Powering the growth of nuclear through strategic partnerships

Last week, we signed a historic agreement for the future of Fortum’s nuclear power business: Google will contract up to 50% of the generation capacity of our Loviisa nuclear power plant until 2050. This is the first large-scale nuclear PPA in the Nordic countries and one of the first globally.

For us at Fortum, the agreement provides the economic certainty we have been seeking to extend the lifetime of the Loviisa power plant and increase its output through 2050. Extending the plant’s lifetime will keep this important source of fossil-free baseload power connected to the Finnish grid. The plant will continue to support security of supply and power price stability for households and businesses, while also meeting the electricity needs of Google’s growing operations.

A 1 billion euro investment programme is needed to extend the plant’s lifetime

It is widely recognised that new nuclear power is not cheap to build. A far more affordable way to retain nuclear power as part of the electricity system is to operate existing plants safely for as long as possible. This was the premise from which we started when Fortum, some ten years ago, began assessing an extension of the Loviisa plant’s operating lifetime. The operating licenses for the Loviisa units were due to expire in 2027 and 2030. We submitted an application for new 20-year operating licenses in 2022, and in spring 2023 the Finnish Government granted them allowing the plant to continue operating until 2050.

Extending the lifetime of the Loviisa power plant requires modernisation and comprehensive refurbishments. In practice, this means investments of approximately 1 billion euros. We launched our modernisation programme about three years ago. To date, investment decisions have been made for approximately one fifth of the required modernisation projects. The remaining 80% of the projects, with a combined value of 700 million euros, are still pending investment decisions.

In recent years, the share of weather-dependent electricity generation has increased significantly in Finland. This has resulted in substantial electricity price volatility and, at times, prolonged periods of low or even negative prices. At the same time, nuclear power production costs have risen. Because a nuclear power plant provides steady baseload generation, its production costs continue to accrue regardless of the power market prices. To deliver the lifetime extension investment programme of the Loviisa power plant, we need confidence that the plant’s revenues will also be sufficient to cover these major investments. Needless to say, I am genuinely pleased with the certainty that our agreement with Google provides.

Leading the way in nuclear lifetime extensions in the Nordics

Fortum is currently the only operator in the Nordic countries able to offer customers nuclear power based on a lifetime extension. In the case of the Loviisa power plant, this means almost 180 terawatt-hours of fossil-free electricity until 2050.

At Fortum, we believe there is still significant potential for lifetime extensions and power uprates at Nordic nuclear reactors. Many nuclear power companies are already considering this option. Our collaboration with Google is an excellent example of how PPAs with large energy users can provide the long-term visibility required for major investments. At the same time, they help preserve the benefits that nuclear power brings to the electricity system and society: grid stability, jobs and mitigation of electricity price spikes.

Partnerships are key to developing new nuclear power

Our strategic partnership with Google in nuclear power extends beyond the purchase of electricity. Going forward, we will also explore what kind of business model could improve the competitiveness of a new nuclear project. Fortum has already acquired land near the Loviisa power plant for new nuclear power, but advancing a concrete project will require risk-sharing and partners. As a major electricity user, Google is exactly the kind of partner we have been looking for to explore new nuclear with.

Globally, the large-scale electrification driven by digitalisation has already brought nuclear power firmly back into focus, and datacentre companies are exploring collaboration with nuclear power operators. Nuclear power is attractive because it is a stable, fossil-free technology capable of generating large volumes of electricity. Time will tell what our collaboration with Google will achieve, but we could not have hoped for a more promising starting point—and I am truly excited about what we can accomplish together.