number one by nature
Annual report
2022
The publication can be downloaded on
nelhydrogen.com
Title:
Annual report 2022
Published date:
Oslo, 28 February 2023
info@nelhydrogen.com
+47 23 24 89 50
Karenslyst allé 49, PB 199 Skøyen,
0212 Oslo, Norway
Table of contents
Annual report 2022
1 Letter from CEO ........................................................................................................ 5
2 Member of the board .............................................................................................. 9
3 Management .............................................................................................................. 10
4 Report from the Board of Directors ..................................................................... 13
4,1 Financial development .................................................................................. 16
4,2 Environment, Social and Governance reporting ..................................... 29
5 Board of Directors’ report in relation to the
Norwegian code of practice for corporate governance ................................. 54
6 Consolidated financial statements 2022 Nel group ......................................... 60
6,1 Notes to the consolidated financial statements ...................................... 68
7 Parent company financial statements .................................................................. 124
7,1 Notes to the parent company financial statements ............................... 132
8 Alternative performance measures ...................................................................... 149
9 Auditor’s report ......................................................................................................... 151
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
6
Letter from the CEO
2022
2021
2020
2020
2019
2018
2017
2015
2014
2003
2001
1988
1974
1959
1953
1940
1927
Best regards,
Håkon Volldal, CEO
customers. We will continue to scale up our electrolyser
production capacity, both in Norway and in the US, as
higher volume is key to unlocking profitability and building
trust with customers. For Nel increasing volume is important
as it enables better resource utilization and hence higher
margins. For customers “seeing is believing” as they tend to
place orders with companies that can back up production
and delivery schedules with real assets.
Better. Being big is essential, but not enough to win in the
market. Nel must also have the best technology in terms
of total cost of ownership for the customer. Consequently,
Nel will continue to invest in research and development
to improve the efficiency (OPEX) and cost (CAPEX) of its
equipment. The joint development agreement with General
Motors is an example of such an investment. Besides
enabling more green hydrogen projects to become viable
without subsidies over time, continuous efficiency and cost
improvements are key to keeping healthy margins over time.
Better also means that Nel must continue to improve other
aspects of its business than technology. We need to mature,
improve and professionalize how we work to create added
customer value and improve profitability. Every year we hire
many skilled employees with backgrounds and references
from other industries we can learn from.
Focused. We cannot be the biggest and best at everything.
To achieve a leading industry position and make Nel
profitable, we must concentrate on what we really do well
and not spread ourselves too thin. Creating sufficient focus
in Nel is, simply put, one of my top priorities going forward.
In Electrolyser, Nel has narrowed its scope of supply from
providing complete hydrogen plants worldwide to delivering
electrolyser stacks and gas separation modules to customers
in Europe and North America. The remaining scope is now
delivered by strategic EPC (Engineering, Procurement and
Construction) partners. This scope split allows Nel to deliver
standardized solutions with less risk and higher margins.
In Fueling the product portfolio will be reduced and the
focus will be on developing a high-capacity solution
for European and North American volume customers.
Development and production of certain modules will also be
outsourced to world-class external partners.
At the grand opening of the Herøya plant I had not yet
joined Nel officially, but I was there in the audience. I was
impressed by what the Nel team had carried out so far
and felt motivated by the company’s mission to “unlock the
potential of renewables and enable global decarbonization.”
Now, just over half a year later, I have an even stronger
belief in Nel. This belief rests on the role green
hydrogen will play in the global energy transition and
decarbonization efforts, the vast potential for cost and
efficiency improvements that will make green hydrogen
competitive with fossil fuel, and the ongoing industry scale-
up that will enable large projects all over the world. Most
importantly, my belief rests on my 600 colleagues in Nel,
who undoubtedly have the industry’s deepest hydrogen
knowledge. Together we will make Nel a bigger, better, and
more focused hydrogen technology company.
MORE THAN 90 YEARS OF HYDROGEN INNOVATION.
AND THAT’S JUST THE BEGINNING.
PIONEERING RENEWABLE HYDROGEN
FOR MORE THAN 90 YEARS
Signed the first large scale 200MW electrolyser contract
Starting up the Herøya plant, first line
Setting new record order sizes with orders from Nikola, Everfuel, Iberdrola and Iwatani
Corporation
Nel opens first H2Station™ in Korea
Nel announces construction plans for the world’s largest electrolyser
manufacturing plant to accommodate multi-billion NOK orders
Nel completes construction of the world’s largest manufacturing plant
for hydrogen fueling stations, with a capacity of 300 units per year
Nel acquires Proton OnSite, adding world leading PEM electrolysis
technology to product portfolio, becoming the world’s largest
electrolyser company
Nel acquires H2 Logic, adding world leading hydrogen fueling
technology to the product portfolio
Nel becomes the first 100% dedicated hydrogen company
listed on the Oslo Stock Exchange
Nel opens the world’s first publicly available hydrogen fueling
station in Reykjavik, Iceland
Our first pressurised electrolyser introduced to the market
The world’s first electrolyser supplier to provide non-asbestos
alkali electrolysers
Our renowned electrolyser technology made available for
other companies and other industries
Complete redesign of the electrolyser unit, forming the basis for
today’s atmospheric electrolyser from Nel
Starts up a second large scale hydropowered electrolyser plant for
supplying hydrogen to ammonia production, in Glomfjord, Norway
The largest installation in the world of water electrolysers at Rjukan,
Norway, with a total hydrogen production capacity exceeding 30.000 Nm3/
hour, from hydropower
The first small electrolyser installation at Norsk Hydro, Notodden, Norway. Testing
for pure hydrogen to fertilizer production
2022
2021
2020
2020
2019
2018
2017
2015
2014
2003
2001
1988
1974
1959
1953
1940
1927
Nel ASA
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Annual report 2022
9
OLE ENGER, CHAIR OF THE BOARD
Mr. Enger (born 1948) has worked as
CEO in Nordsilmel, Elkem, SAPA, REC,
REC Solar and has been in the executive
management of Norsk Hydro and
Orkla. Ole Enger has an educational
background from Norwegian University
for Environment and Life Sciences, NHH
(Norwegian School of Economics) and IMD Business School.
He has board experience as both chairman and board member
of a number of private and listed companies. Mr. Enger is a
Norwegian citizen and lives in Oslo. Mr. Enger has been a board
member since 2017.
HANNE BLUME, BOARD MEMBER
Ms. Blume (born 1968) is the CHRO
in DOVISTA and has previously held
the position as CHRO in TDC, Ørsted
and DONG Energy, vice president
in QHSE and different management
positions in the energy sector. Ms. Blume
holds a master’s degree in Business
administration and commercial law from Aarhus School of
Business and Oregon State University. She has management
and board experience from both listed and private companies.
Ms. Blume is a Danish citizen and resides in Juelsminde in
Denmark. Ms. Blume has been a board member since 2019
and currently chairs Nel’s Remuneration Committee.
CHARLOTTA FALVIN, BOARD MEMBER
Ms. Falvin (born 1966) has held
various management positions in
the tech industry, including e.g COO
of Axis AB and CEO of TAT The
Astonishing Tribe AB, with a focus on
international business development
and organizational growth. Since
2011, she has worked as a professional board member in
primarily public companies in the Swedish tech sector, but
also in academia, banking and regional incubators for start-
ups. Charlotta Falvin holds a Master of Science in Business
Administration and Economics from Lund University in
Sweden. She is a Swedish citizen and resides in southern
Sweden. Ms. Falvin has been a board member since 2020.
