost of renewables is declining

Intermittent nature of renewables is shifting value from

baseload to peaking resources

Significant

Growth in

Renewables

Abundant supply of low cost natural gas will support

dispatchable natural gas generation and coal to gas

conversions

Natural Gas

Generation

Growth

Growing need for flexible, responsive generation

Value of hydro-based power storage will increase

Increasing recognition of the importance of reliability

Shift to Fast-

Ramping

Technologies

1010

TransAlta’s Priorities

Convert coal to gas

Leverage our operating platform for value creation

Build financial strength

Grow free cash flow

Continue to diversify and build customer relationships

1111

Recent Announcements Support Value Creation

Competitively positioned to become Canada’s leader in clean power

Mothball uneconomic coal units until the demand for capacity

grows or capacity market is implemented

Units available to restart when demand for capacity increases

Optimize

Merchant Coal

Portfolio

Signed letter of intent with Tidewater Midstream to construct

pipeline for service in 2020

Accelerates conversion timetable and lowers the cost of carbon

through fuel blending

Advance Gas

Pipeline Strategy

Expect provincial credits for existing wind and hydro in Alberta

Expect federal regulations supporting coal to gas conversions

Regulations

Support Clean

Energy

Brazeau and Bighorn are strong candidates for future

renewable generation and storage procurements

Alberta

Government

Renewables

Procurement

1212

Why Invest in TransAlta

Diversified portfolio in Alberta creates short-term value

Significant value creation from coal to gas conversions

Strong long term cash flows from diversified portfolio

Improving balance sheet

Growth opportunities unique to TransAlta

1313

John Kousinioris

Chief Legal & Compliance Officer

Regulatory & Market Overview

1414

Regulatory Clarity Achieved

Regulatory clarity supports investment strategy

Off-coal agreement and federal rules mean coal is phased out by 2029 in

CanadaCoal Phase Out

Initial carbon tax of $30/tCO2 effective January 1, 2018, potentially

climbing to $50/tCO2 by 2022

Expect credits for electricity generation with emissions below the

performance standard

Expect existing wind and hydro to be eligible

Environmental

Policies

Supports incumbent and new generation by providing value for capacity

Capacity market design well advanced

First auction in 2019 for capacity in 2021

Capacity Market

Plant life extended by 5 to 10 years past coal end of life

TransAlta’s cumulative fleet life extended by approximately 75 years

adding over $1 billion of FCF

Coal to Gas

1515

Alberta Carbon Rules Expected to be Positive for TransAlta

Expect $30 to $50 million annually in credits for existing renewables

EXISTING WIND AND HYDRO GENERATION

Expect to receive credits for generation up to the performance standard

Performance

Standard

Emissions

above standard

Emissions

below standard

Generators

charged based

on emissions

above the

performance

standard

Generators

credited based

on emissions

below the

performance

standard

1616

Development of Alberta’s Capacity Market Supports Our Fleet

TransAlta is well positioned to compete in a capacity market

Provides future revenue visibility and stabilityForward Auction

All capacity resources permitted to participate

TransAlta’s entire generation fleet will be able to participateEqual Treatment

Mitigates price volatility and supports capacity revenue during

periods of oversupply

Downward

Sloping Demand

Curve

REP Capacity

Excluded

Avoids negative impact on capacity price due to subsidized

renewables

1717

12,144 12,557 13,231

1,822 1,884 1,985

13,966 14,441

15,216

2021E 2025E 2030E

Peak Demand 15% Reserve

Adjusted Capacity: 13,700

TransAlta’s Units are Required

EXPECTED CAPACITY REQUIREMENTS (MW)

(3) (4)

1 Based on AESO’s 2017 reference case 2 Assumes AESO sets a 15% reserve margin above peak demand for determining capacity requirements 3 Adjusted for outages, de-rates and anticipated capacity

eligibility for thermal (95%), hydro (90%) and wind (15%) generation 4 Assumes interties are ineligible for capacity

