Norway's Nel sees multiple gigawatts of electrolyzer FIDs by end 2025

Norwegian electrolyzer manufacturer Nel sees "multiple gigawatts" of global electrolysis capacity taking final investment decisions before the end of 2025, led by industrial applications in mature markets.

Nel, which produces both alkaline and proton exchange membrane electrolyzers, expected large installations integrated with new renewables to gradually become another key part of the green hydrogen market, it said in a results statement July 17.

The vast majority current hydrogen demand comes from the fertilizer and refining sectors.

However, Nel cautioned that current high interest rates and raw material prices have made new renewable energy installations more expensive, denting the market outlook.

Governments have also taken longer than expected to implement state support schemes, leading to lower order intake than expected, Nel said.

Less than 10% of announced low-carbon hydrogen production projects have taken FID, according to S&P Global Commodity Insights analysts.

Nel reported an EBITDA loss of NOK48 million ($4.5 million) in the first half of the year, compared with a loss of NOK133 million in H1 2023.

Refueling spinoff

Nel said the spinoff of its hydrogen fueling business into a separate company in June brought its electrolyzer business closer to profitability.

"This is a natural consequence of our business strategy, which is to spend all our resources on what we do best: making the most energy-efficient and reliable electrolyzers in the world," Nel President and CEO Hakon Volldal said in a statement.

The move is part of a wider trend of electrolyzer manufacturers selling or separating their refueling station businesses, with a less certain outlook for hydrogen in the transport sector.

Factory capacity expansions

In the second quarter, Nel completed the expansion of its alkaline electrolysis production capacity at Heroya, Norway, to 1 GW/year, following construction of a second 500 MW/year line.

Nel said it had scope for further expansion to 2 GW/year, subject to market demand, but had not committed capex to this as yet.

It is also progressing its PEM electrolyzer production expansion to 500 MW/year at its Wallingford, US, plant, from 50 MW/year, with capex of around NOK120 million.

The company is eyeing a 4 GW/year facility in Michigan, and has secured almost $170 million in support. Nel is yet to take FID on the project.

Q2 developments

In May, Nel signed a technology licensing agreement with India's Reliance Industries for exclusive rights for Nel's alkaline electrolyzers in India and also allows Reliance to manufacture alkaline electrolyzers for captive purposes globally.

Reliance plans to set up four giga factories in Jamnagar, Gujarat, for manufacturing renewables equipment, battery storage, fuel cells and hydrogen, and the company is also targeting 100 GW of renewable power capacity by 2030.

And in April, Nel received a capacity reservation order from Hy Stor Energy for over 1 GW of alkaline electrolyzer production capacity for its Mississippi Clean Hydrogen Hub in the US.

Platts, part of S&P Global Commodity Insights, assessed the cost of producing hydrogen via alkaline electrolysis in Europe at Eur4.92/kg ($5.38/kg) July 16 (Netherlands, including capex), based on month-ahead power prices. Proton exchange membrane electrolysis production was assessed at Eur5.25/kg.