FINN JEBSEN, BOARD MEMBER
Mr.Jebsen (born 1950) has worked
for Mars Inc. in the US and Norway
and later for 25 years at Orkla ASA,
where he held positions as Business
Development Manager, CFO, EVP of
Financial Investment Division, EVP of
Branded Consumer Goods Division,
and CEO. From 2005, he has been working as a professional
board member and chairman of several private and listed
companies. Mr. Jebsen holds a master’s degree in business
from NHH and a MBA from UCLA. Mr. Jebsen is a Norwegian
citizen and lives in Oslo. Mr. Jebsen has been a board
member since 2017.
BEATRIZ MALO DE MOLINA, BOARD MEMBER
Ms. Beatriz Malo de Molina (born 1972)
is a professional advisor to management
teams and board member. Beatriz has
served as Senior Vice President and
Head of M&A at Orkla ASA and has held
positions at Kistefos Private Equity and
McKinsey & Co in Oslo, after a ten year
career in the Investment Banking Division of Goldman, Sachs
& Co. in London, Frankfurt, New York City and Mexico City. Ms.
Malo de Molina began her career in 1994 within Ernst & Young’s
financial advisory department in New York City.
Ms. Malo de Molina has board experience from publicly
listed and privately held companies both in Norway and
internationally, including chairmanship positions. Beatriz
graduated summa cum laude from Georgetown University in
Washington D.C., attended the Haupt- und Wirtschaftsuniversität
in Vienna and holds a Master’s degree in Philosophy from the
Law Faculty at UiO in Oslo. Ms. Malo de Molina is a Spanish
citizen and has been a resident of Norway since 2006. Ms. Malo
de Molina has been a board member since 2017 and currently
chairs Nel’s audit, risk and sustainability committee.
2 Members of the board
10
Letter from the CEO
HÅKON VOLLDAL, CHIEF EXECUTIVE OFFICER
Håkon Volldal (born 1976) was
appointed CEO effective 1 July 2022.
Mr. Volldal has previous experience as
Executive Vice President at TOMRA,
and later as President and CEO of
Q-Free ASA, creating intelligent
technology solutions for efficient, safe,
and sustainable transportation. Mr Volldal holds an MSc in
Industrial Economics and Technology Management from the
Norwegian University of Science and Technology (NTNU) and
is a Norwegian citizen.
KJELL CHRISTIAN BJØRNSEN, CHIEF FINANCIAL OFFICER
Kjell Christian Bjørnsen (born 1976)
joined Nel as CFO on March 1, 2020.
He served as Chief Financial Officer of
the Kavli Group since 2014 and was
appointed Chief Financial Officer of
Nel from 1 March 2020. He has held
positions within business development,
strategy and finance in several global industrial companies,
including the CFO position of REC ASA. He holds a MSc in
Chemical Engineering from the Norwegian University of
Science and Technology (NTNU), and is a Norwegian citizen.
CAROLINE DUYCKAERTS, CHIEF HR OFFICER
Caroline Duyckaerts (born 1970) joined
Nel ASA as Chief Human Resources
Officer in January 2021. Mrs. Duyckaerts
comes from the position as head of
HR for one of Hydro’s business areas.
She previously also led the People &
Leadership development for Hydro and
has further HR and change management experience from
several well-known companies incl. Hydro, Deloitte, Yara
(Hydro Agri), Accenture. Caroline Duyckaerts holds a Master
of Engineering and Business Administration from HEC Liège,
complemented with an education as executive coach, and is a
Belgian citizen.
FILIP SMEETS, CHIEF COMMERCIAL OFFICER
Filip Smeets (born 1963) was appointed
SVP Nel Electrolyser Division in February
2020. Mr. Smeets has been in the
electrolyser industry for more than 10
years and comes from a position as
Managing Director for Hydrogenics in
Belgium where he was responsible for
the company´s electrolyser activities. Prior to that he held
senior positions in several global industrial companies such as
Cabot Corporation and Cytec Industries. Mr. Smeets holds a
master’s degree in chemistry from the University of Antwerp,
Belgium, and is a Belgian citizen.
3 Management
TOM RØTJER, BOARD MEMBER
Mr. Røtjer (born 1953). Former Head
of Projects at Norsk Hydro ASA, where
he held a number of management
positions from 1980 to 2018. He was
member of Corporate Management
Board of Norsk Hydro from 2007-2012.
He is currently a board member of HI
Entreprenører AS. He has previously held board positions in
Det norske oljeselskap ASA (Aker BP ASA), Aibel AS, Qatalum
Ltd. Qatar and Green Energy Geothermal Ltd. Mr. Røtjer
holds a master’s degree in Mechanical Engineering from the
University of Trondheim, Norway. He is a Norwegian citizen
and resides in Oslo. Mr. Røtjer has been a board member
since 2020.
JON ANDRÉ LØKKE, BOARD MEMBER
Jon André Løkke (born 1970). Former
Chief Executive Officer (CEO) of Nel
ASA, as position Mr. Løkke held from
2016-2022. Prior to joining Nel, Mr.
Løkke was the CEO of Norsk Titanium
AS He has ten years’ experience from
the REC Group, including positions
as senior vice president in REC Wafer, investor relations
officer in REC ASA, and CFO in REC ASA. Mr. Løkke has also
worked for the ABB Group. Mr. Løkke is currently a board
member of Tunable AS and Bergen Carbon Solutions AS. He
holds an International MBA degree from Glasgow University
and a bachelor degree in business and economics from
Southampton University. He is a Norwegian citizen and
resides in Oslo. Mr. Løkke has been a board member since
2022.
Nel ASA
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Annual report 2022
11
ROBERT BORIN, SENIOR VICE PRESIDENT FUELING
Borin (born 1977) was appointed SVP
Nel Fueling Division in April 2021. Prior
to joining Nel, Mr. Borin held several
senior management positions in Vestas
and Siemens. He is also the founder
of Borin Industrial Advisors. Mr. Borin
holds a Master of Science in Mechanical
Engineering and Industrial Management from KTH Stockholm,
and is a Swedish citizen.
STEIN OVE ERDAL, VICE PRESIDENT LEGAL AND GENERAL
COUNSEL
Stein Ove Erdal (born 1979) joined Nel as
Vice President Legal and General Counsel
in May 2019. Erdal comes from a position
as an Associate General Counsel in
Nexans Norway AS where he worked for
nine years with complex offshore EPCI and
EPC projects. He also has experience from
working as a lawyer in the oil and gas division of Arntzen de
Besche, as a deputy judge and as a defence counsel. Erdal holds
a Cand. Jur., Qualifying Law Degree, from the University of Oslo,
and is a Norwegian citizen.
HANS H. HIDE, CHIEF PROJECT OFFICER
Hans H. Hide (born 1965) joined Nel in
March 2019. Mr. Hide has since 2012
held management positions in some of
Kvaerner’s largest projects within the
oil and gas sector. He has previously
served as Project Portfolio Manager in
ALSTOM, and as Vice President Projects in REC, where he also
held several management positions in the projects covering
REC’s expansion program within Solar and Silicon. He holds an
MSc in Process Technology and Process Control from Telemark
College of Engineering, and is a Norwegian citizen.
