TransAlta Corp., an electricity generator, has announced a significant partnership with the Canada Pension Plan Investment Board (CPPIB) and Brookfield to power a new data center west of Edmonton. This move comes at a time when the Alberta government is strategically aiming to boost the data center industry without straining its power grid. The agreement includes a memorandum of understanding, setting the stage for a data center at TransAlta's Keephills power plant, which was converted to natural gas in 2021.
The partnership involves an initial long-term power purchase agreement for approximately 230 megawatts of power, with potential expansion to 1,000 megawatts. TransAlta is being cautious with additional details until the deal is finalized, expected later this year. CEO John Kousinioris expressed satisfaction with the arrangement, emphasizing its commercial viability.
Data centers, essential for artificial intelligence and other applications, demand substantial energy for both operation and cooling. The Alberta government's ambitious goal is to attract $100 billion in data center development by the end of the decade, targeting tech giants like Meta Platforms Inc. Some power generators are exploring exclusive power supply deals with tech partners, while others are focusing on grid enhancements.
The provincial grid operator has set a limit of 1,200 megawatts for large-load projects until 2028 to maintain reliability, a decision that TransAlta considered when seeking data center partnerships. Kousinioris highlighted the importance of attracting hyperscalers, such as Meta and Amazon, which require significantly more power. The partnership with CPPIB and Brookfield aligns with TransAlta's development plans in the province.
Additionally, TransAlta is progressing with the retooling of a Washington State power plant, despite a U.S. Department of Energy order to extend its operational period. The plant, initially set to transition from coal to natural gas by 2025, will now remain operational until March 16. This conversion is expected to halve emissions intensity and cost $600 million, with an in-service date of late 2028. Kousinioris assured that expenses can be recouped, and the project is advancing smoothly from a regulatory and planning standpoint.
TransAlta's shares experienced a notable surge on the TSX, trading over five percent higher on Friday. The company also raised its quarterly dividend and reported a fourth-quarter loss, attributing it to common shareholders. The adjusted loss per share was six cents, compared to a profit of a penny per share in the previous year. Revenue for the quarter decreased to $599 million from $678 million annually.
This comprehensive partnership and strategic initiatives demonstrate TransAlta's commitment to innovation and sustainability in the energy sector, while also addressing the growing demand for data center infrastructure.
