Nel ASA Navigates a Pivotal Phase with EU Backing Amid Market Headwinds

Norwegian hydrogen technology firm Nel ASA finds itself at a critical strategic juncture. While a significant EU grant supports its next-generation technology rollout, recent financial results reveal a challenging operational landscape marked by project delays and weak order intake. The company's ability to scale its new platform while managing near-term financial pressures will define its trajectory.

The immediate business environment for hydrogen projects remains difficult, as underscored by Nel's Q2 2025 figures. The company reported a sharp contraction across key metrics:

• Revenue fell 48% year-over-year to 174 million NOK.
• New orders plummeted 74% to 71 million NOK.
• The order backlog declined 40% to 1.249 billion NOK.
• Specifically, orders for alkaline electrolysers collapsed by 94%.
• The company posted an EBITDA loss of 86 million NOK.
• Operational cash outflow was 121 million NOK.

These pressures were further highlighted by the cancellation of a 40 MW alkaline electrolyser contract by Statkraft. In response, Nel has initiated workforce reductions and a broad cost-cutting program, reflecting the sector-wide strain from postponed projects and hesitant final investment decisions from customers.

A Strategic Bet on Next-Generation Technology

Against this backdrop, Nel's board has made a final investment decision to industrialize its "Next Generation Pressurized Alkaline" platform at its Herøya site in Norway. This move concludes a seven-year development program initiated in 2018.

The project is bolstered by support of up to 135 million euros from the EU Innovation Fund, covering approximately 60% of relevant investment and operational costs. An initial milestone payment exceeding 10 million euros has been triggered by the decision.

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Key Project Details:
* Initial capacity target: Up to 1 GW
* Estimated investment: Roughly 300 million NOK before subsidies
* Targeted commercial launch: First half of 2026
* Larger volume deliveries: From 2027 onward
* Long-term ambition: Annual production capacity of 4 GW

This next-generation platform represents a fundamental technological shift. Nel claims it offers substantial improvements over existing systems, including an approximately 80% smaller footprint, 40–60% lower capital expenditure, and an energy consumption rate below 50 kWh per kilogram of hydrogen. Its modular, skid-based design eliminates the need for separate buildings, simplifying logistics and installation. Full-scale prototype testing at Herøya has reportedly confirmed leading system efficiency.

Portfolio and Partnership Strategy Evolves

The focus on the new pressurized technology has led Nel to review the book values of two currently idled 500 MW production lines for atmospheric alkaline electrolysers at Herøya. This signals a strategic reallocation of resources toward the new platform.

Concurrently, the company is strengthening its market position through collaborations. Samsung E&A has launched its "CompassH2" hydrogen plant solution based on Nel's alkaline technology. Furthermore, in November 2025, Nel secured a PEM electrolyser order worth over 50 million USD for the HyFuel and Kaupanes projects in Norway. A memorandum of understanding was also signed with HydePoint to jointly develop modular hydrogen systems for offshore and near-shore applications, potentially opening new maritime market segments.

The Path to 2027: A Defining Period

The coming years are pivotal for Nel's strategy. The company must successfully manage the commercial launch of its new platform in the first half of 2026 and ramp up to larger volume deliveries from 2027 onwards. Achieving these milestones on schedule, while simultaneously controlling cash burn and executing cost reductions, will be essential. The balance between EU-supported capacity expansion and navigating a strained day-to-day business environment will determine the firm's ability to transition to its new technology without excessive liquidity consumption.