(1) (2)

1818

Forecasted Alberta Prices in New Market Design

Capacity price will be an important driver of future revenue

CAPACITY PRICE FORECAST ($/KW-MONTH)

ENERGY PRICE FORECAST ($/MWH)

$5

$10

$15

$20

$25

2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E

LEI EDC

$30

$35

$40

$45

$50

$55

2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E

LEI EDC

1919

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

2011 2012 2013 2014 2015 2016 2017E 2018E 2019E 2020E

$C

AD

($

/MW

h)

Alberta Spot Price Current Forward Price

Medium Term Alberta Price Forecast

Prices are expected to adjust in response to carbon pricing,

load growth and supply and demand

Potential

Price Range

2020

Gas & Renewables

Aron Willis

Senior Vice President, Gas & Renewables

2121

Gas & Renewables Strategy

Highly valued, clean energy portfolio

STRATEGIC OBJECTIVES

Leverage the competitive business model to support growth

Deliver safe, low cost and clean power to customers

Realize more than $150 million annually in potential upside from the Hydro assets starting

in 2021

Capture increased value as carbon costs impact market prices

Realize value of expected offset credits for existing wind and hydro

Gain capacity payments for wind and hydro in the capacity market

Leverage relationships with behind-the-fence large industrial customers

2222

Hydro

Unique, reliable and perpetual

OVERVIEW

Own and operate over 90% of Alberta’s

hydro

Expecting approximately $25 million

annually in green credits under new

regulation

Critical back-up for wind and solar

Essential for market stability

Immediate ramping

LIFE EXTENSION AND GROWTH

Re-contracted Akolkolex for 30 years

Optionality for extensions and upgrades

New opportunities:

Brazeau Pumped Storage

Bighorn facility expansion

Hydro Facilities

WESTERN CANADA EASTERN CANADA

2323

Significant Upside Post-PPA for Alberta Hydro

Comparable hydro assets valued at 12x to 14x EBITDA

1Balancing Pool

$0

$50

$100

$150

$200

$250

$300

Historical EBITDA(5-yr average)

Capacity PaymentReceived from BP¹

Obligations Paid tothe BP¹

Future CapacityPayments

Emissions Credits Future ProformaEBITDA

$ m

illio

ns

$225 - $275

2424

$87 $73

$82

2014 2015 2016 2017E 2021+

EBITDA ($ millions)

$65 - $75

$225 - $275

Significant Growth in Hydro EBITDA

4 year CAGR of over 30%

2525

Wind and Solar

OVERVIEW

71% of generation contracted with an

average capacity weighted contract life of

13 years

Total net capacity of 1,339MW

Canada’s largest generator of wind power

Experienced developer and operator of

wind in Alberta

OPERATING MODEL

Remote monitoring and operation of all

sites optimizes site performance

Extensive data enables optimization of

operations

Able to leverage our knowledge and

customer relationships to develop new

sites

Wind / Solar Assets

UNITED STATES

WESTERN CANADA EASTERN CANADA

UNITED STATES

2626

Upside Potential for Alberta Wind Assets

Revenue from Alberta expected to increase over 90% going forward

Alberta market supports higher value

Benefit from higher expected power

price due to carbon costs and higher

stronger fundamentals

Expecting $15 to $20 million annually in

green credits

Expected to qualify for capacity

payments in 2021

ALBERTA WIND REVENUE(1)

1) Energy price in 2018 to 2020 assumed to be $65/MWh. Energy and capacity prices post 2021 assumed to be $40/MWh and $10/KW-month, respectively. Credits based on a $30 carbon tax in 2018 to 2020 and a $50

carbon tax post 2022. Generation assumed to be 1,000 GWh

$0

$10

$20

$30

$40

$50

$60

Today 2018 to 2020 Post 2021

Power Revenue ($ mm) Capacity Revenue ($ mm)

Credits ($ mm)

