Shares in Fortum, a Nordic energy company, surged by 8.3% to 23.11 euros in European morning trade following the announcement of a 22-year power purchase agreement (PPA) with Google. This deal, signed on Wednesday, will see Google buy 50% of the Loviisa nuclear power plant's capacity from 2030 through 2049. This agreement is crucial for Fortum as it provides the economic certainty needed to extend the life of the Loviisa plant, which currently supplies 10% of Finland's electricity.
Google simultaneously announced a substantial investment of at least 13 billion euros (approximately $15 billion) in artificial intelligence infrastructure in Finland over the next two years, specifically 2027-2028. This investment, Google's largest in Europe, will include data centers, electricity grid improvements, and clean energy and battery projects across locations like Hamina, Muhos, Vaala, and Kajaani. The Loviisa nuclear plant is situated near Google's Hamina data center, making the PPA a strategic move for the tech giant to secure low-carbon energy for its expanding operations.
The partnership also includes a Memorandum of Understanding (MoU) to explore the development of new nuclear and renewable capacities. This long-term PPA is expected to boost Fortum's Group comparable return on net assets (RONA) by approximately 1.4 percentage points once 50% of the plant's generation capacity is contracted. This supports Fortum's long-term RONA target of 14% and provides revenue certainty for the ongoing $1 billion investment program aimed at extending the Loviisa plant's lifetime until 2050. The agreement will begin with a smaller capacity in 2028 before reaching 50% from 2030-2049.
