11

TransAlta Corporation

First Quarter Results

Monday, May 8, 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 our decision to shut-down Sundance Unit 1 and mothball

Sundance Unit 2, to convert Sundance Unit 3 to 6 and Keephills Units 1 and 2 to gas and the cost and timing thereof; the useful life of the converted coal-to-gas units; the benefits

expected to be realized from such strategy, including minimizing capital requirements, reducing risk and accelerating returns on and of capital; our 2017 outlook, including

Comparable EBITDA, Funds from Operations ("FFO"), Free Cash Flow ("FCF") and Availability and revised guidance for Energy Marketing; the amount and timing for the full dispute

settlement with the Ontario Energy Financial Corporation; the development of pit areas at the Highvale mine and the associated benefits; the payment by the Alberta government

pursuant to the Off-Coal Agreement; the commissioning of South Hedland and the impact on FCF, FFO to Adjusted Net Debt and Adjusted Net Debt to EBITDA; our plans to raise

approximately $700 million to $900 million through project level financing to improve our debt coverage to 20% to 25% FFO to Net Debt by 2020; interest savings to be realized

through debt reductions; expectations relating to electricity prices and impact on FCF; cost savings to be realized from Project Greenlight; the cost of carbon; the growth in

renewable generation and our ability to participate in such growth; the in-service dates for Garden Plains, Cowley Ridge and Antelope Coulee; development costs for our wind and

solar projects and the availability of project financing to fund such development;

Factors that may adversely impact our forward-looking statements include risks relating to: fluctuations in market prices and the availability of fuel supplies required to generate

electricity; our ability to contract our generation for prices that will provide expected returns; the regulatory and political environments in the jurisdictions in which we operate;

environmental requirements and changes in, or liabilities under, these requirements; changes in general economic conditions, including interest rates; operational risks involving our

facilities, including unplanned outages at such facilities; disruptions in the transmission and distribution of electricity; the effects of weather; disruptions in the source of fuels, water,

or wind required to operate our facilities; natural or man-made disasters; the threat of domestic terrorism and cyberattacks; lower than anticipated electricity prices; equipment failure

and our ability to carry out, or have completed, repairs, alterations or conversions in a cost-effective manner or timely manner; commodity risk management; industry risk and

competition; fluctuations in the value of foreign currencies and foreign political risks; the need for additional financing; counterparty credit risk; insurance coverage; our provision for

income taxes; legal, regulatory, and contractual proceedings involving the Corporation; outcomes of investigations and disputes; reliance on key personnel; labour relations matters;

risks associated with development projects and acquisitions; increased costs or delays in the construction or commissioning of the South Hedland power project; adverse regulatory

developments; and any market disruption or changes in market regulation, including changes relating to the implementation of a capacity market. 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 news release. 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.

Forward Looking Statements

333

Agenda

Financial Performance

Strategic Announcement

Segment Performance

Finance Review and FCF Bridge

Coal to Gas Conversions

Greenlight

Growth Opportunities

Questions and Answers

44

Q1 2017 Financial & Operations Highlights

1 Adjusted for economic dispatching at U.S. Coal.

• Liquidity has doubled since March 2015

• $500 million in cash; positioned to pay off June 2017 debt maturity

• Financial ratios continue to improve

• Further improvement with commissioning of South Hedland

• Strong greenfield development pipeline

• Near-term focus on contracted Alberta and Saskatchewan renewables

3 mos. ended

Mar. 31 2017 Outlook(in $CAD millions) 2017 2016

Comparable EBITDA $274 $279 $1,025 - $1,135

FFO $203 $196 $765 - $855

FCF $98 $86 $300 - $365

Adjusted Coal Fleet Availability(1) 84.5% 90.1% 86% to 88%

55

Accelerating Coal-to-Gas

• Effective January 1, 2018: retirement of Sundance Unit 1; mothballing

of Sundance Unit 2

• Coal-to-gas conversions of Sundance Units 3 to 6, Keephills Unit 1 and

2 between 2021 to 2023.