ESA LAUKKANEN, CHIEF COMMERCIAL OFFICER
Esa Laukkanen (born 1966) was
appointed COO in August 2022. Esa
has a background from leading global
operations, industrialization and
automation processes, having worked
for twenty years in ABB, and later
leadership of products, operations, and
technology of automated systems at Jepptech. Mr. Laukkanen
holds an MSc in Industrial Engineering from Lappeenranta
University of Technology, and is a Finnish citizen.
Report from the Board of Directors
13
Highlights
• Revenue and other operating income increased by 25%
from 2021 to 2022.
• As a result of Fueling’s current financial performance and
delayed growth trajectory, Nel has impaired all goodwill
previously recognised in Fueling of NOK 296 million. In
addition, Nel recognise an impairment of other intangible
assets in Fueling by NOK 31 million.
• Year-end cash balance of NOK 3 139 million (2021: 2 723).
Nel raised NOK 1 500 million in gross proceeds in a
private placement on 23 March 2022.
• Order intake in 2022 was NOK 2 275 million (2021: NOK
967 million) which resulted in a record-high order backlog
at end of 2022 of NOK 2 613 million, up 112% from 2021.
– Received purchase order of NOK 600 million from
Woodside Energy for delivery of alkaline electrolyser
equipment in the U.S.
– Received purchase order for 200 MW alkaline
electrolyser from an undisclosed US customer. The
contract value is approximately EUR 45 million.
– Signed a Capacity Reservation Agreement (CRA) with
an undisclosed US energy company, for the delivery of
16 hydrogen fueling stations to be deployed in the US.
SUBSEQUENT EVENTS
• Investment decision to increase PEM production capacity
in Wallingford to ~500 MW. Total capital expenditures
estimated to be around NOK 260 million, and estimated
to be at full capacity in 2025.
• On February 6, 2023, Nel received purchased order from
HyCC with a value of approximately EUR 12 million.
KEY FIGURES
PERFORMANCE MEASURES 2022 2021 2020
Revenue and operating income 994
798 652
Operating expenses 2 272
1 381 1 066
EBITDA -780
-475 -252
Operating loss -1 279
-583 -414
Pre-tax income (loss) -1 187
-1 684 1 246
Net income (loss) -1 171
-1 667 1 262
Net cash flow from operating activities -691
-449 -216
Cash balance end of period 3 139
2 723 2 333
Order intake 2 275
967 1043
Order backlog 2 613
1 230 981
TRIF
1)
11.5
4.9 11.2
Number of fatal accidents 0
0 0
Number of employees 603
507 393
Women in executive management 11.1% 10.0% 12.5%
GHG intensity (excluding scope 3) 1.64 2.69 2.18
Alkaline OEE ² 70% 50% na
Alkaline stack yield ³ >90% >80% >80%
PEM stack yield ⁴ 95%
95% 95%
¹ Total recordable injuries frequency (TRIF) is measured as total recordable
injuries per million hours worked.
² Overall equipment effectiveness (OEE) considers all of availability,
performance and quality.
³ Yield is defined as a complete product that is quality approved (without
repair and rework) and ready for the customer. Material from a not approved
product is reused.
⁴ Yield is defined as a complete product that is quality approved (without repair
and rework) and ready for the customer. Platinum is recovered.
4 Report from the
Board of Directors
Nel ASA
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Annual report 2022
14
Report from the Board of Directors
WHERE WE ARE
Nel consists of electrolyser production facilities in Norway and Connecticut, USA, and one fueling station production facility
in Denmark, supported by headquarters in Norway. Nel has a sales and support network with global reach, including service
organizations close to the main markets for fueling stations – the U.S. West Coast, South Korea, and Northern Europe (based out
of Denmark).
Nel has historically delivered a few electrolyser systems in Russia. We have sold electrolyser systems to Ukraine during 2021.
Business is currently limited in these geographical areas.
MARKETS WE SERVE - A PURPLE WORLD
In total, we have delivered over 3500 electrolyser solutions to over 80 countries, and more than 120 H2Station™ solutions
delivered, or in progress to be delivered, to 14 countries.
FUELING STATION
SERVICE AND MAINTENANCE
San Leandro, CA, USA
PEM ELECTROLYSER
Wallingford, CT, USA
FUELING STATION
SERVICE AND MAINTENANCE
Seoul, South Korea
FUELING STATION
Herning, Denmark
HEADQUARTER AND
ALKALINE ELECTROLYSER
Oslo, Norway
16
Report from the Board of Directors
4.1 Financial development
Group
FINANCIAL REVIEW
Amounts in NOK million
2022 2021 2020
Revenue and operating income 994
798 652
Operating expenses 2 272
1 381 1 066
EBITDA -780
-475 -252
Operating loss -1 279
-583 -414
Order intake 2 275
967 1043
Order backlog 2 613 1230 981
Number of employees 603 507 393
Total assets 6 951
6 007 6 137
REVENUE & ORDER INTAKE, ORDER BACKLOG AND EMPLOYEES
489
570
652
798
994
0
400
800
1,200
1,600
2,000
2,400
2018 2019 2020 2021 2022
Revenue and
Order intake
operating income
2018 2019 2020 2021 2022
350
513
981
1,230
2,613
0
500
1,000
1,500
2,000
2,500
3,000
Order backlog
239
310
393
507
603
100
200
300
400
500
600
700
2018 2019 2020 2021 2022
Employees
INCOME STATEMENT
Nel is committed to building the organization and
production capacity to meet expected market growth, while
simultaneously delivering on increasingly larger and more
complex projects. This impacted the results for 2022.
At Nel, setting up project protocols, partnerships, and
systems are still in its early stages. While the company has
made notable improvements in ability and effectiveness,
further developments are necessary to secure margins and
increase profitability. Despite being the company with the
most experience in this field, both Fueling and Electrolyser
segments face execution challenges.
To succeed, Nel must focus on its strengths. The company’s
amended electrolyser strategy on large projects is to
narrow the scope and concentrate on stacks and balance-
of-stacks. As projects grow in size, Nel will partner up with
world-class EPC companies. This allows Nel to focus on its
core scope while bringing a competitive solution for the
hydrogen production system to the customer. Giving up
some of the scope will reduce execution risk and improve
margins for the equipment produced and sold. Additionally,
since summer of 2022 Nel has shifted away from fixed-price
contracts, minimizing commodity and currency exposure,
which will provide more visibility on nominal margins, and
reduce the overall contract risk. Similarly, Nel’s Fueling
division has narrowed its technology development focus
and will increasingly work with partners to focus on the core
development necessary for high capacity fueling.
Nel reported revenue and operating income in 2022 of NOK
994 million, up 25% from NOK 798 million in 2021. The
growth is the result of Nel Hydrogen Electrolyser’s revenue
increasing 61%, while Fueling declined 26%. Electrolyser is the
largest segment in Nel and now constitutes 75% of Nel’s total
revenue in 2022, up from 58% in 2021.
