Nel ASA’s May 6 Reveal: A €135 Million EU Backstop Meets a 73% Order Collapse

Nel ASA showcases a modular alkaline electrolyser at Herøya, aiming for 40-60% cost cuts, while Q1 orders slump 73% and EU funding of €135M supports scale-up.

The stage is set for a pivotal moment at Nel ASA’s Herøya facility on Wednesday, but the script is far from straightforward. While the hydrogen equipment maker prepares to unveil its next-generation alkaline electrolyser platform after eight years of development, the company’s first-quarter results tell a story of operational strain that sits uncomfortably alongside the recent stock rally.

Shares have surged more than 60% since the start of the year, touching a 52-week high of €0.31 (or NOK 2.14 in Oslo trading), propelled in part by sector-wide enthusiasm following Bloom Energy’s blockbuster quarter. But beneath the surface, Nel’s order intake collapsed by 73% year-on-year to just 85 million Norwegian kroner in Q1, while the order book shrank 24% to roughly 1.1 billion kroner. Revenue came in at 152 million kroner, and EBITDA landed at negative 100 million kroner.

A Modular Bet on Cost Reduction

The new platform, which will be demonstrated as a fully operational physical unit rather than a slide-deck presentation, is built around a modular, factory-tested skid design that can operate outdoors — eliminating the need for expensive building infrastructure at large-scale project sites. Nel claims the technology can slash capital expenditure by 40% to 60% compared with existing alkaline systems, with operating costs falling 10% to 20%.

The company has already taken a final investment decision to build 1 GW of production capacity at Herøya, backed by roughly 300 million kroner in spending before grants, with the bulk hitting the books in 2026 and 2027. The first 500 MW of that capacity is slated to come online by the end of this year, with a long-term target of 4 GW annual output.

EU Funding Provides a Cushion

That industrialisation push has a powerful backer. The European Union’s Innovation Fund has committed up to €135 million to support Nel’s scale-up, covering as much as 60% of relevant investment and operating costs. A milestone-linked first tranche of more than €10 million — the secondary source puts the figure at roughly €11 million — is expected to land in the second quarter of 2026.

Nel’s balance sheet offers additional breathing room. The company ended Q1 with 1.4 billion kroner in cash, which management says is sufficient to fund operations through the end of 2026. The net loss narrowed to 144 million kroner from 179 million a year earlier, while headcount reductions of roughly a quarter have helped stabilise the cost base.

PEM Wins Offer a Glimmer

Since the quarter closed, Nel’s PEM division has secured two contracts worth roughly $7 million each. One of them, with the Douglas County Public Utility District in Washington state, marks the first time a public utility has purchased and will operate a Nel system. The plant is designed to use surplus hydropower for grid stabilisation and is expected to begin operations in the first half of 2027. A further PEM prototype is due for completion this year, with a commercial launch pencilled in for 2028 or 2029.

Skepticism in the Analyst Ranks

Despite the stock’s rally, the analyst community remains firmly on the sidelines. The consensus price target stands at 2.14 Norwegian kroner — roughly in line with current levels — and the average rating is “Sell.” Adding to the caution, Nel is reviewing the carrying value of two idled 500 MW atmospheric electrolyser production lines at Herøya, which could trigger further impairment charges.

CEO Håkon Volldal has said the company is in close discussions with multiple potential customers for post-launch deliveries, particularly for projects in the 50 to 150 MW range in Europe and North America. Whether Wednesday’s reveal translates into firm orders will be the key question for the second half of 2026.

Nel reports its half-year results on July 15. Until then, the market will be watching to see whether the technology showcase can convert enthusiasm into contracts — or whether the share price has simply run ahead of the fundamentals.