General Market Commentary

The Bank of Canada has maintained the base interest rate of 4.5%, unchanged from our past edition. Some expected another increase while others speculated a cut.  The “hold” for many is an indicator of uncertainty which could perhaps increase the likelihood of an economic slowdown or even a moderate recession. During times of economic uncertainty, investors tend to sell stocks and other high-risk assets.

The multiple increases over the past year combined with major fluctuations in currency valuations, the ongoing Russian invasion of Ukraine, and other factors, are impacting individual investors and institutional investors in the global economy. Investors are wondering whether higher interest rates will actually cause a recession. Only time will tell. In the meantime, certain stock prospects are looking up.

Hot Sector News

The energy sector currently generates about three-quarters of greenhouse gas (GHG) emissions globally. Replacing polluting energy sources with renewable energy is clearly the answer to reducing emissions and meeting net zero targets.

“Canada is just starting to take advantage of its wind and solar energy potential,” says Vittoria Bellissimo, the president and CEO of the Canadian Renewable Energy Association. “The country needs to do more to unlock the benefits of the enormous opportunities offered by renewable energy.”

Certain companies are competitively poised to help unlock those benefits and take us into the clean energy future.

One company worth looking at is Alberta-based TransAlta Renewables Inc. (RNW). It’s one of the largest publicly traded renewable power generation companies in Canada. With 48 facilities and nearly 3,000 megawatts (MW) of generating capacity in three countries its asset platform is diversified in terms of geography and generation. It is majority owned by TransAlta Corporation (TA), an electricity power generator and wholesale marketing company that operates 72 generating facilities and approximately 6,600 MW in Canada, the United States, and Australia.

TransAlta Corporation has a deep history in Canada. The company was born in 1909, when it began the planning and construction of the Horseshoe Falls Hydro Plant in Seebe, Alberta. It appears that the horseshoe brought good luck as the company steadily grew over the past century. In 2010, TransAlta became the first company to own and operate more than 1,000 MW of installed wind capacity in—almost 30 per cent of the country’s total at the time, and as of Dec. 31, 2022, had 2993 MW of installed hydro, wind, solar and energy storage capacity.

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TransAlta Corporation has just announced an agreement to acquire an interest in a large-scale renewable energy project on the site of a former coal mine in southwest Alberta, involving a 50 per cent stake in Montem Resources’ Tent Mountain Renewable Energy Complex (TM-REX) if all milestones in the agreement are met. The concept for TM-REX includes a 320 MW pumped hydro energy storage project at the Tent Mountain coal mine site in Alberta’s Crowsnest Pass region, along with an offsite 100 MW green hydrogen electrolyser and an offsite 100-megawatt wind farm.

In the fall of 2021, TransAlta Corporation launched its Accelerated Clean Electricity Growth Plan, plotting a course to focus the company on developing contracted renewable generation and minimizing exposure to regulatory and carbon risk. To date, the company has announced projects totaling 800 MW of its target to add 2,000 MW by 2025 and has a growth pipeline of development projects totalling four gigawatts.

Adjusted EBITDA (Earnings before interest, taxes, depreciation, and amortization) at TransAlta Corporation, for the year ended Dec. 31, 2022, of $1.634 billion, is an increase of $348 million or 27% from 2021. The increase in adjusted EBITDA was largely due to strong performance from the Alberta hydro, gas and wind fleet. The company also reported free cash flow of $961 million (or $3.55 per share), cash flow from operating activities of $877 million, and earnings before income taxes of $353 million. The company exceeded the top end of its adjusted EBITDA and free cash flow (FCF) guidance during the year.

Todd Stack is the chief financial officer and executive vice president of finance at TransAlta. He is also the president of TransAlta Renewables.

Todd Stack - TransAlta

Todd Stack, CFO and EVP, TransAlta Corporation and president of TransAlta Renewables. Image credit: TransAlta.

“TransAlta has been in business for more than 100 years and is in perpetual transition as any good company should be,” says Stack, noting TransAlta’s evolution from predominantly coal and hydro generator to retiring its coal units or converting them to gas, while embracing wind and solar energy as the energy transition advances.  “We’ve had a massive amount of decarbonization over the years.” In 2005, for example, the company emitted about 40 million tonnes of carbon, but now is down to just 10 million tonnes of carbon with the closing of its coal-fired plants.

With the emerging transition to clean energy coming into view in 2013, the company made some strategic financial decisions. “We created TransAlta Renewables so that investors could directly invest into that asset class within the company because at that time we were still operating a number of coal plants under legislated agreements with the government,” explains Stack.

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Fast forward to today and both companies are focussed on renewable energy projects.