2727

Wind and Solar EBITDA

Highly contracted asset base with upside in Alberta

$179 $176

$195

2014 2015 2016 2017E 2021+

Contracted EBITDA ($ millions) Merchant EBITDA ($ millions)

$195 - $215

$220 - $240

2828

Natural Gas

Long-term stable cash flows

OVERVIEW

100% of generation contracted

9 year weighted average contract life

Total net capacity of 1,348MW

67% Canada and 33% Australia

CUSTOMER FOCUS

Sites designed and built to supply a

customer need

Excellent track record of extensions

beyond original contract term

WESTERN

CANADA

EASTERN

CANADA

AUSTRALIA

Gas-fired Generation Assets

2929

Natural Gas Re-contracting

Extended contracts for a total of 65 cumulative years

Windsor

Southern Cross

Fort Saskatchewan

Ottawa

Extension Years

15

10

10

20

Owned Capacity (MW)

36

245

35

37

Parkeston 10 55

3030

World class facility

150 MW COMBINED CYCLE GAS POWER STATION IN WESTERN AUSTRALIA

Achieved commercial operation in July 2017

75% contracted with Horizon Power (AA+ rating) until 2042

South Hedland Power Station

3131

Ontario’s Long-term Energy Needs

ONTARIO SUPPLY AND DEMAND OUTLOOK

Ontario IESO is projecting a supply gap in the mid-2020s

TransAlta’s Sarnia plant is well positioned to play an important role in the market and with

our steam customers well into the future

3232

$315

$334

$372

2014 2015 2016 2017E 2021E

EBITDA ($ millions)

$390 - $410

$290 - $330

Natural Gas EBITDA

Contract expiry and price reductions not fully offset by South Hedland

3333

Gas and Renewables Summary

Significant upside in Alberta renewable assets

Long-term contracted assets provide consistent cash flows

Opportunities for repowering and brownfield expansion across the fleet

Significant scale provides opportunities to add new assets at low cost

Assets in Ontario well positioned for improving market fundamentals

3434

Wayne Collins

Executive Vice President, Coal & Marketing

Transitioning our Coal Fleet

3535

Canadian Coal Strategy

STRATEGIC OBJECTIVES

Optimize the value of the coal portfolio between 2018 to 2020

Convert 2,600 MW of the Alberta coal fleet to clean energy by 2022

Evaluate timing of conversions of jointly owned facilities – Keephills 3, Genesee 3, and

Sheerness

CONVERSION BENEFITS

Cumulative fleet life extended by approximately 75 years, adding over $1 billion of

incremental cash flow between 2021 to 2039

Significantly reduces emissions

Improved operating reliability, flexibility and costs

Low risk investment

Well positioned for the capacity market

Converted assets are required to meet the generation demand in Alberta

3636

Key Actions

Mothball two additional units and adjust cost structure to create value with portfolio of

850MW of merchant generation

April 2018: Mothball Sun 3 and Sun 5

April 2019: Mothball Sun 4 and bring Sun 5 back online

Extract full value from the sustaining capital already invested in Sun 4 and Sun 5

In service Sundance units operate at approximately 20% higher capacity factor

Prepare mothballed assets to participate in capacity market

Adjust the cost structure of the business to align with a smaller less complex operation

Secure pipeline access to a diverse supply of gas

Complete engineering work and obtain required permits for conversions

Convert Sundance Units 3-6 and Keephills Units 1 and 2 by 2022 – a year earlier than

originally planned

3737

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039

No Conversion Scenario Convert to Gas

Key Driver of Conversion – Life Extension

Cumulative fleet life extended

by approximately 75 years

TRANSALTA’S COAL & CTG GENERATION CAPACITY (MW)

3838

Key Outcomes of Conversion – Emissions Reduction

1NOx reduction ranges from 10% to 70% depending on unit specification. Certain units already generate low NOx emissions.

