11

TransAlta Corporation

Investor Presentation

November 2016

22

This presentation may include 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 information available at the time the assumptions were made 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”,

“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 our actual performance to be materially different from that

projected. In particular, this presentation contains forward-looking statements pertaining to our business strategy and goals, including our strategy and position to grow gas-fired and

renewable generation; anticipated future financial performance; the timing and the completion and commissioning of projects under development, including the South Hedland power

project and its associated costs and benefits; expectations related to future earnings and cash flow from operating and contracting activities, including estimates of comparable

earnings before interest, taxes, depreciation, and amortization (“EBITDA”), comparable funds from operations (“FFO”), and comparable free cash flow (“FCF”); expectations in

respect of financial ratios and targets, including adjusted comparable FFO to adjusted net debt, and adjusted net debt to comparable EBITDA; the Corporation’s plans and strategies

relating to repositioning its capital structure and strengthening its balance sheet, including the allocation of debt between the Corporation and TransAlta Renewables Inc. as well as

the debt reductions that are expected to occur in 2016 and beyond; the amount of anticipated cost reductions; expected governmental regulatory regimes and legislation and their

expected impact on TransAlta and the timing of the implementation of such regimes and regulations, as well as the cost of complying with resulting regulations and laws; the

outcome of negotiations with the Government of Alberta in relation to coal-fired generation transition under the Climate Leadership Plan; the Corporation’s ownership level of

TransAlta Renewables Inc.; expectations for demand for electricity in both the short term and long term, and the resulting impact on electricity prices; the impact of load growth,

increased capacity, and natural gas costs on power prices; expectations in respect of generation availability, capacity, and production; expected levels of future contractedness;

expected sustaining capital expenditures; expected pricing in Alberta and the Pacific NorthWest; and the Alberta forward curve and future power prices.

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; equipment failure and our ability to carry out, or have

completed, repairs 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; structural subordination of securities; 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 the

Keephills 1 arbitration; risks associated with development projects and acquisitions, including delays in the construction of or increased costs associated with the South Hedland

power project; adverse regulatory developments, including our potential inability to secure a mutually beneficial coal transition arrangement with the Alberta Government in respect of

the Alberta Climate Leadership Plan; and any market disruption or changes in market regulation, including any actions by the Balancing Pool following a buyer's termination of the

applicable power purchase arrangement. 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. 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. We cannot assure that projected results or events will be achieved.

Certain financial information contained in this presentation, including comparable FFO and comparable free cash flow, 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 “Non-IFRS Measures” contained

in our Management Discussion and Analysis, filed with Canadian securities regulators on www.sedar.com.

Forward Looking Statements

333

Outline

Overview

Strategic Objectives

2016 Outlook

Financial Strategy

TransAlta Renewables Inc.

Growth Strategy

Coal Transition in Alberta

Appendix

4

8

11

16

21

25

30

36

44

TransAlta’s Platform

Coal: 4,931 MW6 facilities in Alberta and the Pacific

Northwest

Gas: 1,323 MW

12 facilities in Canada and Australia;

also 270km pipeline

RNW owns an economic interest in all

Australian gas assets (425 MW) and the

506 MW gas facility in Ontario

Wind & Solar:

1,400 MW

27 facilities in Canada and the U.S

RNW owns ~90% of the wind facilities1

Hydro: 926 MW

27 facilities in Canada and the U.S.

TA owns the majority of the Alberta hydro

facilities

(1) Including TransAlta Renewables economic interest in the 144MW Wyoming wind farm and 98MW Le Nordais wind facility

55

34%

40%

21%

5%

2015 Free EBITDA(1)

Coal Gas Wind and Solar Hydro

Our Highly Diversified Portfolio

56%

17%

16%

11%

Net Capacity (MW)

• Highly diversified cash flows from five fuel types with facilities located

in Canada, the United States and Australia

• TransAlta is Canada’s largest generator of wind power and the largest

generator of renewable energy in Alberta

• Gas-fired and renewable assets accounted for more than 65% of total

free EBITDA in 2015

(1) Free EBITDA = EBITDA less Sustaining Capital, and excluding Energy Marketing and Corporate segments. 2015 Free EBITDA from Canadian Coal excludes a $59 million

adjustment to provisions relating mostly to prior years

66

Proven Track Record

(1) 2015 comparable EBITDA excludes a $59 million adjustment to provisions relating mostly to prior years

80%

85%

90%

95%

2012 2013 2014 2015

Adjusted Availability

0.50

0.60

0.70

0.80

0.90

1.00

2012 2013 2014 2015

Safety (IFR)

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

$0

$200

$400

$600

$800

$1,000

$1,200

2012 2013 2014 2015

Comparable EBITDA(1)

