Finland’s Proposed Power Tax Hike Puts Google’s $1B Data Center Project on Ice

Investment Pause Amid Regulatory Uncertainty

Google has reportedly suspended plans for a major data center development in northern Finland following proposed electricity tax reforms that could substantially increase operating costs. According to sources familiar with the matter, the tech giant acquired 1,400 hectares of land across Kajaani and Muhos municipalities last November for what was intended to be a billion-dollar investment in Finland’s growing data center market.

Investment Pause Amid Regulatory Uncertainty
Tax Reform Threatens Cost Structure
Google Seeks Regulatory Certainty
Broader Industry Implications
Finland’s Data Center Growth Trajectory

Tax Reform Threatens Cost Structure

The Finnish government is considering reclassifying data centers’ electricity tax category as part of broader budget proposals for 2026. Analysis of the legislative amendment indicates it would modify the Act on Excise Duty on Electricity and Certain Fuels, potentially increasing rates from the current €0.0006 per kWh to the standard commercial rate of €0.0225 per kWh – representing a nearly 40-fold increase. The proposed changes, if approved, would take effect January 1, 2026.

Google Seeks Regulatory Certainty

Sources indicate that Google has explicitly communicated to Finnish authorities that “no investment decision has been made yet” regarding the Kajaani and Muhos sites. In an April statement submitted during the public consultation process, Google emphasized that “regulatory stability and predictable operating conditions” rank among the most critical factors influencing its investment decisions. Reports suggest the company is actively engaging with senior government members ahead of today’s crucial policy meeting.

Broader Industry Implications

The potential tax changes appear to be causing concern across Finland’s data center sector. Algorithmic trading firm XTX Markets, which recently signed an agreement for constructing a second data center at its Finnish campus, has stated that its “longer-term investment roadmap remains under review due to the proposed changes in electricity taxation.” Industry analysts suggest that Finland’s appeal as a data center location – built on environment, abundant land, and affordable green energy – could be compromised by the tax reforms.

Finland’s Data Center Growth Trajectory

According to the Finnish Data Center Association, the country’s live data center capacity is projected to expand significantly from 285MW in 2025 to 1.5GW by 2030. The sector has attracted established operators including Verne, Equinix, and atNorth, alongside newer entrants like Polarnode, FCDC, Arcem, and Hyperco planning multiple developments nationwide. Most existing facilities cluster around Helsinki, making Google’s planned northern expansion particularly noteworthy for regional development.

The government’s decision today will likely determine whether Finland maintains its competitive edge in attracting major tech investments or whether companies like Google will redirect resources to more predictable regulatory environments.