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Investor Presentation

March 2016

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Forward Looking Statements

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”, “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 and anticipated future financial and share price performance; our success in executing on our growth projects, including increasing customer

contracts by 2021; anticipated gross margin from proprietary trading; capitalizing on opportunities in gas-fired and renewable generation; repositioning our capital structure and proactively

planning for debt maturities; funding strategy, including pro forma year end 2015 liquidity, raising project-level debt through the use of our contracted asset base and leveraging TransAlta

Renewables Inc. (“TransAlta Renewables”); the timing and the completion and commissioning of projects under development, including major projects such as the South Hedland Power

Project and Sundance 7, and their attendant costs; expectations regarding TransAlta Corporation’s (“TransAlta”) offer control in the Alberta market following the expiry of the power

purchase arrangements; 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; 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; expectations regarding the role different energy sources will play in meeting future energy needs; expected financing of our capital expenditures;

expected governmental regulatory regimes and legislation and their expected impact on us and the timing of the implementation of such regimes and regulations, as well as the cost of

complying with resulting regulations and laws; our trading strategies and the risk involved in these strategies; estimates of future tax rates, future tax expense, and the adequacy of tax

provisions; accounting estimates; anticipated growth rates in our markets; the estimated contribution of Energy Marketing activities to gross margin; and expectations relating to the

performance of TransAlta Renewables’ assets and plans for the sale of contracted assets to TransAlta Renewables.

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 the 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; development projects and acquisitions, including delays in the

construction of the South Hedland Power Project; failure to proceed with plans for raising project-level debt; failure to proceed with plans for the sale of contracted assets to TransAlta

Renewables as a result of failure to agree to commercial terms with the independent directors of TransAlta Renewables, adverse market conditions or failure to obtain any required

regulatory, shareholder or other third party approvals; and the satisfactory receipt of applicable regulatory approvals for existing and proposed operations and growth initiatives. The

foregoing risk factors, among others, are described in further detail in the Risk Management section of this MD&A 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 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 may not be comparable to similar measures presented by other issuers and 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.

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Coal: 4,931 MW ~6 facilities in Alberta and the Pacific

Northwest

Gas: 1,337 MW

12 facilities in Canada and Australia;

also 270km pipeline

RNW owns all Australian gas assets (425

MW) and 506 MW gas facility in Ontario

Wind & Solar:

1,400 MW

27 facilities in Canada and the U.S

RNW owns ~90% of wind facilities

Hydro: 926 MW 27 facilities in Canada and the U.S.

TA owns all of the Alberta hydro facilities

TransAlta’s Diversified Portfolio

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Our Highly Diversified Portfolio

1 Free EBITDA = EBITDA less Sustaining Capital, and excluding Energy Marketing and Corporate.

2 Excludes the $59 million adjustment to provisions

• Generated $755 million of free EBITDA in 2015

• Canadian Coal contributed just over 25% of total free EBITDA

• Gas and renewables accounted for more than 65% of total free EBITDA

2015 Free EBITDA ($M)

Canadian Coal(2)

$203

U.S. Coal $52

Gas $299

Wind and Solar $163

Hydro $38

Total $755

2015 Free EBITDA (1)

27%

7%

40%

21%

5%

Canadian Coal U.S. Coal

Gas Wind & Solar

Hydro

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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%)

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Strategic Objectives

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A Prudent and Proactive Plan

1) Deliver Operational Excellence

2) Increase Financial Flexibility

3) Strategically Grow our Portfolio of Contracted

Gas-Fired and Renewable Generation

Strategic Objectives

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Executing our Strategic Objectives

2015 2016

Operational

Excellence

• Reduced costs by ~$50 million

with productivity and efficiency

initiatives at Canadian Coal and

Corporate

• Best ever safety (IFR = 0.75)

• Continue to focus on Alberta coal

mining operations

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 coal transition agreement

• Prepare to capitalize on

opportunities in gas-fired and

renewable generation

• Longer-term focus given Alberta

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

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2016 Outlook

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2016 Outlook & Assumptions

2016 Outlook Ranges ($M)

Comparable EBITDA $990 $1,100

Comparable Funds from Operations (FFO) $755 $835

Sustaining Capital $(330) $(350)

Pfd Share/Other Distributions $(175) $(185)

Comparable Free Cash Flow (FCF) $250 $300

Comparable FCF Per Share $0.86 $1.03

Annual Dividend $0.16 $0.16

Dividend Payout Ratio 19% 15%

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 -

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$20

$25

$30

$35

$40

$45

$50

$55

$60

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2015 2016 2017

Managing Low Merchant Prices in Alberta

Opportunities

• The Alberta PPA’s were designed for low price periods

• TransAlta’s Alberta fleet has the lowest cost structure among Alberta generators

• Disciplined investment until prices recover

Risk

• If low prices persist to 2018, there is potential for the upside from the post-PPA value

of Sundance 1 & 2 to be reduced

Alberta Forward Curve

Oversupply in the Alberta power market and low gas prices

are driving historic lows for Alberta power prices

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0

1,000

2,000

3,000

4,000

5,000

6,000

2016 2017 2018 2019

Open Merchant Short term contract / Hedges

Long-term contract PPAs

Contracted Portfolio Supports Stable EBITDA

Contract and hedging strategy underpin stable cashflows ¹ As of January 2016

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

MW 87% 84% 72% 70%

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Financial Strategy

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Strengthening our Financial Position

As at Dec. 31 ($M) 2015 2014 2013

Recourse debt - CAD debentures 1,044 1,043 1,269

Recourse debt - U.S. senior notes 2,221 2,444 1,797

Net credit facilities and other 328 72 838

FV of Hedging Instruments (190) (96) (16)

