
Nel ASA
I
Annual report 2022
5
A BIGGER, BETTER, MORE FOCUSED
COMPANY
An important year
2022 was the year the hydrogen industry made the
definitive transition from small to large-scale projects.
According to Nel’s research, orders for almost 5 GW of
electrolyser capacity were announced.
Multiple factors contributed to this important transition:
policymakers in the USA and European Union increased
production targets and improved support schemes
for renewable hydrogen projects; banks and financial
institutions gained more experience and understanding
of renewable hydrogen, making it easier for hydrogen
producers to finance their business plans; and green
hydrogen producers were able to secure attractive long-
term power purchase and offtake agreements with end-
customers.
At Nel, we also made the giant leap from small to large-
scale projects. Our order backlog more than doubled
in 6 months on the back of several exciting contracts.
Consequently, we continued to add substantial new
production and project execution capacity.
• In March, we inaugurated the world’s first fully automated
electrolyser manufacturing plant at Herøya in Norway.
The Norwegian Minister of Petroleum and Energy gave
the opening speech before 150 customers and partners.
We are happy to see that what we do is recognized and
appreciated by policymakers and customers, and that our
Herøya facilities set us apart from competition.
• In July, we signed a contract to supply 200 MW of
electrolyser equipment to a US customer. Only a few
months later, we received another large-scale contract
from Woodside Energy and a 40 MW contract from
Statkraft. These contracts are essential milestones on Nel’s
journey to large-scale electrolyser leadership.
• In November, we signed a joint development agreement
with General Motors, a company with extensive
experience in fuel cell technology development. The
purpose of the collaboration is to combine the two
companies’ expertise to develop Nel’s PEM (Proton
Exchange Membrane) electrolyser technology, with an
aim to reduce the cost of hydrogen at the pump for GM’s
vehicles.
• In December, we received a capacity reservation contract
for 16 hydrogen refueling stations from a US customer.
This is one of the most significant reservations of refueling
stations we have ever received. What an excellent way to
end the year!
Only the beginning
Green hydrogen is a powerful tool for addressing two of
the most pressing challenges the world is facing today
– ensuring reliable energy supply and fast-forwarding
decarbonization initiatives.
First, green hydrogen offers a way to transport renewable
energy from where it is possible and cheap to produce to
where it is needed and consumed. Hydrogen is an energy
vector that will help balance supply and demand in a global
energy market where trade flows and rules are redrawn.
Second, green hydrogen is a prerequisite for decarbonizing
hard-to-abate industries such as ammonia, methanol,
refinery, steel, aviation, shipping etc. where direct
electrification is complicated or even impossible.
The pipeline of new large-scale green hydrogen projects
is growing rapidly driven by these megatrends. Demand
is expected to increase further driven by the US Inflation
Reduction Act and the legislative and financial support
packages proposed by the EU Commission. I think that
everyone can agree that this development is good; we
don’t have much time to decarbonize our industries and
outcompete fossil fuels.
At the same time, the transition from small to large-scale
projects implies significant investments. The costs related to
the scale-up are real and evident in our bottom-line for the
year. Clearly, continuing along this trajectory for many years
is not sustainable. We need a path to industry leadership
that also allows Nel to become profitable, and this is
outlined in our business strategy coined “bigger better
focused”.
A pathway to industry leadership and profitability
Bigger. A market study conducted by Nel shows that large-
scale electrolyser projects will account for almost 90% of
demand from 2025. Similarly, in fueling, heavy-duty vehicles
are expected to become the most promising segment.
Nel will therefore concentrate on large-scale electrolyser
projects and high capacity fueling stations for high-volume
1 Letter from the CEO