TransAlta bets $1B on two Denver-area gas “peaker” plants as Colorado power demand climbs

TransAlta is spending $1 billion to buy two natural-gas power plants outside Denver, a move that adds 318 megawatts of fast-start capacity to its U.S. footprint, and doubles down on gas at a time when the West’s grid is straining under growth, heat, and renewable volatility.

The Canadian power company says the plants come with long-term, fixed-price capacity contracts that lock in revenue for more than 25 years and push key costs, fuel, operations, maintenance, and some capital expenses, onto customers. The pitch: predictable cash flow now, with less exposure to day-to-day power and gas price swings.

TransAlta is buying Mountain Peak Power (162 MW) in Keenesburg and Canyon Peak Power (156 MW) in Bennett, both east of Denver. The seller is tied to Blackstone’s energy platform, with Kindle Energy acting as the representative.

Two “peaker” plants built for the grid’s toughest hours

These aren’t round-the-clock power stations. They’re “peakers”, plants designed to ramp up quickly when electricity demand spikes, like during a heat wave or a deep cold snap. In those moments, reliability matters more than theoretical capacity, and prices can jump fast.

Both facilities use GE LM2500XPRESS turbines, a common choice for quick-start generation. For grid operators, that flexibility is the point: when solar fades in the evening or wind drops unexpectedly, peakers can fill the gap.

Timing is part of the bet. Mountain Peak is expected to be in commercial operation by September 2025. Canyon Peak is slated to enter service in the third quarter of 2026, meaning TransAlta is buying one asset that should be producing soon and another that still has to clear the riskiest phase: startup and early operations without delays or performance problems.

The contracts: 25+ years of revenue, with costs passed through

TransAlta’s headline claim is that both plants are 100% contracted under fixed-price capacity agreements with investment-grade counterparties. In plain English: the company says it’s buying a long-term revenue stream, not gambling on volatile spot-market power prices.

The contracts are also structured to pass through major cost categories, fuel, operations, maintenance, and certain capital costs, to customers. That can shield the plant owner from swings in natural gas prices and from the kind of maintenance-cost inflation that has hit power generators across North America in recent years.

There’s also upside tied to performance. TransAlta says the deals include availability incentive payments, bonuses if the plants are online when the grid needs them most. The flip side is implied pressure: if availability slips, penalties and lost incentives can quickly erode the “safe” cash-flow story.

How TransAlta plans to finance the $1 billion purchase

The company says it will fund the deal with about $750 million in senior secured project-level debt and roughly $250 million in equity. That structure is typical for contracted infrastructure assets because lenders can underwrite against predictable cash flows.

To support the equity portion, TransAlta also announced a $350 million bought-deal stock offering, expected to close around June 9, 2026, pending standard approvals, including from the Toronto Stock Exchange and the New York Stock Exchange. the stock sale isn’t contingent on the acquisition closing, giving the company flexibility if the deal falls apart.

Underwriters also have an option to buy up to 2,734,500 additional shares, which could raise about $53 million more. That extra cushion comes with a tradeoff familiar to U.S. investors: dilution. TransAlta argues the deal will still boost free cash flow per share, but that depends on execution and the true all-in cost of capital.

What TransAlta says the plants will earn

TransAlta is projecting about $110 million in annual adjusted EBITDA and about $45 million in annual free cash flow from the assets. (Those figures are already in U.S. dollars, despite the company’s Canadian base.) Management says the acquisition should be immediately accretive to free cash flow per share, in the low-to-mid single digits.

CEO Joel Hunter is framing the purchase as a low-risk way to expand in a fast-growing U.S. market with contracted revenues that can help fund future projects. The company also points to potential synergies in operations, insurance, and taxes, real, but typically incremental rather than transformational for assets like these.

Why Colorado, and why gas, still matters in the West

Colorado has been one of the country’s fastest-growing states, and the Denver metro area has seen steady population and commercial expansion, trends that translate into rising electricity demand and sharper peak-load stress on the grid.

At the same time, the region is adding more wind and solar. That’s good for emissions, but it increases the need for flexible generation that can respond when renewables dip. Gas peakers often get positioned as a bridge technology, useful for reliability, politically contentious for climate goals.

That tension is the backdrop to this deal. TransAlta is betting that long-term contracts and grid reliability needs will keep these plants valuable, even as regulators, utilities, and voters push for cleaner alternatives and tighter limits on fossil-fuel generation.