CALGARY, AB, Jan. 11, 2022 /CNW/ - TransAlta Renewables Inc.
("TransAlta Renewables" or the "Company") (TSX: RNW) announced
today additional findings from the ongoing investigation pertaining
to a tower collapse at the Kent Hills 2 wind site.
Following extensive independent engineering assessments and root
cause failure analysis, the Company has determined that all 50
turbine foundations at the Kent Hills 1 and 2 wind sites require a
full foundation replacement. The root cause failure analysis
indicates that deficiencies in the original design of the
foundations have caused crack propagation within the foundations
and that the foundations must be replaced. The Company is in the
process of planning the rehabilitation of the wind sites and
currently expects the wind facility foundations to be fully
replaced by the end of 2023. Based on the recommendations of
independent engineers, and in order to maintain the safety of the
affected sites and turbines, the wind turbines will cease to
operate until their associated foundations are remediated. The
foundation issues at the Kent Hills 1 and Kent Hills 2 sites are
unique to the design of those sites. There is no indication
of any foundation issue at the Kent Hills 3 site or the Company's
other wind sites.
"We remain focused on our objective to safely return the site to
service as soon as reasonably practicable", remarked Todd Stack, President of TransAlta Renewables.
"We are appreciative of the support and cooperation of NB
Power in furtherance of NB Power's commitment to deliver reliable,
safe and clean energy to its customers. As a result of the site
remaining down for an extended period during remediation, we also
continue to work closely with our project lenders and look forward
to being able to resume delivery of renewable electricity as the
foundation replacements are complete," added Mr. Stack.
Based on initial estimates, replacement of the 50 foundations is
expected to cost between $75 million
and $100 million, in aggregate, and
is expected to result in foregone revenue of approximately
$3.4 million per month on an
annualized basis for so long as all 50 wind turbines are offline,
based on average historical wind production. Revenue generation is
expected to resume as wind turbines are individually returned to
service following foundation replacement. The Company is actively
evaluating any options that may be available to recover these costs
from third parties and insurance.
The Company has been in discussions with New Brunswick Power
Corporation ("NB Power") and they have been supportive of the
efforts undertaken to investigate the incident and return the site
to service in a safe and prudent manner in accordance with good
industry practice. The Company expects to work closely
with NB Power through the remediation process.
As a result of the determination that all 50 foundations require
replacement, as well as certain resulting amendments to applicable
insurance policies, the Company has provided notice to BNY Trust
Company of Canada, as trustee (the
"Trustee") for the approximately $222
million outstanding non-recourse project bonds (the "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. Upon the occurrence of any events
of default, holders of more than 50% of the outstanding principal
amount of the Bonds have the right to direct the Trustee to declare
the principal and interest on the Bonds and all other amounts due
thereunder, together with any make-whole amount due thereunder, to
be immediately due and payable and to direct the Trustee to
exercise rights against certain collateral. The Company
intends to engage in discussions with the Trustee and holders of
the Bonds to negotiate required waivers and amendments while the
Company works to remedy the matters described in the notice.
Although the Company expects that it will reach agreement with the
Trustee and holders of the Bonds with respect to terms of an
acceptable waiver and amendment, there can be no assurance that the
Company will receive such waivers and amendments.
The 167 MW Kent Hills wind facility in Kent Hills, New Brunswick (the "Facility") is owned as to
an 83% interest by the Company's indirect subsidiary, Kent Hills
Wind LP. Natural Forces Technologies Inc. owns the
remaining 17% interest. The Facility was completed in
three phases and consists of 50 turbines at Kent Hills 1 and Kent
Hills 2, which achieved commercial operation in December 2008 and November
2010, respectively; and five turbines at Kent Hills 3, which
began commercial operations in October 2018.
About TransAlta Renewables Inc.