Carbon emissions are

almost halved and

particulate emissions

are effectively

eliminated for

converted generation

EMISSIONS INTENSITY REDUCTION (%)

(1)

48%

60%

98%95%

CO2 NOx SO2 Hg

3939

Key Outcomes of Conversions – Reduced Fixed Costs

Fixed OM&A and sustaining capital costs are reduced

by approximately 15%1Average annual fixed costs for a 400 MW unit

Less complex

operations lead to

significant cost

reductions

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

Convertible Coal Converted Gas

$ m

illio

ns

Fixed OM&A Sustaining Capital Pipeline Tolls

4040

Key Outcomes of Conversion – Competitive Variable Costs

Cost of carbon drives competitive advantage

Note: Converted unit based on natural gas price of $2.50/GJ. “Other” category includes costs associated with the removal of mercury, and costs associated with reducing NOX, SOx, and particulates. Transmission costs

are excluded in all scenarios.

$30 PER TONNE CARBON COSTS

($/MWh)

$50 PER TONNE CARBON COSTS

($/MWh)

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

$50

Coal Converted Coal Converted

Fuel Carbon Other

4141

$-

$500

$1,000

$1,500

$2,000

$2,500

$3,000

Key Outcomes of Conversions – FCF Generation

Assumes $30 carbon tax and $8/KW-month capacity price

CUMULATIVE FCF OVER LIFE OF ASSETS ($ MILLION)

Expected FCF growth of over $1 billion with conversion

Conversion expected to

generate over $1 billion in

additional FCF given

expected federal

regulations

Stay on Coal

Convert to

Gas

4242

-

$50

$100

$150

$200

$250

$300

$350

$400

$7.00 $8.00 $9.00 $10.00 $11.00 $12.00 $13.00

FC

F @

$3

0/to

nne

Capacity Price ($/KW-month)

FCF of converted units is expected to be in-line with historical

Sensitivity of FCF to Capacity Prices

2014 - 2016

Average

EST. AVERAGE ANNUAL FCF UNDER CAPACITY MARKET ($ MM)

4343

Substantial Economic Advantages Compared to New Build

• Conversions will be able to enter the market faster, at lower capital cost and

with substantially less risk than new CCGT

Build Cost (2,700 MW)

Carbon Tax

Ramping

Time to Build

CTG Conversion

$300 million

Higher

Slower

60 days

New Combined Cycle Facility

$4.5 billion

Lower

Faster

4 – 5 years

Conversions will supply customers with low priced, reliable power

Illustrative Heat Rate 9.5x - 11x 7x

4444

$451 $456$434

2014 2015 2016 2017E 2021+

EBITDA ($ millions)

$395 - $415

$300 - $350

CA and US Coal EBITDA

Approximately $200 million in FCF annually for an additional

fifteen years beyond 2021

Reduction in EBITDA is offset by lower sustaining capital for converted units

Assumes $9/kw-month post 2021+

4545

Canadian Coal Summary

Alberta coal fleet will transition to clean energy

Size of fleet allows significant flexibility

Costs can be consolidated by running fewer plants at higher utilization

Plants can be prepared for conversions

Units can re-enter the market quickly as the demand for capacity grows

Under new federal legislation cumulative fleet life extended by approximately 75 years

Over $1 billion in incremental value

4646

Trading & Marketing

Jennifer Pierce

Senior Vice President, Trading & Marketing

4747

Role of Trading & Marketing

In-house Trading & Marketing provides unique optimization and customer

opportunities

Optimize Centralia, Ontario and Alberta merchant portfolio

including environmental products, hydro, wind, natural gas and

coal

Asset

Optimization

Standard and customized products for large wholesale,

commercial and industrial customers

Connect customer needs with growth opportunities

Customer

Solutions

Balanced portfolio of real time, day ahead and term trading in

gas and power to assist in price discovery and asset

optimization

Proprietary

Trading

Forecast pricing changes due to changing regulatory rules,

technology trends and supply / demand fundamentals

Market Pricing

& Trends

4848

Portfolio Management Strategy - Alberta

For each $1/MWh move in prices the change in value of the portfolio

is ~$8 million in 2018 and ~$11 million in each of 2019 and 2020

POSITION (MW)

