Nel ASA's Cost Revolution Clashes With a Gutted Order Book

The technology promises a breakthrough — but the commercial pipeline tells a different story. Nel ASA has unveiled a new generation of pressure alkaline electrolysers at its Herøya facility in Norway, targeting turnkey costs of under $1,450 per kilowatt for a 25-megawatt plant. That would roughly halve the current industry standard of around $3,000 per kilowatt, a development that could reshape the economics of green hydrogen production.

The system delivers hydrogen at high pressure, eliminating much of the need for expensive downstream compressors. Nel plans to scale automated manufacturing at Herøya to one gigawatt of annual capacity by the end of 2026, with ambitions to quadruple that figure later. Standardised modular design is expected to shorten project timelines and improve margins.

But those ambitions are running headlong into a starkly different reality in the order book. First-quarter order intake collapsed 73% to just 85 million Norwegian kroner. The total order backlog shrank 24% year-on-year to 1.113 billion kroner, and revenue from customer contracts slipped 5% to 148 million kroner. Chief executive Håkon Volldal described the start of the year as "quiet" amid muted market demand.

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

Nel has responded by slimming down. Headcount has fallen 19% from a year earlier and 26% from its historic peak, while personnel costs dropped 21% in the quarter. The EBITDA loss narrowed to minus 100 million kroner from minus 115 million kroner, helped by better project execution and cost controls.

Investors, however, have so far looked past the weak commercial picture. The stock has soared 58% since the start of the year and gained roughly 40% in the past month alone, trading around €0.30. Analysts remain cautious. Kepler Cheuvreux rates the shares underweight with a target of 1.90 kroner, while the broader consensus sits at 2.12 or 2.35 kroner — well below the current Oslo-listed price.

Financially, Nel still has room to manoeuvre. Cash holdings stood at 1.443 billion kroner at the end of the quarter, and an 11-million-euro EU grant to support industrialisation of the new platform is expected to arrive in the second quarter.

All eyes now turn to July 15, when Nel reports half-year results and must demonstrate that its new electrolyser platform is gaining commercial traction. Without binding offtake agreements, the rally's foundation looks increasingly shaky.

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