Nel ASA Faces a Pivotal Year Amid Strategic Overhaul

Nel ASA NO0010081235

The new year finds Nel ASA navigating significant headwinds. Its share price is hovering near historic lows, around 2.30 NOK (approximately 0.19 euros), even as the company initiates a profound technological pivot. This creates a challenging dynamic for investors, who must weigh strained financial metrics against ambitious expansion plans.

Undeterred by a skeptical market environment, Nel is pushing forward decisively with its industrialization strategy. The centerpiece of this effort is the "Next-Generation Pressurized Alkaline" platform at its Herøya facility. Management has given the final green light for an investment of roughly 300 million NOK to expand production capacity there.

The objective is to achieve substantial cost advantages in green hydrogen production. Several factors are providing momentum for this key project:

• EU Backing: Commitments from the EU Innovation Fund of up to 135 million euros.
• Scalable Capacity: The site is slated to launch with 1 GW of annual capacity, with a future pathway to expand to as much as 4 GW.
• Modular Technology: The shift involves a new modular containerized concept, designed to eliminate the need for costly new factory constructions.

Through this combined approach of scaling up and switching technology, Nel is betting on an industrial model intended to drive down unit costs and bolster its competitive position.

The Pressure of a Shrinking Order Book

The most immediate pressure point, however, is a sharp contraction in the company's order backlog. Over the course of a single year, it has plummeted by 47% to just 984 million NOK. This decline substantially reduces revenue visibility for the coming quarters.

Market sentiment reflects this concern. The equity's valuation is trading toward the lower end of its 52-week range, which spans approximately 1.95 to 3.61 NOK. Investors are primarily pricing in the risk that cost-reduction programs alone may be insufficient to achieve a sustainable stabilization of earnings.

While Nel did manage to trim its operational losses in the third quarter of 2025 through strict cost discipline, the persistent lack of major new orders calls its previous growth trajectory into question.

Bridging the Gap Between Ambition and Reality

The discrepancy between Nel's long-term industrial vision and its near-term financial reality is becoming more pronounced. Although the new technology promises greater efficiency and lower Levelized Cost of Hydrogen (LCOH), the current market focus is squarely on liquidity and new contract wins.

From this perspective, the Herøya expansion appears as a bold yet inherently risky strategic move. The commercial launch of the new platform is scheduled for the first half of 2026. Until the additional capacity translates into firm, large-scale orders, the shares are likely to remain in a defensive position.

This sets the stage for 2026 to be a decisive year. It will be the critical test of whether Nel ASA can successfully transition from a heavily subsidized development enterprise into a profitable industrial-scale provider.