PPA

Long-term

contract

Hedges

Potential

open

positionsStrategic shift from being

highly hedged to active

portfolio management -

position the portfolio to

benefit from price volatility

0

500

1,000

1,500

2,000

2,500

3,000

2018E 2019E 2020E

4949

$75

$37

$52

2014 2015 2016 2017E 2021+

EBITDA ($ millions)

$50 - $60

$40 - $50

Energy Marketing EBITDA

Generating $50 to $60 million of EBITDA while providing

expertise and advice to the business

Expected to be in

line with historical

levels

5050

Break

5151

Corporate Transformation

Nipa Chakravarti

Chief Transformation Officer

5252

Creating the Environment for Change

Continuously driving value

1,800 Initiatives in the pipeline, >12,000 Milestones; with 875

Initiatives completed in 2017

Managing weekly cadence with a focus on execution

Bottom Up

Innovation

Structuring costs to align with a simpler, more flexible operationFlexible

Operations

Using technology innovation to drive sustainable outcomes

Driving value from all aspects of the business

Focus

on Value

Creation

5353

Project Greenlight

BREAKDOWN BY METRIC

$50 to $70 million in incremental free

cash flow

2-3 year payback on initiatives

KPI and financial impact tracking at

the Initiative level

Gross Margin

OM&A

Capital

Financing

Working Capital

5454

Project Greenlight Video

5555

Brett Gellner

Chief Investment Officer

Growth & Reinvestment in the Future

5656

TransAlta’s Growth Objectives & Strategic Boundaries

Invest in highly contracted clean energy assets

Continue to diversify by geography, asset, contract life, and technologies

Create value by leveraging TransAlta’s competitive strengths

Focus primarily on core markets of Canada, United States, and Australia

Remain disciplined in terms of returns and leverage

Utilize TransAlta Renewables for lower risk opportunities

5757

0

500

1,000

1,500

2,000

2,500

2000 Today

MW

Proven Track Record in Investing in Renewables

Significant growth through combination of acquisitions

and greenfield development

TRANSALTA’S GROWTH IN RENEWABLE ENERGY (MW)

One region

14 facilities

Primarily hydro

Eight regions

51 facilities

Hydro/Wind/Solar

175% Growth

5858

Changing Landscape

Coal phasing out

Challenging to permit large scale greenfield

projects

Renewables cost effective and proven

Need for fast-ramping gas/hydro/storage

Significant carbon regulations

Customers want clean, low cost, reliable

generation

Low cost baseload provided by

Coal, Nuclear, Combined Cycle

Limited carbon regulations

Wind higher cost than thermal

Solar unproven and costly

Customers indifferent to power

source

Battery storage untested

FUTUREPAST

5959

TransAlta’s Growth Strategy

De-carbonizeLeverage

Existing Sites

Leverage

Scale and

Operational

Expertise for

Acquisitions

Focus on

Greenfield &

Brownfield

Take Some

Merchant

Risk

Expand into

New Regions

Expand Direct

Customer

Business

Partner

6060

TransAlta’s Growth Strategy – Key Actions

De-carbonize Fleet

Leverage Existing Sites

Leverage Scale and

Operational Expertise

Focus on Greenfield &

Brownfield

Take Some Merchant

Risk

Expand into New

Regions

Expand Direct Customer

Business

Partner

• Convert coal to gas

• Expand in hydro/wind/solar/efficient gas

• Expand existing Alberta hydro sites (e.g. Brazeau)

• Future repowering of existing wind sites

• Add new natural gas at existing coal sites

• Integrate new assets without adding significant overhead/admin costs

• In-sourcing of operations and maintenance

• Leverage experience and competitive advantage in new builds

• Less competitive - higher returns

• Leverage Energy Trading & Marketing expertise and knowledge

• Opportunities with some merchant risk attract fewer competitors and generate

higher returns

• Expand into other regions of U.S. and Eastern Australia

• Behind-the-fence generation

• PPAs with non-traditional counterparties (e.g. technology/telecom companies)

• Create value by combining strengths of other parties

• Potential to partner with financial players, OEMs, and customers

Strategy Actions

6161

Growth Opportunity Set

TransAlta/TransAlta Renewables well positioned to continue to grow

Alberta natural gas pipeline

Potential for 500+ MW of renewables in Alberta and Sask.

