J.P. Morgan, Goldman Sachs Upgrade Fortum on Google Power Deal
Fortum, a Finnish utility company, has signed a significant power purchase agreement (PPA) with Google for a data center supplied by its Loviisa nuclear plant. The deal is worth 22 years and covers 50% of the plant's capacity, or 500 megawatts.
The PPA was priced at around €80 to €90 per megawatt-hour, which is significantly higher than current Nordic power market rates. J.P. Morgan estimates that the agreement will increase Fortum's group comparable return on net assets by about 1.4 percentage points, implying a €127 million annual improvement in return.
Goldman Sachs raised its price target for Fortum to €25.50 from €16.50 following the announcement and said the deal adds about 30% to its EPS estimate by 2030. The broker also noted that Nordic wholesale power prices have risen more than 10% since July, driven by higher gas prices and expectations of higher power demand from data centers.
Fortum's balance sheet will be expanded by around €2 billion as a result of the deal, which includes a memorandum of understanding with Google on new nuclear, renewable capacity, and flexibility solutions. J.P. Morgan raised its FY26, FY27, and FY28 EPS estimates to stand 4%, 18%, and 44% above Bloomberg consensus, respectively.