TransAlta shares got a boost after RBC Capital Markets highlighted two potential catalysts for the Alberta-based power generator: a tightening electricity market in the province and a proposed data center deal called the Boreal Technology Hub. The bank says these could be the next big drivers of investor sentiment for the utility.
What's driving the optimism?
Alberta is seeing a surge in electricity demand, largely from data centers that run around the clock. These facilities need a constant, reliable power supply, which is valuable in a grid that's getting tighter. RBC notes that TransAlta is trying to convert that demand into longer-term contracts, even as the Alberta Electric System Operator (AESO) updates market rules.
The bank flagged two key milestones investors are watching. First, clearer “phase 2A” rules from AESO, which will shape how the market operates. Second, a finalized Boreal agreement that TransAlta's management expects to complete in early 2027. RBC said the project would start with 230 megawatts (MW) supplied from TransAlta's existing gas-fired plants, with the potential to scale up to as much as 1,600 MW over time. Longer-term supply options could include upgrades at Sundance Unit 5 and Keephills Unit 1.
Why data centers matter for power companies
Data centers are often “always-on” customers, meaning they draw power steadily rather than in bursts. That makes them ideal for long-duration power contracts. For a company like TransAlta, which has historically been exposed to Alberta's volatile spot electricity prices, locking in such contracts could shift the business toward steadier, baseload-like revenue.
This is a broader trend across the industry. As tech giants back data center projects and AI-driven demand surges, power producers are finding new opportunities to sign long-term deals. However, not all data center projects proceed as planned. Some analysts warn that political factors could delay builds, so investors should keep an eye on execution risks.
What RBC is watching
RBC's broader point is that contracting matters as much as power prices. Even with planned outages at some units later this decade, the bank believes TransAlta can still benefit from higher prices and continue pursuing new contracts. That's why it reiterated an “outperform” rating and a CA$24 price target.
The bank is specifically watching the Boreal project's initial 230 MW and the early-2027 agreement date. If those pieces fall into place, investors may put more weight on contracted cash flows from the existing gas fleet today, and on the company's ability to add supply later through projects like the Sundance and Keephills repowering plans.
What it means for investors
For everyday investors, this story is about how a utility can transform its revenue profile. TransAlta has long been seen as a play on Alberta's power prices, which can swing wildly. A successful data center deal could make its earnings more predictable, which often leads to higher valuations.
But there are risks. The deal isn't finalized, and AESO's rule changes could alter the economics. Also, data center demand is tied to the broader tech and AI boom, which could cool. Investors should watch for updates on the Boreal agreement and AESO's phase 2A rules as key signposts.
In the meantime, TransAlta's existing gas-fired plants provide a base of operations, and the company is exploring upgrades to increase capacity. If the Boreal deal closes as expected, it could mark a turning point for the company's growth story.
Bottom line
RBC's note underscores a shift in how power companies are being valued: not just on spot prices, but on their ability to sign long-term contracts with reliable customers. TransAlta's Boreal Technology Hub is a test case for that strategy in Alberta. The next few months will be crucial as AESO clarifies rules and management works toward a final agreement.