, FFO and FCF

Comparable EBITDA ($M) FFO/Share FCF/Share

77

Energy Marketing Capability – A Competitive Advantage

Energy

Marketing

and

Asset

Optimization

• Transacting in multiple markets

provides us with a competitive

advantage

• Targeting $40 to $60 million in

gross margin annually from

Proprietary Trading

• Preparing for roll off of Alberta

PPAs

• Increase customer contracts from

700 MW today to 3,000 MW by

2021

• Service behind the fence large

industrial customers in Canada,

U.S. and Australia

• Centralia

• Hydro peaking capability

• Ontario Gas supply and

dispatching

Asset Optimization

(30%)

External Customer

Business (50%)

Proprietary Trading

(20%)

888

Strategic

Objectives

999

Strategic Objectives

Deliver Operational Excellence

2 Increase Financial Flexibility

1

Strategically Grow our Portfolio of Contracted

Gas-Fired and Renewable Generation

3

A Prudent and Proactive Plan

1010

Executing Our Strategic Objectives

2015 2016

Operational

Excellence

• Reduced costs by ~$50 million

with cost saving initiatives at

Canadian Coal and Corporate

• Best ever safety (IFR of 0.75)

• Continued focus on delivering

strong operational, safety and

financial performance

Increase

Financial

Flexibility

• Raised approximately $1 billion

of capital through the use of

TransAlta Renewables

• Met 2015 guidance for

comparable EBITDA(1) and FFO;

exceeded FCF guidance

• Reposition our capital structure by

pursuing project-level debt

• Proactive planning for debt

maturities in 2017 and 2018

• Similar guidance ranges to 2015

despite continued challenging

market conditions expected in

2016 in Alberta and PacNW

Strategic

Growth

• Acquired 71 MWs of wind and

solar assets in the U.S.

• Received final approval to

construct and operate

Sundance 7

• Secure a mutually beneficial coal

transition arrangement with the

Alberta government

• Longer-term, prepare to capitalize

on opportunities in gas-fired and

renewable generation

(1) Excluding adjustment to provisions relating mostly to prior years.

111111

2016 Outlook

121212

2016 Goals and Priorities

Secure a mutually beneficial coal transition arrangement

with the Alberta Government

2Continue to reposition our capital structure

1

Continue to grow TransAlta Renewables Inc.3

Continued focus on delivering strong operational, safety

and financial performance

4

1313

2016 Outlook Ranges ($M)Comparable EBITDA $990 $1,100

Comparable Funds from Operations $755 $835

Sustaining Capital (330) (350)

Pfd Share/Other Distributions (175) (185)

Comparable Free Cash Flow $250 $300

Comparable Free Cash Flow Per Share $0.86 $1.03

Annual Dividend $0.16 $0.16

Dividend Payout Ratio 19% 15%

2016 Outlook

Range of Key Assumptions

Power Prices

Alberta Spot ($/MWH) $ 29 - $ 33

Alberta Contracted ($/Mwh) $ 44 - $ 49

Mid-C Spot (US$/MwH) $ 22 - $ 26

Mid-C Contracted (US$/MWh) $ 40 - $ 45

Other

Canadian Coal Availability 87% - 89%

Hydro / Wind Resource - P50 -

1414

2016 YTD vs 2016 Guidance

$7

71

$9

90

$1

,10

0

$-

$200

$400

$600

$800

$1,000

$1,200

YTD Low High

Guidance

Comparable EBITDA

$5

35

$7

55

$8

35

$-

$200

$400

$600

$800

$1,000

YTD Low High

Guidance

Comparable FFO

$2

06

$2

50

$3

00

$-

$100

$200

$300

$400

YTD Low High

Guidance

86

% 87

%

89

%

80%

85%

90%

YTD Low High

Guidance

Comparable FCF CAD Coal Availability

1515

$33

$20

$25

$30

$35

$40

$45

$50

$55

$60

2015 2016 2017 2018 2019 2020

Managing Low Merchant Prices in Alberta

Alberta Forward Curve$/MW

• Power prices in Alberta are not expected to increase significantly in

2016; the forward curve strengthens in 2017 to 2019 partly due to

the implementation of the Carbon Competitiveness Regulation

• Our hedging program protects us from near-term low prices

• Our Alberta wind and hydro assets provide us with the ability to

capture upside in the forward market

Oversupply in the Alberta power market and low natural

gas prices are driving historic lows for Alberta power prices

1616

Contracted Portfolio Supports Stable EBITDA

Contract and hedging strategy underpin stable cashflows

Alberta• Well hedged through 2016

• Market shocks allow opportunity to further

hedge at prices higher than the current

market

Pacific Northwest• Puget Sound Energy and other long-term

contracts provide base of between

~280MW and 380MW

• Additional shorter-term hedges managed

dynamically to capture market volatility

Merchant exposure in Alberta and the

Pacific NW

2016 Hedge prices

AB ~$45 - $50/MWh

PacNW ~$40/MWh

2017 Hedge prices

AB ~$45 - $50/MWh

PacNW ~$45 - $50/MWh

Total portfolio contractedness1

MW88% 85% 73% 70%

As of June 30, 2016

0

1,000

2,000

3,000

4,000

5,000

6,000

2016 2017 2018 2019

PPAs Long-term contract

171717

Financial

Strategy

1818

Finance & Treasury Overview

Area of Focus Execution

Liquidity• Average liquidity of $1.3B since 2014; liquidity of $1.7B at

September 30, 2016

Area of Focus Execution

Financial Ratios• Consistently moved the mark on ‘Adjusted FFO to Adjusted Net

Debt’

