Fortum Sells 22 Years of Nuclear to Google — and Hedges 2028 Below the Forward Curve

Europe's first large-scale lifetime-extension nuclear PPA landed in September; the same quarter quietly cut the optimization premium and dropped the Uniper option

FORTUM.HE · Earnings Call · 2026-10-28

The contract that underwrites a lifetime

For three years Fortum has been telling investors that the data-center PPA would come when it came. In September it came. A 22-year power purchase agreement with Google covering the lifetime extension and power upgrades of Loviisa through 2050 — “the largest sales agreement in Fortum's history. It is also the first large-scale lifetime extension nuclear PPA in Europe.” — Markus Rauramo, Chief Executive Officer · 2026-10-28 Alongside it sits a memorandum of understanding spanning new renewables, flexibility, new nuclear and portfolio management for Google's Finnish sites at Muhos, Vaala, Kajaani and Hamina. The market has watched this lifetime extension theme for many quarters — it was a top-six Fortum keyword back in 20241, faded hard in 20222, and has now returned to the very top of the company's keyword stack alongside Google PPA. What is genuinely new is not the extension but the counterparty: a 22-year commercial contract that converts an asset-life decision into contracted cash flow. The customer need that management has described as "robust" for six straight quarters finally printed as a number on the hedge page rather than as an adjective in the CEO section. Contrast that with July, when Markus Rauramo was explicit that the push for long contracts was not coming from Fortum: “the drive to do long-term PPAs isn't really coming primarily from our side, but it is how we communicate is based on what we hear from the customers.” — Markus Rauramo, CEO · 2025-10-29 Two quarters later Fortum has signed the biggest of them. That is a real change of state, not a change of tone. Elmera closed too: EUR 463 million for roughly 92% of the Norwegian retailer, consolidated into Consumer Solutions from 31 October, with the squeeze-out and delisting to follow. Combined customer base of about 3.2 million. Synergy targets remain unquantified, exactly as in July, when the CEO would only say that previous deals delivered double-digit synergies.

The hedge book tells a different story

Here is the tension. For the first time Fortum disclosed 2028 hedges: a hedge price of EUR 42 per megawatt hour at a 45% ratio, including the first year of the Google PPA. The first analyst question of the day was that it looked low against a forward curve where regional prices had been nearer EUR 45. The answer was essentially arithmetic: “these are a result of already some years of building up the hedging portfolio. So in looking at how have we come to the EUR 42 level, it's a result of going back a couple of years and looking at where the prices were then.” — Markus Rauramo, Chief Executive Officer · 2026-10-28 So Fortum's visibility into 2028 is, in part, a relic of a softer market. That is the cost of the strategy that has served it well — “the hedge price for 2028 is EUR 42, while the hedge ratio is 45%” — Tiina Tuomela, Chief Financial Officer · 2026-10-28, and the same disclosure last year for 2027 showed a 45% ratio at EUR 39. The price has climbed EUR 3 in a year; the ratio has not. It is a predictable, and predictably unexciting, glide path. The second soft spot is the optimization premium. Guidance was cut for 2027 and beyond to EUR 6-8/MWh from the EUR 8-10 still held for 2026 — the same downgrade management first floated in July, now reiterated with the same culprit: ancillary services margins compressed by batteries and demand response entering the market. Hydro flexibility and guarantees of origin remain strong. The message, though, is that the volatility Fortum monetises is being arbitraged away at the margin by exactly the flexibility assets that make the system volatile in the first place. The quarter itself was small, as third quarters are: comparable operating profit of EUR 102 million, up EUR 5 million, comparable EPS flat at EUR 0.08, operating cash flow EUR 134 million. Net debt EUR 1,811 million, leverage 1.4x, liquidity EUR 6.7 billion. Nuclear volumes were guided down to roughly 23 TWh for 2026 against a 26 TWh normal, with a return to normal expected next year — the fourth consecutive quarter of nuclear-outage questions, and the fourth consecutive reassurance.

Before we end the Q&A session, I still want to come back to Harry's first question on this '28 hedge that we published today. This because there has been a lot of questions this morning already around the '28 hedges.
Ingela Ulfves, Head of Investor Relations · 2026-10-28

IR having to close the call on a hedge disclosure is a small signal that the story has migrated from growth narrative to housekeeping.

Data centers: the demand story the tape has stopped paying for

Fortum's structural pitch is unchanged and, if anything, better supported: some 10 GW of data-center projects are queued in the Nordics, roughly 5 GW of powered land is being developed, and Fingrid has raised its Finnish demand forecast. Management is also confident the regulatory noise is noise — Finnish authorities instructing Google to pause work at Muhos and Kajaani produced the flat response that “I regard this as quite normal. So no impact on our contract and no impact on our future MOU either.” — Markus Rauramo, Chief Executive Officer · 2026-10-28 The worry is more systemic than contractual. A grid-connection prioritisation framework is being drafted for early next year, and the CFO's own words were that Fortum is a bit concerned about the timeline for who gets access. That is a queue risk on the entire industrial-demand thesis, not on any single contract. And the tape has cooled on precisely this theme. The global AI data center cluster is up 53% over 360 days across 45 advancing tickers — but down 5.4% over both 90 and 30 days, with 50 decliners against 6 advancers in the near window. Adjacent nuclear-fuel themes are worse: small modular reactor names are down roughly 5% over 90 days, Low Enriched Uranium down 5% over 30. Fortum's upside case leans on data centers and on new nuclear — the latter now with a customer attached, which genuinely helps — while the market's marginal dollar has been rotating out of that complex for a quarter.

What management stopped saying

The loudest absence is Uniper. For four consecutive calls the Nordic hydro and nuclear assets of Uniper were framed as a live option — interest "continues" even if the right of first refusal lapsed, no equity raise contemplated. This quarter that door was shut in a single sentence: the German government is running an IPO track and a bilateral sale of up to 75%, and “we are not part in that.” — Markus Rauramo, Chief Executive Officer · 2026-10-28 The optionality that once sat under the equity story has been removed by the counterparty, not by Fortum. The company also declined to give any quarterly read on optimization or on Elmera synergies, and pushed the pump hydro decision further into the future pending permitting and market conditions. What remains is a cleaner, more contracted, less optional story: a 1.4x-levered utility with a 22-year anchor tenant, hedges locked at levels set years ago, and a demand pipeline it can describe but not yet convert. Solid. Not yet exciting again. Note: no price tape was supplied for FORTUM.HE in this context, so the share-price reaction to the report could not be assessed.