Plans for a Google data center in Finland have been put on hold following a potential electricity tax rise.

Last November, the American tech giant acquired 1,400 hectares of land in Kajaani and Muhos, which it intends to use for a billion-dollar data center development.

Muhos is a municipality in northern Finland, while Kajaani is a town to its east in the municipality of Kainuu.

Sources told Finnish newspaper Helsingin Sanomat that the National Coalition Party, which is Finland’s governing party, is concerned that Google will not follow through with its billion-dollar investment in the country until the scale of a potential electricity rate hike is confirmed.

Additional reports also said that Google is pressuring senior members of the Finnish government to reject the rate hike. The government is set to decide its course of action at a meeting today.

In March, the county’s finance minister, Riikka Purra, announced that the government would consider changing the electricity tax category for data centers as part of a broader proposal for the government’s 2026 budget.

A proposed legislative amendment would amend the Act on Excise Duty on Electricity and Certain Fuels, forcing operators to pay 40 times more for electricity, pushing the rate up from €0.0006 ($0.0007) per kWh to the standard rate of €0.0225 ($0.0226) per kWh.

This amendment, if approved, would enter into force on January 1, 2026.

Google has previously voiced opposition to the potential rate hike.

A statement sent to the Finnish government in April as part of the public consultation on the amendment said that Google had “not yet made an investment decision regarding the Kajaani and Muhos sites,” emphasizing that “regulatory stability and predictable operating conditions” were amongst the most important factors influencing investment decisions.

Google’s Finland country manager Antti Jarvinen reiterated this to Helsingin Sanomat, saying that the company had told the government that “no investment decision has been made yet.”

Algorithmic trading firm XTX Markets, which signed an agreement in August with construction company YIT Corporation for the construction of a second data center at its own campus, has also stated that the electricity rate hike would impact its “longer-term investment roadmap remains under review due to the proposed changes in electricity taxation.”

Finland’s environment, abundant land, and cheap green energy have attracted data center developers, with the Finnish Data Center Association estimating that live capacity in the country will increase from 285MW in 2025 to 1.5GW in 2030.

Most of the country’s data centers are located in the country’s capital, Helsinki. Established operators, including the likes of Verne, Equinix, and atNorth, have a presence in Finland, while new operators such as Polarnode, FCDC, Arcem, and Hyperco are planning multiple developments across the country.