Total recourse Debt 3,403 3,463 3,888

Non-recourse debt 766 380 376

Finance lease obligations 82 74 25

Total Net Debt (as of December 31, 2015) 4,251 3,917 4,289

Proceeds following close of transaction on Jan. 6, 2016 173 - -

Total Net Debt (as of January 6, 2016) 4,079 3,917 4,289

• Reduced our debt by ~$200 million since 2013

• Acquisition of renewable projects in the US in 2015 added ~$200 million of debt

• Construction of South Hedland since 2014 required ~$250 million

• The US dollar appreciation added an incremental ~$300 million over the last two

years, net of hedging instruments. All of our US debt is hedged with FX

contracts or net investment in US operations

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Increasing our Financial Flexibility

Reposition TransAlta’s capital structure

• As of January 2016, ~$1.4 billion in available liquidity

• Over the next three years, we plan to repay $1.2 billion of recourse debt with

project-level debt and cash

• Deliver on FFO and debt reduction targets and achieve FFO to Debt target

of 20% by 2018

1 Raise $400 to $600 million of project-level debt to repay U.S.$400 million

corporate maturity in 2017 and $200 million of CHD bonds

2 Execute a similar strategy in 2017 to refinance $U.S. $520 million

3 Reduced the dividend from ~$200 million to less than $50 million freeing up

~$150 million annually which can be allocated to debt reduction over the

2016 - 2018 period

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Utilizing our Contracted Asset Base

• Assets support target of $400 - $600 million in financing in the near-term

• Long-term contracted assets with credit worthy counterparties

• Strong operating history and well planned maintenance programs

• Size and ability to package certain assets together to manage transaction costs

Wind • ~300 MW in Eastern Canada and the U.S.

Hydro • ~50 MW in Ontario and B.C.

Gas • ~525 MW in Ontario

• Longer-term, additional ~$1.2 billion by using our Hydro and Wind in Alberta

and Australian portfolio

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TransAlta Renewables

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TransAlta Corporation and TransAlta Renewables are strategically aligned

Leveraging TransAlta Renewables

TransAlta Renewables

TransAlta

Public

~60-80% ~20-40%

• TransAlta is the largest shareholder

of TransAlta Renewables and will

maintain ~60-80% ownership

• Unlocks the value of long-life contracted

assets on attractive terms

• Provides access to lower cost funding

• Funds growth and debt reduction

• Strong currency to support accretive

acquisition of third party assets

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TransAlta Renewables (TSX:RNW)

• Created in August 2013 to provide stable, consistent returns for investors through the

ownership of highly contracted power generation and other infrastructure assets.

$3.0 billion Market Cap

$2.4 million in 2014

adjusted EBITDA

$176 annual dividend per share

$0.84 billion Enterprise Value

Enterprise Value¹ $3.3 Billion

Market Cap. $2.5 Billion

2016E EBITDA $365 - $390 Million

2016E CAFD $210 - $235 Million

Dividend Yield 7.8%

Generating Capacity (including South Hedland) 2,470 MW

TransAlta Corporation’s Ownership 64%

¹ Does not include capital required to complete South Hedland Project

* Enterprise Value and Market Cap. based on closing price as of February 22 2016

Wind

Hydro

Gas Fired

Gas Pipeline

Transmission

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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

Recently

acquired from

Rockland Capital

Recently

acquired from

Suncor

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Growth Strategy

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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

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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

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Coal Transition in Alberta

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Coal Transition in Alberta – The Facts

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

approximately 39% of the overall supply

• Federal regulations amended in 2012 designate useful life of coal plants as 50 years

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

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

• Four other coal units in Alberta will be decommissioned in 2030, representing

approximately 650 MW due to Alberta’s Climate Leadership Plan

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

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The Alberta Climate Leadership Plan

With respect to the power generation sector, the Climate Leadership Plan targets:

• the phase-out of emissions from coal-fired generation in AB by 2030;

• replacement of two-thirds of the retiring coal-fired generation with

renewables and one-third with gas;

• phase-in of the Carbon Competitiveness Regulation (CCR) in 2018, an

economy-wide price on carbon of $30 per tonne benchmarked against

highly efficient gas-fired generation, to replace the existing Specified Gas

Emitters Regulation (SGER)

TransAlta has significant opportunities for replacing coal retirements including:

• ~700 MW of Hydro expansion at Brazeau and BigHorn

• ~200 MW of other AB hydro expansions

• Coal to gas conversions

• Solar in the Wabamum area

• Wind expansion/repowering

• Brownfield & greenfield cogeneration

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Coal Transition in Alberta – Policy Discussions

• The Government of Alberta is appointing a negotiator to work with coal-fired

generators

• TransAlta will work with the negotiator to ensure it has the certainty and

capacity needed to invest in clean power

• Energy only market structure expected to be preserved

• We will be better able to assess the impact of legislation on the Alberta market

after these negotiations are finalized

TransAlta has numerous opportunities available for investment in

renewable and gas-fired generation

It is critical that the coal transition:

Keeps power prices stable

Maintains system reliability

Does not unnecessarily strand capital

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Appendix

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Financial Performance by Business Segment

Business Segment 2011 2012 2013 2014 2015(1)

EBITDA ($M)

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

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

Gas $275 $312 $332 $312 $330

Wind $163 $151 $181 $179 $176

Hydro $105 $127 $148 $87 $73

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

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

Comparable EBITDA ($M) $1,044 $1,016 $1,023 $1,036 $1,004

Comparable FFO ($M) $812 $788 $729 $762 $740

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

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$27

$204

$400 $400 $400

$520

$0

$200

$400

$600

$800

2016 2017 2018 2019 2020

CAD

USD

Upcoming Debt Maturities