Even the Finnish government was overjoyed by this news – three withdrawals from Fortum’s deal

Energy company Fortum is one of the companies that directly benefits from the digital giant Google’s massive data center investment in Finland.

The exceptionally long power purchase agreement concluded by the companies creates predictability for Fortum for a long time and makes it much easier to extend the life of the Loviisa nuclear power plant until 2050.

The letter of intent between the companies can also enable the construction of a completely new nuclear power plant.

After the announcement of the news, Fortum’s shares rose by 15 percent on Wednesday. Inderes chief analyst Antti Viljakainen estimates that it is a really good contract for Fortum for three different reasons.

“If you look at the information that was given in the press release and our analyst’s calculations, the profit forecasts for the 2030s will probably rise by around 125 million euros or around 10 percent,” says Viljakainen, who visited the Stock Exchange Investor’s Week event.

Just the beginning?

Another benefit is that it is a very predictable, valuable revenue stream for Fortum and at a good price level.

The third good thing is that nothing prevents Fortum from concluding similar contracts in the future. Viljakainen points out that investments tend to feed investments.

“When this whole thing is taken into account, it is so difficult to disagree with the market that a clearly positive price reaction would not have been deserved”, Viljakainen sums up.

Also Fortum’s director of investor relations and financial communications Ingela Ulfves believes that the agreement announced in September is just the beginning of new big projects.

“As can be seen from the demand growth forecasts, yes, there is a lot of activity in the Nordic countries at the moment. The question then is, in which timeline will they be realized and how will investment decisions be made”, says Ulfves.

A clear policy on dividends

Data centers require a huge amount of electricity to operate. Google’s investment has already raised questions about whether the price of electricity in Finland and the Nordic countries will rise to an unreasonably high level with the data center boom.

According to Ulfves, there is no immediate emergency, because more electricity is produced in the Nordic countries than is consumed here.

“It’s also good to understand in relation to data centers that the capacities will not come all at once, but they are built little by little, and according to that we are developing wind projects, for example, so that we can offer these by 2030,” says Ulfves.

The state owns the majority of Fortum, so the dividends paid by the company are important for the state of Finland in addition to ordinary investors.

Some investors have expressed the wish that the company would buy back its own shares. However, according to Ulfves, Fortum wants to focus on paying dividends directly in cash and at once.

“We have a strong cash register and a strong balance sheet, so we don’t see the need to break it up at the moment. We will pay it all at once,” says Ulfves.

Stock market investor’s week is an event realized as a commercial collaboration with the participating stock exchange companies and Inderes. All journalistic decisions are made in the editorial office.