Behind the fence gas generation in Alberta, BC and Ontario

Solar development in Australia and U.S.

Significant acquisition opportunities in U.S., Canada, Australia

Conversion of 2,500 - 3,000 MW of coal to gas

Potential for 4,000 MW of renewable in Alberta

Brazeau energy storage project, Bighorn expansion, Dunvegan

Repowering of existing wind sites in U.S. and Canada

Acquisitions

Replacement of 3,000 MW of converted CTG in Alberta with

greenfield natural gas fired generation and storage

Greenfield solar and wind in U.S.

Acquisitions

2018 - 2020

2021 - 2030

2031+

6262

Leveraging our Existing Platform

SIGNIFICANT OPPORTUNITIES BY LEVERAGING OUR EXISTING ASSET BASE

Kent Hills wind farm expansion

Natural gas pipeline to support coal to gas conversions

Brazeau pumped hydro storage project

Bighorn hydro expansion

Solar opportunities at mine sites

Repowering of wind

New combined cycle or simple cycle gas at Sundance/Keephills

Coal to gas conversions, or new gas plants at Centralia

Repowering of gas plants in Australia

6363

Significant Opportunities Being Evaluated

Over 9,000 MW currently being evaluated

CURRENT OPPORTUNITY SET (MW)

-

500

1,000

1,500

2,000

2,500

3,000

Wind Hydro Solar Gas-fired Coal to Gas Conversions

Operating Greenfield/Brownfield

6464

EXPANSION OF THE EXISTING KENT

HILLS WIND FARM IN NEW BRUNSWICK

Five additional turbines adding 17 MW of

capacity, bringing total capacity to 167

MW

All three Kent Hills wind farms now fully

contracted until 2035 with New Brunswick

Power

Financing completed

Value of existing sites – Kent Hills 3

6565

PROVIDES ACCESS TO TIDEWATER

STORAGE FACILITIES

Alberta Pipeline Strategy

NATURAL GAS PIPELINE

REQUIREMENTS

Sundance and Keephills can consume up

to 175 MMcf/d through fuel blending; up

to 700 MMcf/d once converted

Existing pipelines can provide only limited

amount of gas today

Two or more pipelines will be secured in

order to minimize the risk of any supply

disruptions and to provide diversified

access to natural gas in Western Canada

TIDEWATER NATURAL GAS PIPELINE

Entered into Letter of Intent with

Tidewater to construct a 120 km pipeline

from their Brazeau River Complex to

TransAlta’s generating facilities

Initial volumes of 130 MMcf/d with the

potential to expand to 340 MMcf/d

Cost of ~$150 million, and expected COD

in early 2020

TransAlta has the option to invest in up to

50% of the pipeline

Aligns both companies interests;