Nel ASA
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Annual report 2022
17
Order intake in 2022 was NOK 2 275 million (2021: NOK 967
million) which resulted in a record-high order backlog at end of
2022 of NOK 2 613 million, up 112% from 2021. The backlog
only includes firm purchase orders with agreed price, volume,
timing and terms and conditions. The increase in order backlog
is mainly explained by the two record-size purchase orders
for delivery of alkaline electrolyser equipment in the US, with
values of NOK 600 million and EUR 45 million. The delivery of
electrolyser equipment, and the recognition of revenue related
to these orders is expected in 2023 and 2024.
Raw materials expenses totalled NOK 585 million (552),
an increase of 6% from 2021. The increased raw materials
expenses are related to the 21% increase in revenue from
contracts with customers.
Personnel expenses amounted to NOK 665 million (472).
The 41% increase compared to 2021 is mainly explained by
a higher number of employees, up from 507 employees by
the end of 2021 to 603 at the end of 2022. Other operating
expenses also increased 110% and totalled NOK 524 million
(250) for the year. The high level of personnel and other
operating costs are the results of Nel’s strategic decision to
continue to invest in growth and higher activity levels. The
employees added are experienced project, production and
technology personnel.
EBITDA ended at NOK -780 million (-475), negatively
impacted by costs for scaling the organisation for growth
as mentioned in the section above for personnel expenses
and other operating expenses. The EBITDA is also negatively
impacted by Nel’s customer projects often including new
geography, customer segments, technological components
and/or products leading to additional costs and risk. Nel
is intent on improving its project execution capabilities,
which are still experiencing significant inefficiencies and cost
overruns in this early stage of market development.
Depreciation, amortisation and impairment increased to NOK
499 million (108), mainly driven by the 2022 impairment
of goodwill and technology in Fueling of NOK 327 million.
In addition, Herøya manufacturing facility commenced
depreciation of NOK 46 million in 2022.
As a result of all of the above, the operating loss amounted to
NOK -1 279 million (-583).
Net financial items amounted to NOK 92 million (-1 101). Nel
received NOK 72 million in interest from banks in the current
year in comparison to NOK 20 million in 2021, caused by the
increased interest rates for NOK in particular. The negative
2021 financial items were driven by a negative fair value
adjustment of shareholdings in Everfuel and Nikola, totalling
NOK 1 121 million. Pre-tax loss totalled NOK -1 187 million
(-1 684) and the net loss for the year was NOK -1 171 million,
compared to a loss of NOK -1 667 million in 2021.
Financial position
Total assets were NOK 6 951 million at the end of 2022,
compared to NOK 6 007 million at the end of 2021. Total
equity was NOK 5 450 million. Thus, the equity ratio was 78%.
Cash flow
Net cash flow from operating activities in 2022 was NOK
-691 million, compared to NOK -449 million in 2021. The
development is mainly due to higher personnel expenses
driven by an increase in full time employees. Net cash flow
from investing activities was NOK -403 million (-374). Nel has
purchased property, plant and equipment for NOK 160 (258)
million in 2022, mainly related to the expansion at Herøya,
Norway, in the electrolyser division.
Nel’s cash balance at the end of 2022 was NOK 3 139 million
(2 723). The increase from end of 2021 is mainly due to
raising gross proceeds of NOK 1 500 million from the share
capital increase in March, offset by negative cash flow from
operations and investments.
The company estimates it has sufficient working capital
for the 12 months following the balance sheet date. In
accordance with section 3(3a) of the Norwegian Accounting
Act, the board of directors, therefore, confirms that the
financial statements have been prepared on the assumption
of a going concern.
18
Report from the Board of Directors
Nel Hydrogen Electrolyser
Financial review
Amounts in NOK million
2022 2021 CHANGE
Revenue and operating income 748
466 61%
Operating expenses 1 168
737 59%
EBITDA -304
-210
Operating loss -420
-271
Order intake 1 978 763 159%
Order backlog 2 224
937 137%
Number of employees 304 240 27%
Total assets 2 427
1 906 27%
The electrolyser segment received two record-size purchase
orders in 2022, both of which will be delivered in 2023 and
2024 and are therefore reported as order backlog. The 137%
increase in order backlog compared to end of 2021 is mainly
explained by these two US orders for alkaline electrolyser
equipment, with values of about NOK 600 million and EUR 45
million.
Nel Hydrogen Electrolyser reported revenue and operating
income 61% higher than in 2021. Growth in alkaline
electrolysers was strong as Nel continued the deliveries
of electrolyser systems from the manufacturing facility at
Herøya according to plan. Revenues from sales of alkaline
electrolysers increased 506% compared to 2021, while sales
of PEM electrolysers were stable, decreasing 1% from 2021
driven by supply chain challenges. Nel is currently recognizing
revenue and other financial results from projects signed in
previous years when market conditions were less favourable
than today.
EBITDA for the year was NOK -304 million (-210). EBITDA
decreased as establishing project execution protocols,
partnerships and systems is at an early stage at Nel. While
significant improvements have been made in our ability and
effectiveness in executing projects for our clients, continuous
improvements are required in order to safeguard margins
and increase profitability. Bringing new technologies to the
market in the form of industrial projects of increasing size and
complexity brings with it very many challenges. Nel is focused
on increasing its efficiency and margins in project execution
over time, but a confluence of factors negatively impacted
operating performance in the past year.
Electrolyser continued its scaling activities including a 27%
increase in number of employees. Nel is preparing the
delivery of large-scale projects in the coming years, two of
which have already been signed.
DEVELOPMENT AND KEY PROJECTS
Technology development
As the renewable hydrogen industry continues to develop,
Nel is at the forefront of the industrialization of electrolyser
production and of product development within several
electrolyser technologies. Nel is continuing to invest in the
development of large-scale industrialisation of electrolyser
products. In addition, Nel is working to develop a pressurized
alkaline Electrolyser which could generate additional demand
globally given the technical advantages of this product. Also,
further development of the current atmospheric alkaline
technology towards larger capacity solutions is ongoing.
Finally, in order to meet new large-scale opportunities within
the PEM portfolio, Nel is developing a larger single cell-
stack PEM platform. All of these three development activities
target increases in functionality and decreases in total cost
of ownership for our current and future customers, and are
intended to increase demand for our products globally.
Production capacity development
• Alkaline Water Electrolyser (“AWE”)
– Official opening of the first 500 MW line at the Herøya
facility on April 20, 2022
– As of 2022, with the opening of its 500 MW fully-
automated manufacturing facility at Herøya, Nel
became the first electrolyser company capable of
accommodating large-scale project orders. The line
operated at 3-shift operation in most of 2022, and
towards the end of the year operators were recruited
and trained to go to continuous operation from
January 2023.
– In an effort to meet the global ambitions for renewable
hydrogen, Nel initiated a continued expansion at
Herøya in Norway with an additional 500 MW alkaline
production line, expected to be operational from
April 2024. Given the significant pipeline of projects
globally, and the expectation that projects will continue
to grow in size, Nel is ready to continue to increase
its electrolyser production capacity. The carrying
amount for the Herøya second line expansion is NOK
55 million as of 31 December 2022. Total contractual
commitments beyond December 2022 for the second
line are NOK 230 million, including purchase contracts
for all the physical equipment needed.
– Further capacity expansion will be closely aligned
with commercial backlog. Nel has ordered building
modifications at Herøya and long-lead time items for
two additional lines to prepare for further expansion.
