Nel ASA: Navigating Headwinds with Strategic EU Backing

While the broader market for hydrogen infrastructure continues to face challenges, Norwegian electrolyzer manufacturer Nel ASA is pushing forward with ambitious capacity expansion plans. The company’s strategy is currently defined by a significant contrast: substantial European Union funding for future growth collides with stark near-term operational pressures.

The company’s most recent financial results clearly illustrate the prevailing headwinds in the hydrogen sector, characterized by project delays and hesitant final investment decisions from clients. Key figures from the second quarter of 2025 reveal the scale of the impact:

• Revenue fell by 48% to 174 million Norwegian kroner (NOK).
• New order intake plummeted 74% to 71 million NOK.
• The total order backlog declined by 40% to 1.249 billion NOK.
• Orders specifically for alkaline electrolyzers saw a dramatic decrease of 94%.
• EBITDA stood at a loss of 86 million NOK.
• The company experienced an operating cash outflow of 121 million NOK.

In a further setback, Statkraft canceled a previously secured order for 40 MW of alkaline electrolyzer capacity. In response to these market conditions, Nel has initiated cost-reduction measures, including workforce reductions.

Major EU Grant Secures Gigawatt-Scale Factory Investment

Against this backdrop of near-term weakness, Nel has secured a pivotal long-term growth enabler. The company’s board has made the final investment decision (FID) to expand its Herøya manufacturing plant, aiming for an eventual production capacity of up to 1 gigawatt (GW). This move concludes a development program initiated back in 2018.

The project is underpinned by a grant of up to 135 million euros from the EU Innovation Fund, covering as much as 60% of relevant investment and operational costs. The FID triggers an immediate disbursement of over 10 million euros to the company.

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

• The initial capital expenditure is estimated at approximately 300 million NOK before subsidies.
• Commercial operations at the expanded facility are scheduled to begin in the first half of 2026.
• Large-scale deliveries from the new lines are expected to commence from 2027 onward.
• Nel’s long-term ambition is to achieve a total annual nameplate capacity of 4 GW across its operations.

Strategic Pivot to Next-Generation Technology

Concurrent with its capacity build-out, Nel is executing a decisive technological shift. The company is focusing its future on a new pressurized alkaline platform, moving away from older systems. This next-generation technology promises substantial improvements:

• A reduction in physical footprint requirements of around 80%.
• Capital expenditure savings estimated between 40% and 60%.
• An energy consumption rate of under 50 kilowatt-hours per kilogram of hydrogen produced.

The modular, skid-based design eliminates the need for separate buildings and is intended to simplify logistics and on-site installation. In a clear signal of this transition, Nel is reviewing the book values of two currently idled 500 MW production lines for atmospheric alkaline electrolysis at Herøya.

Partnerships and Project Wins Provide Anchors

To bolster its market position, Nel is actively pursuing strategic collaborations. SAMSUNG E&A has introduced its ‘CompassH2’ hydrogen solution, which is based on Nel’s proprietary alkaline technology. Furthermore, in November 2025, the company secured a notable proton exchange membrane (PEM) electrolyzer order valued at over 50 million US dollars for the HyFuel and Kaupanes hydrogen projects.

The combination of substantial EU funding, the ongoing commercialization of its advanced pressurized technology, and the planned gigawatt-scale manufacturing expansion at Herøya could position Nel to capitalize on a future recovery in hydrogen investment cycles. The critical factors for success will be the timely execution of the Herøya project ahead of its 2026 market launch and the subsequent ramp-up to high-volume deliveries starting in 2027.