EU Backs Nel ASA’s Hydrogen Expansion, But Shares Remain Under Pressure

Nel ASA has taken a decisive step in its growth strategy, yet investor sentiment remains tepid. The company's board has given the final investment decision for a major expansion at its Herøya facility in Norway, a move significantly bolstered by substantial funding from the European Union. Despite this progress, the market's reaction has been muted, with the share price continuing to reflect broader sector skepticism.

The core of the announcement centers on the industrialization of Nel's Next Generation Pressurized Alkaline technology. Board approval has been granted to construct up to 1 GW of production capacity at the Norwegian plant. This marks a pivotal shift for the company, moving from a successful prototype phase into large-scale serial manufacturing. Commercial operations for this new platform are scheduled to commence in the first half of 2026, with full delivery capability expected by 2027.

Financing for this scale-up is partially secured through a major grant. The EU Innovation Fund will provide up to €135 million in non-dilutive funding to support the industrialization process. These funds are allocated to cover a portion of the capital expenditure (CAPEX) and initial operational costs for the first 1 GW phase. The non-dilutive nature of the grant strengthens the balance sheet without requiring the issuance of new shares.

Market Reaction Contrasts with Operational Progress

Operational advancements, however, have failed to ignite investor enthusiasm. The share price recently closed at NOK 2.33, declining by 1.12% on the day. This performance is part of a longer-term trend of significant underperformance relative to the OBX Total Return Index over the past twelve months.

Should investors sell immediately? Or is it worth buying Nel ASA?

The recent price dip suggests that either the positive news was already anticipated by the market or that the extended timeline—with commercial production years away—limits its immediate impact for near-term focused traders. The current valuation appears to weight the execution risks and prolonged ramp-up period more heavily than the secured financial backing.

Technology and Economic Outlook

The new production system is based on a modular, skid-mounted design. This approach involves prefabricating and testing modules at the factory prior to shipment, aiming to simplify and accelerate on-site installation and logistics.

A critical measure of the project's success will be its effect on the Levelized Cost of Hydrogen (LCOH). The technology targets improved energy efficiency, which should translate to lower hydrogen production costs. Nevertheless, the financial impact of this efficiency gain will only become materially evident as production scales up from 2026/2027 onward.

Summary of Key Facts

• Strategic Decision: Final investment decision approved for an expansion of up to 1 GW at Herøya.
• Technology Shift: Next Generation Pressurized Alkaline platform entering mass production.
• Financial Support: Up to €135 million in secured grant funding from the EU Innovation Fund.
• Share Price: Trading at NOK 2.33, with a recent daily loss of 1.12% and a persistent weak trend.
• Project Timeline: Commercial launch targeted for H1 2026, with full capacity anticipated in 2027.

The situation presents a clear contrast: concrete operational progress and a defined roadmap on one side, and a subdued share price coupled with market caution on the other. The critical factor for Nel's future trajectory will be the pace at which it can secure firm orders and build utilization for its new production platform in the coming years.