TransAlta Renewables is among the largest of any publicly
traded renewable independent power producers ("IPP")
in Canada. Our asset platform and economic interests are
diversified in terms of geography, generation and counterparties
and consist of interests in 27 wind facilities, 13 hydroelectric
facilities, eight natural gas generation facilities, twenty-one
solar facilities, one natural gas pipeline, and one battery storage
project, representing an ownership interest of 2,966 megawatts of
owned generating capacity, located in the provinces of British
Columbia, Alberta, Ontario, Québec, New Brunswick,
the States of Pennsylvania, New
Hampshire, Wyoming, Massachusetts, Michigan, Minnesota, Washington, North
Carolina, and the State of Western Australia. Our objectives
are to (i) provide stable, consistent returns for investors through
the ownership of, and investment in, highly contracted renewable
and natural gas power generation and other infrastructure assets
that provide stable cash flow primarily through long-term contracts
with strong counterparties; (ii) pursue and capitalize on strategic
growth opportunities in the renewable and natural gas power
generation and other infrastructure sectors; (iii) maintain
diversity in terms of geography, generation and counterparties; and
(iv) pay out 80 to 85 per cent of cash available for distribution
to the shareholders of the Company on an annual basis.
Cautionary Statement Regarding Forward-looking
Information
This news release contains "forward-looking information" and
"future oriented financial information" within the meaning of
applicable Canadian securities laws, and "forward-looking
statements", within the meaning of applicable United States securities laws, including the
United States Private Securities Litigation Reform Act of 1995
(collectively referred to herein as "forward-looking
statements"). In some cases, forward-looking statements can
be identified by terminology such as "plans", "expects",
"proposed", "will", "anticipates", "develop", "continue", and
similar expressions suggesting future events or future
performance. In particular, this news release contains,
without limitation, forward-looking statements pertaining to: the
tower collapse incident at the Kent Hills wind farm and the
Company's plans in response to such incident; the outcome of the
engineering assessments and root cause failure analysis, including
expectations regarding required remediation resulting therefrom;
the timing and cost of remediation; the impact of the tower
collapse incident and the replacement of the foundations on revenue
and other financial metrics including the Company's payout ratio of
cash available for distribution; expectations to return the Kent
Hills 1 and 2 wind sites to service and the timing thereof; the
Company's ability to resume delivery of renewable electricity;
expectations that an agreement will be entered into with the
Trustee and holders of the Bonds with respect to the waivers and
amendments because events of default may have occurred under the
trust indenture governing the terms of the Bonds; and the Company's
objectives. The forward-looking statements contained in this news
release are based on current expectations, estimates, projections
and assumptions, having regard to the Company's experience and its
perception of historical trends as well as other factors management
of the Company believes to be reasonable and relevant in the
circumstances, and includes, but is not limited to, expectations
based on preliminary assessments by the Company's internal and
third-party engineers and prior dealings with the Trustee and
holders of the Bonds. The forward-looking statements are
subject to a number of risks and uncertainties that may cause
actual results to differ materially from those contemplated by the
forward-looking statements. Some of the factors that could
cause such differences include: supply chain disruptions;
regulatory delays in respect of any remediation plan; effects of
weather, catastrophes and public health crises, including COVID-19;
labour availability; the material costs associated with replacing
the foundations; adverse impacts under material agreements,
including the power purchase agreement; failure to obtain necessary
regulatory approvals in a timely fashion, or at all; and other
risks and uncertainties discussed in the Company's materials filed
with the securities regulatory authorities from time to time and as
also set forth in the Company's Management's Discussion and
Analysis and Annual Information Form for the year ended
December 31, 2020. The
financial guidance included herein has been prepared by management
to provide an outlook of the Company's activities and results in
light of the tower collapse incident, and such information may not
be appropriate for other purposes. Readers are cautioned not
to place undue reliance on these forward-looking statements, which
reflect the Company's expectations only as of the date of this news
release. TransAlta Renewables disclaims any intention or
obligation to update or revise these forward-looking statements,
whether as a result of new information, future events or otherwise,
except as required by law.
SOURCE TransAlta Renewables Inc