Proton Exchange Membrane (“PEM”)
– PEM has been granted approximately USD 6 million in
funding from the U.S. Department of Defense (DoD)
for accelerating advanced PEM electrolyser stack
development.
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– Entered into a joint development agreement with
General Motors to help accelerate the industrialisation
of Nel’s PEM electrolyser platform. In Q1 2023 Nel
has taken the investment decision to improve the
production line in Wallingford substantially, introducing
automated stack assembly, sputtering, roll-to-roll etc.
This will increase PEM production capacity up to 500
MW, while at the same time reducing stack cost and
improve stack efficiency.
• As a result of the above, Nel have initiated the site
selection process for large-scale technology production
facility for both PEM and alkaline, to be located in the
United States.
Key commercial activities
• Order intake in 2022 was NOK 1 978 million (2021: NOK
763 million) which resulted in a record-high order backlog
at end of 2022 of NOK 2 224 million, up 137% from 2021.
• Nel Hydrogen Electrolyser received large purchase orders
for:
– An alkaline electrolyser to Woodside in the U.S.
providing renewable hydrogen to fuel cell vehicles.
Value approximately NOK 600 million.
– An alkaline electrolyser in the U.S. for industrial
application.
Value approximately EUR 45 million.
– An alkaline electrolyser to Statkraft in Norway.
Value approximately NOK 120 million.
• Other purchase orders include:
– Multiple PEM electrolysers to several customers. The
offtake from the renewable hydrogen production in
these contracts is for transportation (land and aviation)
and food production.
Value approximately USD 17 million.
– Multiple alkaline electrolysers to several customers.
The renewable hydrogen will be used in refinery and
ammonia production, amongst other.
Value approximately EUR 14 million.
SUBSEQUENT EVENTS
• Agreed with HH2E for a Front-End Engineering and
Design (FEED) study and a Letter of Intent for two 60 MW
alkaline electrolyser plants in Germany. The hydrogen
produced from the plants will be used for industrial
applications, transportation and heat. In total, HH2E is
aiming for 4 GW of electrolyser capacity in Germany
by 2030. The parties intend to conclude a contract for
electrolyser equipment within the first half of 2023.
• Investment decision to increase PEM nameplate
production capacity at the Wallingford site to ~500 MW.
Total capital expenditures estimated to be around NOK
260 million, and estimated to be at full capacity in 2025.
• Received purchased order from HyCC for 40 MW alkaline
electrolyser equipment for the H2eron project in Delfzilj,
Netherlands, focusing on emission reduction for the
aviation sector. The value is approximately EUR 12 million.
20
Report from the Board of Directors
Nel Hydrogen Fueling
Financial review
Amounts in NOK million
2022 2021 CHANGE
Revenue and operating income 245 332 -26%
Operating expenses 972 541 80%
EBITDA -352 -169
Operating loss -726 -209
Order intake 297 205 45%
Order backlog 388 293 32%
Number of employees 269 240 12%
Total assets 1 005 1 038 -3%
Although Nel Fueling continues to work with potential large
framework orders, the division has had a low order intake for
a longer period. Revenues were further suppressed by supply
chain disruptions, which resulted in longer delivery times.
Therefore, revenue for the year declined 26% compared
to 2021, while order backlog increased 32%. In the fourth
quarter, Nel Fueling entered into a substantial capacity
reservation agreement that is expected to lead to a firm
purchase order in 2023.
Gross margin was negatively impacted by quality costs.
There has been a large increase in the utilisation of many
of Nel’s installed stations, enabling accelerated learnings
and improvements both within product maturity and
overall reliability. However, increased utilisation also leads
to increases in cost for stations under warranty or fixed rate
service contracts as components have to be replaced and
service and maintenance costs increase. A hydrogen fueling
station is a complex and relatively new technology. The
hydrogen industry, including Nel, is still working to mature the
technology as well as investing in service and maintenance,
robustness, and reliability. Nel will continue to incur high costs
related to these activities going forward.
The EBITDA was NOK -352 million (-169) in 2022. Fueling
EBITDA decreased compared to 2021 due to lower revenues,
high quality costs, and an increase in personnel expenses
resulting from a 12% increase in the number of employees as
well as higher overtime and travel expenses. The results are
unsatisfactory and Nel is intensifying actions to improve the
performance and profitability of this division.
Operating expenses of NOK 972 million in 2022 (compared
to NOK 541 million in the prior year) were negatively
impacted by a NOK 327 million impairment of goodwill and
technology. Other increases in operating expenses include
12% increase in employees.
Fueling impairment
As mentioned above, there are negative financial development
in revenues, gross margin and EBITDA for the Fueling division
during the year and Nel expects these challenges to continue.
The annual impairment test performed include assumptions
impacted by the current financial performance and a delayed
growth trajectory. The impairment test indicated that the
carrying amount of Fueling exceeded measured enterprise
value and required Nel to recognise impairment expenses in
2022. The impairment equals all goodwill previously recognised
in Fueling of NOK 296 million and other technology (intangible
assets) in Fueling of NOK 31 million. As a result, the operating
loss in 2022 for Fueling of NOK -726 million (-209) includes the
negative impact of a total of NOK 327 million in impairment
expenses for the year. No impairments have been previously
made to the Fueling division.
DEVELOPMENT AND KEY PROJECTS
Technology development
Nel Hydrogen Fueling continues to see large increase in the
utilisation of many of the stations already installed, and this
enables accelerated learnings and improvements both within
product maturity and overall reliability. Fueling a hydrogen
vehicle (passenger or heavy duty) needs to be as easy and
reliable as fueling a gasoline or diesel vehicle. The company
will focus on developing its core technology with special focus
on high-pressure compression, cooling and control. Nel will
continue to incur research and development costs in an effort
to advance hydrogen-fuelled transportation as a viable and
reliable option across the globe.
Nel continues to see the market of Heavy-Duty transportation
move fast towards hydrogen. Therefore, the fueling division
will continue to invest significantly in the development of next
generation Heavy-Duty Vehicle (“HDV”) equipment such as
2019 2020 2021 2022
Europe USA Asia
0
50
100
150
200
250
300
350
400
TONNES OF H2 FUELED FROM NEL H2STATION
®
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Annual report 2022
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70MPa CAR Dispenser
high-capacity station modules and dispensers. This is to serve
customers who have a need for large capacity dispensing
capability, enabling fueling of a heavy-duty truck in 10-15
minutes, to achieve a range of 1 000 km. In addition, there
will be ongoing investments in factory and laboratory to be
able to accommodate HDV fueling equipment.
We believe that we are still at the very beginning of the
development of hydrogen as a viable fuel for passenger and
heavy-duty vehicles and other methods of transport. Nel
fueling continues to be one of the world’s leading innovators
and equipment providers in this important sector.
Production capacity development
• Manufacturing facility, Herning, Denmark
– Nel’s H2Station™ manufacturing plant is located in
Herning, Denmark. It has a capacity of 300 H2Station™
modules per year, leaving room for significant growth.
Combining technology innovations with increased
manufacturing capacity should enable Nel to further
reduce the cost of our hydrogen fueling station
solutions.
Key commercial activities
• Order intake in 2022 was NOK 297 million (2021: NOK
205 million) which resulted in a record-high order backlog
at end of 2022 of NOK 388 million, up 32% from 2021.