In 2022, TransAlta Renewables achieved some key accomplishments in Canada. The company completed and executed contract extensions and renewals with customers such as the Ontario Independent Electricity System Operator (IESO) at the Sarnia cogeneration facility and announced 10-year contract extensions at its Kent Hills wind facilities with New Brunswick Power Corporation, advancing rehabilitation efforts to replace turbine foundations for Kent Hills 1 and 2, with these facilities expected to return to service in the second half of 2023.

Last month, TransAlta Corporation announced an agreement with Montem to acquire an interest in the Tent Mountain project in southwest Alberta. The deal involves the land rights, fixed assets and intellectual property associated with the pumped hydro project as well as the offsite electrolyser and offsite wind facility. The project will leverage Montem’s existing assets at the former Tent Mountain project, which include large legacy water reservoirs from past mining operations.

Pumped hydro is an environmentally sustainable solution for managing the intermittency of increased renewable electricity generation. The characteristics of the Tent Mountain site are rare and present a unique opportunity to provide 15 hours of energy storage capability that can firm up intermittent renewable electricity production on the Alberta grid.

“This is an early-stage project, with years of development in the making,” says Stack, however the project has already completed key technical and environmental work including a hydrology assessment. Additional geotechnical analysis is being planning to further advance the design of the project, with construction targeted to start as early as 2026, all subject to regulatory, commercial, and engineering considerations.

Some clean energy innovators say the grid will change more in the next decade than it has in the past century. Stack doesn’t disagree. He says there’s a lot of corporate will in support of clean energy projects across the country. For its part, TransAlta currently has $1.4 billion in construction projects on the go right now for new wind, solar and battery storage projects across its global operating areas.

Today the trading price of TransAlta Renewables is $11.75, while the price of TransAlta Corporation is $11.27.

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According to a financial analyst report by Ben Pham and James Fracas of BMO Capital Markets, fourth-quarter results for TransAlta were exceptional. The adjusted EBITDA was +27% YoY and beat initial guidance by 45%. That said, the share price moved in the other direction, likely being weighed down (once again) on continued end game uncertainty and share price downdraft on 60%-owned RNW – does TA buy it, sell it, or leave it public?

The big disconnect between TA shares and fundamentals have been disappointing, according to the report, but the analysts remain confident that execution of the strategic plan should ultimately surface value. As such, they’re maintaining their Outperform rating and $20 target.

Key catalysts highlighted are achieving 2023 FCF/EBITDA guidance, higher Alberta power prices, and sanctioning 500 MW of new clean energy projects for 2023.

Stocks to Watch

Here is a list of Canadian cleantech stocks we’ve selected to kick off the column. This list of public companies is by no means complete, and we are open to suggestions from our advisors and readers.


Name Symbol Price in $CDN
(Feb. 13/23)
Price in $CDN
(March 13/23)
% Change
Algonquin Power & Utilities Corp. AQN $9.91 $10.38  +4.74%
Anaergia Inc. ANRG $4.96 $3.69 -25.6%
Ballard Power Systems Inc. BLDP $8.13 $7.32 -9.96%
*Biorem Inc. BRM $1.03 $1.05 +1.94%
Boralex Inc. BLX $36.43 $37.28 +2.33%
*CHAR Technologies Limited YES $0.45 $0.56 +24.4%
Electrovaya Inc. EFL $1.28 $1.08 -15.6%
Engine No 1 Carbon Streaming ETF NETZ $66.49 $65.18 -1.97%
Evogene Ltd. EVGN $1.15 $1.08 -6.08%
Greenlane Renewables Inc. GRN $0.46 $0.38 -17.39%
H2O Innovation Inc. HEO $2.64 $2.71 +2.65%
Loop Energy LPEN $1.05 $1.14 +8.57%
*Thermal Energy International Inc. TMG $0.11 $0.10 -9.09%
TransAlta Renewables Inc. RNW $12.00 $11.75 -2.08%
UGE International Ltd. UGE $1.58 $1.36 -13.92%
Westport Fuel Systems Inc. WPRT $1.44 $1.56 +8.33%
Zinc8 Energy Solutions Inc. ZAIR $0.19 $0.16 -15.78%

*The author of this column owns equity. It is not meant to be an endorsement, but simply a statement of this fact.

Profile photo of James Sbrolla,

James Sbrolla is a veteran of the financial and environmental industries. His career has been focused primarily on public and private companies in the clean technology sector. He is a member of the Environment Journal Advisory Board.

This column is written by James Sbrolla and Connie Vitello, editor of Environment Journal. To pitch an idea for an upcoming Market Watch column, or to suggest a stock, please email


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