Norwegian hydrogen technology firm Nel ASA is navigating a pivotal strategic transition, marked by a significant technological shift and substantial EU backing, even as it contends with persistent operational challenges. The company’s recent moves signal a decisive turn from development to industrialization, setting the stage for a crucial commercial test in the coming years.
Financial Headwinds Amid Strategic Ambition
Recent quarterly figures underscore the difficult market conditions Nel currently faces. For Q2 2025, the company reported broad-based declines that highlight operational pressure:
- Revenue fell 48% year-over-year to NOK 174 million.
- New orders plummeted 74% to NOK 71 million.
- The order backlog decreased by 40% to NOK 1.249 billion.
- Orders for alkaline electrolyzers saw a dramatic 94% drop.
- The EBITDA loss stood at NOK 86 million.
- Operating cash outflow was NOK 121 million.
The cancellation of a 40 MW alkaline electrolyzer order by Statkraft further exemplifies the challenging environment. In response, Nel has initiated workforce reductions and a comprehensive cost-saving program to stem its cash burn.
A 1 GW Project Fueled by EU Support
Against this backdrop, Nel’s board has made a final investment decision to industrialize its Next Generation Pressurized Alkaline (NGPA) technology at its Herøya facility in Norway. This project represents the culmination of a seven-year development program.
The European Union’s Innovation Fund is providing grants of up to €135 million to support the initiative, which are expected to cover approximately 60% of the relevant investment and operational costs. The investment decision has already triggered an initial milestone payment exceeding €10 million.
Key project parameters include:
- Initial Capacity: Up to 1 GW
- Investment Volume: Roughly NOK 300 million before subsidies
- Commercial Launch: First half of 2026
- Volume Deliveries: Starting from 2027
- Long-term Goal: 4 GW annual capacity
Next-Gen Platform Promises Major Efficiency Gains
The core of Nel’s strategy is the new pressurized alkaline platform, which the company claims offers substantial improvements over existing systems. According to Nel, the advantages include:
- An approximately 80% reduction in required footprint.
- 40–60% lower capital expenditure (Capex).
- An energy consumption of less than 50 kWh per kilogram of hydrogen.
Its modular, skid-based design largely eliminates the need for dedicated buildings, simplifying planning, logistics, and installation. Full-scale prototypes at Herøya have reportedly confirmed leading system efficiency.
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This strategic focus has implications for existing assets. Nel is reviewing the book values of two currently idled 500 MW production lines for atmospheric alkaline electrolyzers at Herøya, signaling a clear resource reallocation toward the new platform.
Selective Contract Wins Provide Near-Term Support
Despite weak overall demand, Nel secured a notable contract in November 2025: a larger PEM electrolyzer order valued at over USD 50 million for the HyFuel and Kaupanes hydrogen projects in Norway.
Additional partnerships offer further underpinning. The company has an agreement with GreenH to act as technology provider for projects in Kristiansund and Slagentangen. A collaboration with Samsung E&A resulted in the development of the modular “CompassH2” plant solution based on Nel’s alkaline technology. Furthermore, a signed Memorandum of Understanding with HydePoint aims to develop modular hydrogen systems for offshore and near-shore applications.
Analyst Sentiment Remains Cautious
Market experts maintain a predominantly guarded stance on Nel’s outlook. The consensus rating among the 14 analysts covering the company is “Underperform.” The average price target is NOK 2.28, close to recent trading levels. Citi recently raised its target modestly from NOK 2.50 to NOK 2.70.
Year-to-date, the share price has declined by approximately 14%. Over a twelve-month period, the loss exceeds 22%, significantly underperforming the OBX Total Return Index.
The Defining Path to 2027
The period through 2027 will be critical in determining whether Nel can bridge the gap between its technological promise and commercial reality. Success hinges on the timely commercial launch of the new platform in the first half of 2026, the subsequent ramp-up to volume deliveries from 2027, and a concurrent, meaningful reduction in cash burn through strict cost discipline.
The company’s ability to balance an EU-funded capacity expansion with the pressures of its current day-to-day operations will likely define Nel’s ultimate position in the emerging green hydrogen industry.
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