Canadian power generator TransAlta has reached an agreement with Kineticor Holdings to purchase two 230MW Siemens F class gas turbines and associated equipment for a fee of $84m.

The Canadian company will be integrating the new gas turbines into the existing steam turbine at Sundance Unit 5, to repower and transform the unit into an efficient combined-cycle unit.

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TransAlta president and CEO Dawn Farrell said: “The acquisition advances our repowering strategy in Alberta and increases our contractedness which will help de-risk our business as we move into a fully merchant Alberta market starting in 2021.

“We are very pleased for the opportunity to have Shell as a major customer and look forward to working with them on this opportunity to provide low cost, clean and reliable power for Albertans.”

Once operational in 2023, the Sundance 5 combined-cycle unit will have the capacity to generate nearly 730MW of power and is expected to cost approximately $760m.

The integration of two gas turbines into one steam turbine is expected to provide TransAlta more operational flexibility.

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As per the agreement, TransAlta will also secure a long term non-unit contingent power purchase agreement in late 2023 with Shell Energy North America.

The transaction with Kineticor is part of the company’s strategy to become a low cost, low emissions power generation company.

In September 2019 TransAlta unveiled its Clean Energy Investment Plan to focus on transitioning its coal assets to natural gas while strengthening its position in the renewable energy segment.

The company’s plan, which is expected to cost nearly $1.5bn (C$2bn) will see its thermal units converted from coal to natural gas in 2020 and 2021 in the Alberta region of Canada.