provides low cost access to natural gas

transportation and future flexibility

Ownership builds on TransAlta’s

ownership of natural gas pipeline

infrastructure in Australia

PROPOSED PIPELINE MAP

6666

Edmonton

Bonnyville

Grande Prairie

Hinton

Camrose

Wetaskiwin

Red Deer

Drumheller

Calgary

Lethbridge

Medicine Hat

Ft. McMurray

100 km

60 mi

Big Horn 1&2 – 120MW

Abraham

Lake

Rocky

Mountain House

Brazeau Dam

355MW

Brazeau Gorge

Brazeau

Canal

Brazeau

Reservoir

Edmonton

Water Flow

Water Flow

Water Flow

Brazeau Energy Storage

SIGNIFICANT VALUE

Unique one-of-a-kind pumped storage

hydro project

Up to a 900 MW/5,000 MWh

Investment of $2.5 billion

Significant economic and employment

benefits

Targeting 2025/2026 operating date

Requires long-term contract

6767

Brazeau Pumped Hydro Storage Video

6868

Pumped Hydro Dominates Global Energy Storage

Pumped Hydro Represents ~95% of Global Energy Storage

Pumped

Hydro

Other Storage

Technologies

Pumped hydro

GLOBAL ENERGY STORAGE CAPACITY (GW)

Source: Department of Energy Global Energy Storage Database

0

20

40

60

80

100

120

140

160

180

19

05

19

51

19

57

19

63

19

68

19

73

19

78

19

83

19

88

19

94

19

99

20

04

20

09

20

14

20

20

Pumped Hydro Storage Other Storage

6969

Brazeau Pumped Hydro – Significant System Benefits

Brazeau Pumped Hydro

Storage

Fast Ramping

Load Following

Wind Firming

Avoided Curtailment

Voltage and Inertia Support

Supports Transition to Clean Energy and a Low Cost, Reliable Electricity

System

7070

TransAlta’s Brazeau Pumped Hydro Opportunity

Leverages existing infrastructure

Existing power house

Proposed pumped hydro

7171

Brazeau: Significant Work Completed and Underway

Engaged Owner’s Engineer, providing Class 5 Estimate

Conducted initial geotechnical work

Started engagement with First Nations

Started environmental field studies

Engaged with Governments, Communities, Unions, Regulators and NGOs

7272

Bighorn 1&2 – 120MW

Abraham

Lake

Rocky

Mountain House

Brazeau Dam

355MW

Brazeau Gorge

Brazeau

Canal

Brazeau

Reservoir

Edmonton

Water Flow

Water Flow

Water Flow

Bighorn Hydro Expansion

Expand existing Bighorn from 120 MW to

240 MW

Two additional turbines and intake

structure

Preliminary engineering work completed,

identifying no significant issues

Utilizes existing infrastructure

Capable of providing energy, capacity

and ancillary services

Preliminary cost estimate of $360 million

7373

Well Positioned to Grow

Proven track record with significant opportunities being evaluated

Competitive advantages beyond cost of capital

Brownfield expansions leveraging existing infrastructure provide unique growth

opportunity

Continue to utilize TransAlta Renewables for long-term contracted opportunities

Remain Focused and Disciplined

7474

Donald Tremblay

Chief Financial Officer

Financial Summary

7575

TransAlta’s Financial Key Priorities

Deliver $1.2 billion in FCF over the next three years - $400 million per year

Fund growth through TransAlta Renewables, financial partners, project level debt and

post 2020 excess cash flows

Target corporate debt to decline from $2.6 to $1.2 billion by 2020

Achieve 25% FFO / Debt for the overall business

Increase the share price to fully recognize the long-term value of the portfolio

Solid financial footing underpinned by strong long-term cash flows

7676

$0.3

$1.2

$0.1

$0.3

$0.3

$1.4

$0.2

$0.4

Uses Sources

Growth

Capital Allocation - 2018 to 2020

Capital plan supports the transition to clean energy

Bond Repayment

Amortizing Debt

Dividend

FCF including payment for

Alberta PPA termination

Off-Coal Monetization

Drop down to RNW

Existing Liquidity

SOURCES & USES ($ BILLION)

7777

15%17%

20%

0%

5%

10%

15%

20%

25%

30%

2015 2016 2017E 2020E

Capital Structure – On Solid Ground

Flexibility to fund additional growth over the next three years

ADJUSTED FFO TO NET DEBT

Debt metrics above target range post 2021 allow for excess FCF to be allocated to

growth

Current capital plan would

result in FFO / Net Debt of ~30%

Target

range of

20 - 25%

7878

$256

$0

$100

$200

$300

$400

$500

$600

2016 2018E

Free Cash Flow Outlook

FREE CASH FLOW BUILD-UP ($ MILLION)