• Align and execute our strategy to be consistent with Alberta’s

environmental and power policies.

• Minimizes capital required, reduces risk, accelerates return on (and of)

invested capital

Clearer view of expected cash flow duration from coal

66

Segmented EBITDA - Generation

Renewables and gas contributed 67% of Comparable Generation EBITDA in

Q1 2017

-$50

$0

$50

$100

$150

$200

$250

$300

$350

CanadianCoal

U.S. Coal CanadianGas

AustralianGas

Wind andSolar

Hydro TotalComparable

EBITDA

Renewablesand Gas

EB

ITD

A $

Mill

ion

s

Q1 2015 Q1 2016 Q1 2017

77

Alberta Power Price Overview

Performance not highly impacted by Alberta Power Price

$65$61

$29

$18$22

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

$0

$50

$100

$150

$200

$250

$300

$350

Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2017

$ M

illio

ns

Quarterly Results and Alberta Power Price

Comparable EBITDA ($M) Comparable FFO ($M) AB Avg Power Price ($/MWh)

88

Finance & Treasury Overview

Area of Focus Execution

Liquidity • Liquidity of ~$2.0B at March 31, 2017 including cash of $504 million

(1) Reduction in committed credit facilities due to reduction in US bilateral credit facility from $300 million to $200 million.

(1)

$1.0 $1.0$0.9

$1.3$1.5 $1.5 $1.5

$1.4 $1.4

$0.0

$0.5

$1.0

$1.5

$2.0

Mar 31/15 Jun 30/15 Sep 30/15 Dec 31/15 Mar 31/16 Jun 30/16 Sep 30/16 Dec 31/16 Mar 31/17

Cash Available Liquidity Committed Credit Facilities

99

Financial Ratios and Debt Reduction

Ratios Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Target

Comparable FFO before Interest to Adjusted Interest 3.7 3.7 3.9 3.8 3.8 4 – 5x

Adjusted FFO to Adjusted Net Debt 16.2 16.5 17.6 17 18.2 20 – 25%

Adjusted Net Debt to Comparable EBITDA 4.6 4.3 4.1 3.8 3.6 3 – 3.5

• Metrics expected to improve with the commissioning of South Hedland in mid-2017 and

growth in Free Cash Flow.

• Decreased total net debt by $244 million in the quarter

• Further debt reduction will drive share price appreciation

Current Post 2020

Debt Reduction AccretesValue of Equity

Debt Equity

+ ~$3/share

1010

Tangible Factors Driving Cash Flow Growth

$250 mm(1)

$300 mm

$365 mm $400 mm

2016 2017

Guidance

2018 – 2020

Outlook

South Hedland

(Partial Year)

MSA Settlement

Off-Coal Payment

Lower Margin on

Alberta Coal

South Hedland

(Full Year)

Project Greenlight

Interest Expense

Mississauga and

Poplar Creek

Sundance 1&2

Higher Margin on

Alberta Renewables

Brazeau

Wind RFP in Alberta

and Saskatchewan

Solar Project in

Australia

$440 mm

Targeting in excess of $400 million of Free Cash Flow for 2018-2020

(1) Includes MSA settlement payment, productivity capital and Lakeswind tax equity.

1111

Factors Driving Early CTG Conversion

Early Conversion Benefits

Expected

Timing2021 – 2023 vs. 2026 – 2030

Expected Near-

Term Carbon

Costs

Political and social influence trending to less carbon, CTG reduces emissions by

~40%, CTG better positioned for potential increases in carbon pricing

~70% Savings Upon Conversion

Opex and

Sustaining

Capital

Significant savings upon conversion driven by lower fixed operating expenses

and sustaining capital expenditures (including avoidance of CASA compliance

capital expenditures)

Operating

FlexibilityFaster CTG ramp-up, ability to turn unneeded plants “off” and avoid unnecessary

operating expenses will drive improved capacity market competitiveness

ReliabilityCTG will have better reliability, important to meet performance obligations in a

capacity market

Gas Pricing Benefit from currently low natural gas pricing environment

Early conversion decision supported by detailed risk assessment and NPV

analysis

1212

Transforming the way we do business

• Drives ambitious improvements in all parts of TransAlta

• Engaging all employees – bottom-up approach

• Rigorous structure reinforcing accountability

• Creates a highly competitive low cost organization

1313

Positioned to Seize Opportunities in Targeted Markets

1Total estimated project spend is AUD$570 million. Total estimated project spend is stated in CAD$ and includes estimated capital interest costs and may change due to fluctuation in foreign exchange rates.

