Finland's Fortum says new nuclear not feasible at current prices
Anne Kauranen
Fortum headquarters in Espoo, Finland
By Anne Kauranen
By Anne Kauranen
HELSINKI (Reuters) - Fortum doesn't believe investing in new nuclear generation capacity is feasible at current low Nordic power prices, its chief executive said on Thursday, after the Finnish utility surprised markets with better than expected second quarter results.
Fortum is among companies eyeing possible deals from the Swedish government's goal to build 2,500 MW of new nuclear power by 2035 - the equivalent of two new reactors - and 10 new reactors a decade later to help tackle climate change.
On Monday, a commission appointed by the Swedish government put a price tag of around 400 billion crowns ($38 billion) on the new nuclear plans and proposed a financing and risk-sharing model, which would include state loans, a price hedging agreement and a mechanism to share risk and gains.
Sweden and Finland are both considering introducing new nuclear power to serve as a steady base load for intermittent renewables.
Fortum's Chief Executive Markus Rauramo welcomed the Swedish government's report but said more details were needed before any investments could go forward.
"With today's market prices, new nuclear is not feasible," he told a conference call after the company's quarterly results on Thursday.
Shares in Fortum were up 1.2% in afternoon trade after the company reported a 233 million euro ($256.51 million) operating profit for the April to June period.
That was down from 262 million a year earlier, but beat a forecast of 200 million euros in a company-provided poll as higher hydro volumes and the divestment of Fortum's Indian solar portfolio helped offset a decline in revenue from its power generation unit due to a drop in spot prices.
"The main reason for the lower Generation result was the lower achieved power price, but this was partly offset by higher hydro volumes and improved results in the renewables and decarbonisation businesses," Rauramo said in a statement.
Benchmark Nordic power prices have fallen this year due in part to a surge in wind and solar power output. Spot prices have averaged 42.01 euros/MWh this year, down from 56.44 euros/MWh in 2023 and 135.86 euros/MWh during the energy crisis in 2022.
Fortum also said it was on track with its goal to lower its recurring fixed costs by 100 million euros by the end of 2025, expecting to reach 50 million euros in cost reductions by the end of this year.
Its shares have gained 10% this year.
(Reporting by Anne Kauranen in Helsinki and Louise Breusch Rasmussen in Copenhagen; Additional reporting by Nora Buli; Editing by Terje Solsvik and Susan Fenton)
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