Int. Exp. Reduction

Off-Coal Pmt / MSA

Optimization

Greenlight & Other

South Hedland

$275 - $350

Solomon

Sundance A

Sundance B/C

Coal Cost

Sundance B/C

Termination Payment

7979

2018 Outlook

2018 Outlook Ranges ($ million) Low High

Comparable EBITDA $950 $1,050

Funds from Operations $725 $800

Sustaining Capital (215) (235)

Free Cash Flow $275 $350

Free Cash Flow Including PPA Termination Payment $475 $550

Free Cash Flow Per Share $0.96 $1.22

Annual Dividend $0.16 $0.16

Dividend Payout Ratio 17% 13%

Range of Key AssumptionsAlberta Spot ($/MWh) $50 - $60

Alberta Contracted ($/MWh) $35 - $40

Mid-C Spot (US$/MWh) $20 - $25

Mid-C Contracted (US$/MWh) $47 - $53

Canadian Coal Capacity Factor 65% - 75%

Hydro / Wind Resource Long term average

8080

$0

$100

$200

$300

$400

$500

$600

2018E 2019 to 2020 Post 2021

Free Cash Flow Outlook

Full Year of Greenlight

Interest Reductions

Optimization

Full Coal Cost Reductions

Mississauga

Poplar Creek

Hydro Upside

FREE CASH FLOW BUILD-UP ($ MILLION)

$375 - $425

$525 - $575

$275 - $350

Sundance B/C

Termination Payment

8181

Enhancing Growth Through Sponsored Vehicle

COMMENTARY ADVANTAGE FOR TRANSALTA

Attractive portfolio of highly

contracted renewables and

gas-fired assets

Current dividend yield 7%

Majority shareholder - 64%

Provides stable and predictable

dividends to TransAlta

Low leverage offers strong

potential for growth

Significant acquisition capacity

(both third-party acquisitions

and drop-downs)

Market premium multiple for

assets with strong, stable cash

flows – 10.4x EV/EBITDA

Access to competitive cost of

capital – 10%% AFFO Yield

Ability to compete for third party

acquisitions and new

opportunities

Ability to align risk/return profile

with appropriate entity

Provides natural home for new

renewables investments

Significant

Source of Value

Strong Balance

Sheet

Premium for

Strong, Stable

Cash Flows

8282

Value of Coal Not Being Recognized

Correct valuation for the coal and CTG would

increase the share price by $5 to $8 per share

Hydro (3)

Coal Monetization

Renewables and gas not held at RNW

PPA Termination payment

Value

attributable to

existing coal

plants in current

share price

TA RNW TA-Excluding

RNW

Priced as of November 27, 2018. Balance sheet items reflect Q3 2017 values.1 TA Debt, net of cash includes termination proceeds from Solomon. 2 includes the market value of TransAlta Renewables and BV of TA Cogen. 3 Hydro valued at $2.6 million per MW

(1) (2)

TA Upside

Implies

Coal at

6x to 8x

EBITDA

$2.2

$3.3

$0.9

$1.5

$3.4

$0.9

$2.2

$0.4

$0.6

$0.2$0.2

TA Equity TA Debt,net of cash

Preferred Shares NCI RNW Equity RNW Debt Remaining Value Coal Plant

8383

Dawn Farrell

President and Chief Executive Officer

Closing Remarks, Q&A

8484

What You Have Heard Today

Low cost, clean, reliable and firm electricity for customers

WHY INVEST IN TRANSALTA?

Diversified portfolio in Alberta creates short-term value

Significant value creation from coal to gas conversions

Strong long term cash flows from diversified portfolio

Improving balance sheet

Growth opportunities unique to TransAlta

8585

Question and Answer