• Nel Hydrogen Fueling received large purchase orders for:
– Signed a Capacity Reservation Agreement (CRA) with
an undisclosed US energy company, for the delivery of
16 hydrogen fueling stations to be deployed in the US.
Value approximately USD 7 million. The final purchase
order is estimated to additional USD 10 million, with a
final agreement expected first half 2023. Delivery of the
fueling equipment is scheduled to commence in Q4
2023 and run throughout 2024.
• Other purchase orders for:
– Several H2Station™ modules in Paris, France, fuelling
the world’s largest fleet of hydrogen taxis.
– One H2Station™ hydrogen fueling module from HTEC
in Canada. Value approximately USD 1.5 million.
– Two H2Station™ fueling systems from a European
client. Value approximately EUR 3 million.
– Hydrogen fueling equipment from Biproraf in Poland.
Undisclosed value. Multiple H2Station™ units from a
European client. Value approximately EUR 8 million.
Corporate developments
• Nel appointed Håkon Volldal as new Chief Executive
Officer (CEO) from July 1, 2022.
• Nel raised NOK 1,500 million through a private placement
in March 2022
• Subsequent event: In January 2023, Nel sold all its shares
in Hyon AS for a total net consideration of about NOK 7
million.
• During 2022, Nel has divested all its shares in Nikola
Corporation for a total net consideration of about NOK
72 million.
22
Report from the Board of Directors
SHAREHOLDERS AND
FINANCING
Nel’s shares are listed on the Oslo Stock Exchange under the
ticker “NEL”. At the end of 2022, the company had 1 563 325
304 issued shares, consisting of 1 562 907 271 outstanding
shares and 418 033 treasury shares, held by 27 544
known shareholders in addition to a substantial number of
unknown shareholders owning shares through custodians
(for example, through Clearstream Banking ). The list of
27 544 known shareholders includes a considerable number
of Nordic institutional investors and private investors, while
Nel’s investigations into the unknown shareholders through
custodians indicate that these seem to be a large number of
shareholders largely based in Continental Europe.
The nominal value of the Nel share is NOK 0.20 per share.
The company has placed considerable emphasis on providing
shareholders, stakeholders and investors in general, with
timely and relevant information about the company and its
activities in compliance with applicable laws and regulations.
Nel is committed to increasing awareness of the share in
Norway and abroad.
Distribution of shareholders
Norway; 12.52%
United States;
11.01%
Sweden; 4.26%
France; 1.89%
United Kingdom;
1.43%
Germany; 1.07%
Other; 3.76%
Unknown
country; 64.07%
Norway United States Sweden France
United Ki ngdo m Germany Other Unknown country
source: Modular Finance AB
STRATEGY
Nel has a history tracing back to 1927 and is today a leading
pure play hydrogen technology company with a global
presence. The company specializes in electrolyser technology
for production of renewable hydrogen, and hydrogen fueling
equipment for road-going vehicles. Nel’s product offerings are
key enablers for a green hydrogen economy, making it possible
to decarbonize various industries such as transportation,
refining, steel, and ammonia.
Governments and companies continue to focus on their energy
transition and greenhouse gas reduction roadmaps. For many,
renewable hydrogen is an integral part of the strategy. Nel is
working to meet this rising demand by investing significantly in
developing reliable, efficient, and affordable energy solutions
that support environmentally sustainable activities.
NEL DIVISIONS’ STRATEGIES
Nel operates in two separate divisions, Nel Hydrogen
Electrolyser, producing electrolysers for hydrogen production
and Nel Hydrogen Fueling, producing hydrogen fueling
stations for cars, buses, trucks, and other applications. Serving
different markets, each division develops and executes its
own strategy.
NEL HYDROGEN ELECTROLYSER
During 2022, the Nel Electrolyser division developed its 2025
strategy: Bigger, Better, Focused. In a market characterized by
rising demand for renewable hydrogen solutions, the strategy
focuses on maintaining Nel Electrolyser’s market leadership
position.
Nel Electrolyser’s analysis of the market is in line with the
industry trend reports, showing that investments in electrolyser
projects will continue to grow significantly in the coming years.
While today, some of Europe’s largest installed hydrogen plants
are approximately 20 MW in size, future production plants are
expected to scale to hundreds of MW and then to GWs over
the next years. Nel Electrolyser will pursue a broad market
strategy, with a view towards winning large-scale orders.
The fully-automated production facility in Herøya, Norway
made Nel Electrolyser an early mover in the industrialization
of electrolyser production. To enable future growth and
decrease cost through scale, volume and automation, Nel
Electrolyser plans to further expand its production capacity in
Europe and North America.
24
Nel Electrolyser is the leading global electrolyser manufacturer,
offering both AWE (alkaline water electrolysis) and PEM (proton
exchange membrane) technology globally. Nel’s electrolyser
technologies have improved continuously and set the industry
standard for performance and total cost of ownership. Key to Nel’s
strategy is to continue to improve and standardise current AWE
and PEM products for different operating conditions, as well as to
develop adjacent technologies.
Nel expects to sell and deliver directly primarily in Europe and North
America over the next couple of years until larger projects in other
projects starts to materialize. As many of the largest projects are
likely to be located in geographical areas with abundant resources
of wind and solar energy, reducing electricity prices and carbon
footprint, important export markets longer term is expected to
include Chile and Australia. Nel Electrolyser has a partnership
strategy and a network of agents across the globe to service other
geographical markets.
In addition, for larger capacity projects Nel is narrowing its scope of
supply, concentrating on offering high-efficiency/low-cost cell stacks
and gas separation units. Working closely with selected EPC, energy
providers and downstream technology partners enables Nel to
respond to customer requests outside Nel’s preferred scope.
NEL HYDROGEN FUELING
Nel Hydrogen Fueling is a leading manufacturer of hydrogen fueling
stations that provide FCEVs (Fuel Cell Electric Vehicles) with fast
hydrogen fueling. The Nel H2Station™ manufacturing plant and
headquarter is in Herning, Denmark, while Nel Hydrogen Fueling
also has installation and service organizations in South Korea,
California, U.S. and in Europe.
Since Nel began manufacturing hydrogen fueling stations in
2003, there has been significant investment into research and
development, and Nel Hydrogen Fueling was among the first to
achieve compliance with the international hydrogen fueling standard
(SAE J2601) required by major car manufacturers.
The H2Station™ technology is now being utilized daily in several
European countries as well as in South Korea and California, and in
the U.S., providing fueling stations to mainly light duty vehicles (such
as passenger vehicles) as well as for heavy-duty vehicles (such as
buses and trucks).
There are ongoing strategic considerations on how to best
capitalize on a highly experienced workforce and market-leading
hydrogen fueling technology. Going forward, the company will
focus on developing high capacity fueling stations for heavy-duty
transportation, phase out old product platforms and old technology,
and cultivate a smaller and better product portfolio. From now
on, the company will focus on developing its core technology with
special focus on high-pressure compression, cooling and control.
Furthermore, Nel will collaborate closely with world-class partners
Photo: Ferenc Horvath
Report from the Board of Directors
Nel ASA
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Annual report 2022
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on other components to offer the best product, reduce
technology risk, and improve overall profitability.
