TransAlta (TA) should benefit from higher power prices and rising data-center demand in Alberta, with the finalization of a new Alberta power-market framework and data-center agreements offering potential catalysts for the company's shares, RBC Capital Markets said in a Wednesday note.
Investors can expect an agreement with CPP Investments and Brookfield Asset Management (BAM) for their Boreal Technology Hub data-center project to be finalized relatively soon after the Alberta Electric System Operator provides clarity on its phase 2A power-market framework, RBC said. Management expects the agreement to be finalized in early 2027.
The initial 230 megawatts of grid allocation for the project would come from TransAlta's existing gas-fired fleet, with longer-term supply potentially coming from the repowering of its 742-megawatt Sundance Unit 5 and 829-megawatt Keephills unit 1. The project could have a full build-out of as much as 1,600 megawatts, according to the note.
The mothballing of TransAlta's Battle River Units 4 and 5 from March 2027 to as late as Jan. 1, 2029, and an extension for Sundance Unit 6 to April 1, 2029, should not hurt the company's ability to capture stronger power prices later this decade or secure contracting opportunities, the note added.
RBC reiterated its outperform rating and CA$24 ($17.19) price target on TransAlta.
The company's shares were up 5.5% in Wednesday afternoon trading.
Price: 13.94, Change: +0.73, Percent Change: +5.53
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