Ratio Q4/15 Q1/16 Q2/16 Q3/16 Target

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

Adjusted FFO to Adjusted Net Debt 15.2 16.2 16.5 17.6 20 – 25%

Adjusted Net Debt to Comparable EBITDA 5.0 4.6 4.3 4.1 3 – 3.5

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

Dec 31/14 Mar 31/15 Jun 30/15 Sep 30/15 Dec 31/15 Mar 31/16 June 30/16 Sep 30/16

C$

Bill

ion

Cash

Available

Liquidity

Committed

Credit Facilities

1919

Repositioning our Capital Structure (2016 to 2018)

Sources (C$M) 2016 to 2018

Project-level financing $850 - $1,100

Cash flow from the business $450 - $600

Total $1,300 - $1,700

Uses (C$M) 2016 to 2018

Repayment of USD notes ~$1,000

Repayment of CHD bond ~$200

Construction of South Hedland ~$300

Total ~$1,500

• Over the next three years, we plan to repay ~$1.2B of debt maturing in

2017 and 2018 and fund ~$300M of capital to complete construction

of South Hedland with project-level debt and cash generated by the

business

2020

TOTAL

C$B Recourse Non-Recourse RecourseNon-

Recourse

Current (March 31, 2016) $3.2 $0.1 $0.0 $0.7 $4.0

Project Financing $0.4 $0.6 $1.0

Debt Repayment (2016 - 2018)1

($1.0) ($0.2) ($1.2)

Projected $2.2 $0.5 $0.0 $1.1 $3.8

Repositioning our Capital Structure (2016 to 2018)

Debt attributable to

coal and Alberta hydro facilities

• Financing plan is expected to result in the appropriate allocation of

debt between TransAlta and TransAlta Renewables

(1) Includes repayment of intercompany credit facility

212121

2222

Leveraging TransAlta Renewables Inc.

TransAlta Corporation and TransAlta Renewables are strategically aligned

TransAlta Renewables

TransAlta Public

~60-80% ~20-40%

• TransAlta is the largest

shareholder of TransAlta

Renewables Inc. and will

maintain ~60-80% ownership

• Unlocks the value of long-life

contracted assets on attractive

terms

• Provides access to lower cost

funding

• Strong currency to support

accretive acquisition of third party

assets

2323

TransAlta Renewables (TSX:RNW)

• Provides stable, consistent returns through the ownership of highly

contracted power generation and other infrastructure assets

Enterprise Value¹ $4.7 Billion

Market Cap.2

$3.7 Billion

2016E EBITDA $365 - $390 Million

2016E CAFD $210 - $235 Million

Dividend Yield 5.9%

Net Generating Capacity (incl. South Hedland) 2,441 MW

TransAlta Corporation’s Ownership 64%

¹ Does not include capital required to complete South Hedland Project2 Based on closing price as of October 31, 2016 and including Class B shares

Wind Hydro Gas Fired Gas Pipeline Transmission

2424

Significant Drop-Down Inventory

Potential Drop-Down Candidates from TransAlta Corporation

Gas Fired

Generation

• ~400 MW in Alberta & Ontario including:

• 244 MW Poplar Creek facility in AB

• ~150 MW from 4 facilities through TA Cogen

• ~$140M EBITDA

Alberta Hydro

• ~800 MW from 13 units in Alberta, representing

90% of Alberta’s hydro

• ~$60 - $120M EBITDA

Other

Renewables

• 20 MW wind facility in ON

• 45 MW wind facility in AB

• 50 MW wind facility in Minnesota

• 21 MW solar facilities in

Massachusetts

252525

Growth

Strategy

2626

South Hedland Power Station

150 MW Combined Cycle Gas Power Station in Western Australia

• Commissioning expected on schedule and on budget in mid-2017

• Expected to generate ~$80 million of EBITDA on an annualized basis

• Project has been funded without increasing our debt levels (total

investment by completion of ~$585 million)

Total 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.