CLIMATE-RELATED SCENARIO RESILIENCE
IN NEL’S STRATEGY
Considering that 100 % of Nel’s revenue comes from
renewable hydrogen technology, the resilience of Nel’s
strategy within the different climate-related scenarios is
robust. Key considerations are how fast our customers’
industries will grow and develop, how complex and price
competitive green technology will be, and developments
within renewable energy and the related grid. Nel’s strategy is
stress-tested against different scenarios to assess parity with
both fossil energy, grey and blue hydrogen. The hydrogen
market is already large, but with only a fraction served
by water electrolysis there are significant opportunities
to transition the existing market into being increasingly
renewable. In addition, we see regulations supporting the
transition across the globe, with the EU and the US pledging
hundreds of billions of dollars into zero-emission programs
where hydrogen is the energy carrier of choice. Growth is
expected not only to come from industrial applications, but
also from currently transitioning diesel-based heavy-duty
transportation into zero-emission renewable hydrogen. In
order to meet cost-efficiency comparisons with diesel, these
developments will require low-cost electrolysis and ultra-fast
fueling, both areas where Nel is the global leader.
There is significant uncertainty associated with the timing
and pace of the growth expected in the hydrogen industry
as it relates to renewable energy (as storage or carrier),
the decarbonization of industrial activity (in refinery, steel
or fertilizer production), and transportation (heavy duty or
other). There is a risk that Nel is moving either too quickly or
too slowly, meaning we are either over- or under investing
in assets, technology and/or human capital development.
Nevertheless, the global focus on addressing climate change
through decarbonization is the megatrend that underpins
our current strategy, and which is being supported by our
increasing levels of multi-year order intake.
STRATEGIC ALLIANCES
Cooperation is vital in a rapidly growing renewable hydrogen
industry. Combining resources, expertise and knowledge is a
key enabler that allows us to improve our entire value chain
effectively and rapidly, from engineering and procurement
through installation, service, commissioning and aftersales.
Strategic alliances can help shorten the timeline to achieving
full competitiveness for our technologies. We are engaged
in numerous strategic alliances, both domestically and
internationally, with partners that share our values and
commitment to customer dedication. We are actively
pursuing new alliances in all areas of our business.
Some of our alliances include:
• EPC-partners: Enabling turnkey solutions for large scale
hydrogen production facilities with predictable project
execution.
• Energy sources: Working with solar, wind and other
technology providers to optimize the interface between
renewable energy and electrolysis and optimizing the
cost of renewable hydrogen production through seamless
operation between the power supply and the electrolysis
process.
• Downstream technology partners: Optimizing the total
offering through technical collaboration with specialists in
key customer segments such as ammonia, methanol and
local back-up power.
MEMBERSHIPS AND ASSOCIATIONS
Nel is member of several associations with a national,
European and global footprint. Our presence in these
associations enables us to communicate our position,
market our technologies and support the development of
appropriate hydrogen legislation and regulation.
Some of our memberships include:
• Hydrogen Europe
• Renewable Hydrogen Coalition (RHC)
• Hydrogen Council
• Norsk Hydrogenforum (Norwegian Hydrogen Association)
• California Fuel Cell Partnership
26
Report from the Board of Directors
Risks and opportunities
Nel’s regular business activities entail exposure to various
types of risk. The company proactively manages such risks,
and the board of directors regularly analyses its operations
and potential risk factors and takes steps to reduce risk
exposure.
Nel places strong emphasis on quality assurance and has
implemented quality-assurance systems in line with the
requirements applicable to its business operations.
Nel is operating in a fast-growing emerging market, with a
long list of initiatives in many regions. The need to address
growth opportunities and make investments ahead of actual
market demand and revenue recognition, balanced with the
need to appropriately allocate capital and demonstrate a
viable business model, is a continual challenge.
In this phase of fast growth, there are especially risks
associated with technological change, both related to
technology elements within the field of hydrogen as well as
technology elements outside of the field of hydrogen. Other
technologies under development could potentially make
renewable hydrogen less relevant for the future. Additionally,
if competitors gain advantages in the development of
alternative technologies, this could affect the competitive
position of the group.
Nel’s ability to grow depends to a substantial degree on its
ability to successfully acquire new customers, and to maintain
and grow its relationships with existing customers. A number
of Nel’s existing and potential customers are themselves
planning for substantial growth, and should these customers
fail to succeed with their business plans or fail to fulfil their
contracts with Nel, Nel’s sales to such customers may be
adversely affected.
Nel is also to a certain degree dependent on a limited
number of third-party suppliers for key production
components for its electrolyser and hydrogen fueling
products. To reduce the sourcing risk Nel’s supply chain
strategy is to have dual supply chains on all components
and raw materials. Nel currently has few components with
single source and is at the risk of temporary supply chain
disruptions should one or more suppliers fail to deliver.
Another supply chain risk is whether the suppliers can follow
the expected growth of the industry. In addition to making its
current supply chain more robust, Nel is working to facilitate
increasing volumes from important sub-suppliers. The timing
of addressing such elements and risks is important. Moving
too fast could result in an unnecessarily high cost level, with
cash requirements beyond the current financing plan.
CLIMATE-RELATED RISK FACTORS
Nel assesses climate transition risks into two major categories:
(1) risks related to the transition to a low-carbon economy
and (2) risks related to the physical impacts of climate change.
Nel constantly monitors product failure and technology
obsolescence. There is a risk of reputational damage from
product failure and failure to meet high expectation from our
customers that Nel’s technology will deliver efficient products
within an acceptable price range.
Local authorities and governments have an important role in
the renewable hydrogen sector by enacting legislations that
support research and innovation and scalable investments
in production and infrastructure. Reduced and/or delayed
support from governments will halt the developments of the
renewable hydrogen industry. In 2022, the United States took
an important step by enacting the Inflation Reduction Act
of 2022 and we believe that other developed countries and
the European Union can enact similar legislations between
2023-2025.
Raw materials supply issues could surface when the value
chain experience exponential growth driven by efforts to
abate climate change. For example, raw material Iridium is
important for the manufacturing of PEM electrolysers. The
total supply is limited and a significant reduction of Iridium
consumption in PEM products and very high recycling rates
will be necessary to reduce the risk. Our net zero target by
2050 depends on the supply of green steel sources for our
production chain.
No physical risks from i) temperature increases, or associated
changes ii) weather patterns, sea levels, ecology or human
habitation. Nel’s electrolysers requires water and may not be
relevant to geographies with water stress prior to additional
investments.
A complete range of operational, financial, market and
climate-related risk and opportunity factors are discussed in
detail in notes 6.1, 6.2, 6.3 and 6.4, respectively.
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Outlook
SUSTAINABILITY FUTURE PROSPECTS
Being accountable for our environmental footprint is
emerging as a pivotal component in corporate transparency,
and we aim to provide information as expected by our
key stakeholders. Nel strongly believes that the renewable
hydrogen market has a potential of great magnitude,
supported by a wide body of research. Virtually every
industry needs to realign their energy mix if we are to stand a
chance of achieving the UN Sustainable Development Goals,
and renewable hydrogen will be a part of the energy mix that
enables the transition. Ramp-up investments, organizational
expansion, new markets and larger order sizes were a few
of the highlights of this past year, signalling an important
increase in demand. Combined with an ambitious strategy
of drastically reducing the total cost of ownership (TCO) to
customers, we have established a solid framework for our
technology, engineering and production divisions for the
years to come. We must ensure that sustainable business
practices are guiding our operations, with scalability, cost-
leadership and world-class safety at our core. During the
ramp-up stage of our business, taking a precautionary
principal approach is necessary to promote sustainability
within the organization. Moving forward, our global presence,
coupled with strong financing, will help us remain the
preferred partner.