USA

CANADA1,500MW

1,000MW

500MW

AUSTRALIA

5,000MW

5,000MW

UNITED STATES

Renewables expansion at existing facilities

Targeted gas and renewables acquisition

AUSTRALIA

Wind and solar focus with sites in active

development

Offtake agreements

Targeted gas and renewables acquisitions

SASKATCHEWAN

Wind and Solar sites being

developed

EASTERN CANADA

Ontario RFPs greenfield solar /

small hydro uprates

Targeted gas and renewables

acquisitions

ALBERTA

Long history of developing renewables

in Alberta

3,000MW of CTG conversions

Brownfield wind farms shovel-ready

Brownfield solar and battery at

existing facilities

South Hedland $585 mm (1) Mid-2017150MW

Mid-2018$160 mm80MWGoonumbla Solar

Farm

Alberta Wind

ProjectsDecember 2019$300 mm150MW

Saskatchewan Wind $400 mm December 2019200MW

Brazeau Pump

Storage$1.8 - $2.5 B 2025600 – 900MW

OpportunityExpected

Capital

Expected Online

DateCapacity

Potential for

$3B to $4Bof contracted growth

opportunities over the

next 5 – 10 years

• Contracted projects can be funded

with 60-80% leverage

• Target 8-12% return on equity

depending on locations, contract

profile, and technologies

• $0.8 to $1.0 billion of equity

investment

1414

Garden Plains and Cowley Ridge Repower to be submitted in up-coming Alberta

procurement; Antelope Coulee submitted to Saskatchewan’s

Canadian Wind Projects

Edmonton

Calgary

Saskatoon

Regina

Hanna

Pincher Creek

Swift Current

Garden Plains Wind

Location30 km north of Hanna, Alberta

Capacity 130MW

Proposed

In-Service DateDecember 2019

Capital Costs $260 mm

Other Details Wind resource data dating back

to 2009

Partnerships with landowners

since 2011

Antelope Coulee Wind

Location 35 km southwest of Swift

Current, Sask

Capacity Up to 200MW

Proposed

In-Service DateDecember 2019

Capital Costs $400 mm

Other Details Wind resource data dating back

to 2008

Cowley Ridge Wind Repower

Location Northwest of Pincher Creek,

Alberta

Capacity 20MW

Proposed

In-Service DateDecember 2019

Capital Costs $40 mm

Other Details Site of original Cowley Ridge

Wind Farm which was built in

1993 and dismantled in 2016

Long-term understanding of

wind resource

1515

Australian Opportunities

1Total estimated project spend is AUD$570 million. Total estimated project spend is stated in CAD$ and includes estimated capital interest costs and may change due to

fluctuation in foreign exchange rates

TransAlta continues to build on already its significant Australian presence

Perth

South Hedland

Sydney

AUSTRALIA

Goonumbla

Gas

Solar

Goonumbla Solar Farm

Location 350km North-West of Sydney in New South Wales

Capacity 80MW

Proposed

In-Service Datemid-2018

Capital Costs $160 mm

Other Details

Site is permitted under the New South Wales Major

Project Planning Development process

Engaged Tier 1 EPC contractor to undertake

construction and operation and maintenance

Currently securing offtake agreements

South Hedland

Location South Hedland, Western Australia

Capacity 150MW

Expected

In-Service Datemid-2017

Capital Costs $585 mm(1)

Notes Expected to generate $80 mm of

EBITDA on an annualized basis

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Question and Answer