2727

Recent Growth Accomplishments

• Advanced construction of our 150 MW South Hedland gas-fired facility

in Australia with expected commissioning in mid-2017

• Re-structured contracts at our Poplar Creek facility, extending the

contract duration by 7 years and reducing our merchant exposure in

Alberta

• Acquired three wind facilities in Alberta, Ontario and Minnesota adding

115 MW of net wind capacity to our portfolio

• Added our first solar assets with the acquisition of 21 MW of fully-

contracted solar projects in Massachusetts

Strategically reinvesting in our business for the long-term

2828

Long-Term Investment Opportunities

Gas-Fired and Renewables

• Alberta’s Climate Leadership Plan – requirement for

gas-fired and renewable generation (~6,000 MW of

coal will need to be replaced by 2030)

• Sundance 7, low cost gas-fired option in our portfolio

• Expansion & acquisition opportunities in the United

States & Australia

• Evaluating hydro pumped storage at TransAlta’s

existing hydro sites

Coal Optionality

• Evaluating coal to gas conversions

• Flexibility under the Federal GHG legislation allows

optimization of cash flows across Alberta coal units

292929

Coal Transition

in Alberta

3030

Alberta’s Climate Leadership Plan

Acceleration of

the retirement

of coal-fired

power plants

Coal-fired generation

phased out by 2030

Implementation

of a carbon

price

Starting in 2018, coal

fired generators will

pay $30 per tonne of

CO2 emissions based

on an industry-wide

natural gas

performance standard

Incentives for

renewable

generation

By 2030, renewable

sources like wind and

solar will account for

up to 30 percent of

electricity generation

3131

Coal Transition in Alberta – The Facts

• There is currently 6,277 MW of coal-fired installed capacity in Alberta, representing

~39% of overall supply

• Federal regulations amended in 2012 designate a 50 year useful life for coal plants

• Eight of TransAlta’s coal units (2,931 MW) will be retired by the end of 2029 under

the federal rule, resulting in GHG reductions of 88% from current levels

• Due to Alberta’s Climate Leadership Plan, four other coal units in Alberta will be

decommissioned in 2030, representing approximately 650 MW

Plant MW (Net) Annual GWh1 Retirement Under

Federal GHG Regulations

Retirement Under AB

Climate Leadership Plan

Sundance 1 & 2 560 4,170 2019 2019

Sundance 3 368 2,740 2026 2026

Sundance 4 406 3,023 2027 2027

Sundance 5 406 3,023 2028 2028

Sundance 6 401 2,986 2029 2029

Keephills 1 & 2 790 6,046 2029 2029

Sheerness 1 98 708 2036 2030

Sheerness 2 98 707 2040 2030

Genesee 3 233 1,675 2055 2030

Keephills 3 232 1,675 2061 2030

¹ Based on 85% availability

Note: Sheerness 1 and 2 capacity based on 25% ownership interest

3232

Secure a Coal Transition Arrangement in Alberta

It is critical that the transition arrangement achieve these

three key outcomes:

Maintain system reliability

Provide stable prices for consumers

Minimize stranded capital

2

1

3

3333

Secure a Coal Transition Arrangement in Alberta

To successfully achieve these outcomes, we need:

Market mechanisms and a market structure that sustain

promises to current investors & attract new private capital

Meaningful incentives to drive the build out of renewable

and gas-fired generation

A clear and thoughtful policy environment for the use of

gas-fired generation in Alberta

Market rules that ensure generators are paid for the

services they provide the grid

2

1

3

4

3434

TransAlta’s Coal Transition Positioning

TransAlta is well-positioned to transition from coal to

renewables and gas-fired generation by 2030

• The expansion of hydro assets

• The development of greenfield wind and solar

opportunities

• The development of our permitted Sundance 7 combined

cycle gas plant

• The conversion of coal-fired generation to gas-fired

generation

• Potential cogeneration opportunities

353535

Appendix

11

Map of TransAlta’s Operations

3737

Financial Performance by Business Segment

Business

Segment

2011 2012 2013 2014 2015(1)

2016

YTD

EBITDA ($M)

Canadian Coal $273 $373 $311 $389 $393 $295

U.S. Coal $211 $148 $67 $65 $67 $27

Gas $275 $312 $332 $312 $330 $270

Wind $163 $151 $181 $179 $176 $129

Hydro $105 $127 $148 $87 $73 $62

Energy Marketing $101 ($13) $58 $75 $37 $39

Corporate ($84) ($83) ($74) ($71) ($72) ($51)

Comp. EBITDA ($M) $1,044 $1,016 $1,023 $1,036 $1,004 $771

Comp. FFO ($M) $812 $788 $729 $762 $740 $535

(1) Canadian Coal is normalized for provision adjustment included in 2015 EBITDA of $59 million relating to prior years

3838

Upcoming Debt Maturities

(1) Includes USD$20 million of debt related to RNW.

(2) Debt related to RNW.

$400

$520

$167

$400 $400

$0

$200

$400

$600

$800

2017 2018 2019 2020

USD CAD

(2)

(1)