FINANCIAL OUTLOOK
External and internal analyses support a market view that
multiple gigawatts of electrolyser projects will reach final
investment decision before 2025. Industrial applications
represent the most promising near-term opportunities.
Projects come first in mature markets, before large greenfield
installations integrated with renewable energy sources
gradually are expected to become another important market
segment.
As customers are increasingly looking to secure supply of
electrolysers from high-quality suppliers, fearing that future
supply could be constrained, market dynamics have improved
for Nel during 2022. Nel is now able to negotiate large
contracts with more favourable terms and conditions for
projects that will be realised several years into the future, and
the order book continues to grow.
Nel is in a good position to maintain its lead in electrolysers.
Nel’s production capability is an important differentiating
factor short- to mid-term. Based on a large and growing
pipeline of opportunities and improved funding schemes
in both the EU and the US, Nel expects to win several new
large-scale orders in the coming periods. Higher revenues
in combination with higher margins on individual contracts
and improved execution is expected to yield significantly
improved profitability in electrolyser in the years to come, as
revenue is recognized. This positive market outlook drives
Nel’s continued investments in engineering, projects, and
related personnel. It should be noted that the increasing size
of projects leads to a long preparation and negotiation phase
with significant paid as well as unpaid engineering work.
Despite the positive market momentum, order intake is likely
to vary significantly from quarter to quarter.
In Fueling, the current market dynamics and outlook are
different than in Electrolyser. The long-term market outlook is
positive, but short-term demand continues to be challenging.
Nel has high-quality energy companies on its customer
list that believes that tomorrow’s heavy-duty vehicles will
be powered by green hydrogen. These clients want Nel
to continue as a provider of hydrogen fueling equipment
to secure sufficient supply and contribute to technology
developments. Margins in the Fueling division are currently
low as quality costs related to the installed base increase with
higher utilisation. This will continue until the performance of
the installed base has been stabilized. Nel is dissatisfied with
the profitability in its Fueling division and is considering and
implementing operational and strategic actions to improve
performance and profitability.
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Report from the Board of Directors
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Annual report 2022
29
4.2 Environmental, Social and
Governance report
Nel is reporting on sustainability on a group level, and
reports on metrics and targets in an integrated annual
report, following the GRI Sustainability Reporting Standards
(GRI Standards: Core option). The report implements
considerations found in Norwegian Accounting Act, Task
Force on Finance Related Disclosures (TCFD), Euronext ESG
Guidelines for listed companies, UN Guiding Principles on
Business and Human rights, the UN Global Compact and the
OECD’s Guidelines for Multinational Enterprises.
ESG POLICY
At Nel, sustainability is an integral part of the identity. The
vision is to empower generations with clean energy forever.
This vision is driving ambitions and priorities. Combating
climate change is high on the corporate agenda, and
sustainability is always incorporated into the strategic
decision-making processes. The Board of Directors (BoD)
is responsible for sustainability at Nel and is the owner of
the ESG policy. The Board Audit, Risk and Sustainability
Committee (BARSC) is the preparatory body to assist the
BoD in exercising its oversight of ESG matters. Further, the
Chief Executive Officer (CEO) has delegated the authority
and responsibility to the Chief Financial Officer (CFO) for
implementation and execution of the key principles as
outlined in this policy. General follow-up and execution of
daily operations is conducted by a dedicated ESG committee,
consisting of members from group management and the
business line”The ESG policy is available on Nel’s website. Visit
www.nelhydrogen.com/sustainability.
DOUBLE MATERIALITY
Implementation of the European Commission adopted
legislative Corporate Sustainability Reporting Directive (CSRD)
and its European Sustainability Reporting Standards will enter
into force for reporting year 2024 in EU and Norway. The
directive introduces new reporting standards for reporting
in accordance with the concept of double materiality. The
concept increases the focus on materiality when reporting
on sustainability matters. Information reported should be
relevant whether from the perspective of material impacts
on people and the environment, or from the perspective
of financial materiality, or both. In addition, the information
presented should be verifiable and comparable.
The GRI Standards Index for Nel can be found on our
website. Visit www.nelhydrogen.com/sustainability.
STAKEHOLDER DIALOGUE
Stakeholders are driving forces in Nel’s operations, and
frequent stakeholder interaction is important to account
for input across our value chain. Nel engages with a wide
range of stakeholders. Overall, Nel experiences continuously
rising expectations in all aspects of our work and we strive to
address concerns that are expressed. We aim to improve our
stakeholder dialogue by setting up a structured stakeholder
dialogue program.
Nel’s activities show the following key stakeholders:
Employees
Employees generally express views related to occupational
health and safety, career development, and timely two-way
communication as key areas of concern. Employees are
often the first to address risks and opportunities, so efficient
employee dialogue is important.
Shareholders and capital market participants
Our shareholders are vital contributors to the development of
our company and important stakeholders with the power to
influence our operations. As such, it is important to maintain
regular stakeholder dialogue with our shareholders as our
business develops. Quarterly presentations, annual reports,
and investor relations activities are channels employed to
keep an open dialogue with this group. In January 2021, we
held our first capital markets day (CMD), allowing for a deep
dive into our current operations and important activities.
In April 2022, Nel invited investors and equity analysts to
participate in the inauguration of the Herøya facility, providing
more insights to capital market participants.
Customers
Customers are generally concerned with product safety, cost
of ownership, responsible supply chains, the applicability
of solutions, and general project execution. Our customer
relations are formed on a project basis and active
communication is required throughout the customer’s journey
to deliver a satisfying product to the client, and to take home
learnings to the organization.
Suppliers
Through its supply chain screening and procurement efforts,
Nel sets requirements and requires insight into the ESG
performance of suppliers. Also, that Nel operates honestly
in-line with rules and legislations is important to provide to
the suppliers. Most of the topics Nel raised to its suppliers
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Report from the Board of Directors
are related to quality, cost, delivery concerns, and alignment on ESG
related topics. Another emerging topic subject to close dialogue is
around growth, and whether a supplier can, or has, the ambition to
grow with Nel.
Partners
As we develop and mature our technologies, strategic partners are
significant drivers behind our progress. Their concerns are usually
aligned with those raised by suppliers and customers, and our dialogue
with them follows similar procedures.
Governments
Governments play a vital role as the regulatory body that forms
policies and procedures, awards grants, and presents roadmaps for the
energy transition. Regular dialogue and monitoring are necessary to
ensure our product development meets requirements set by different
governments.
Proxy Advisors
Nel’s shareholders to a large extent rely on proxy advisors when
voting at the general meeting. Proxy advisors therefore provide third
party insights and a critical view of proposals set out by the Board
of Directors for general meetings. Dialogue with proxy advisors is
important to align governance practices, such as management and
board remuneration, board composition, selection of auditor and
auditors’ fees, and authorization to increase share capital.
ESG rating agencies
Dialogue with various ESG rating agencies provides insights into ESG
reporting materiality. While different agencies focus on somewhat
different topics, Nel can, from dialogue to a larger degree, manage to
navigate the topic of ESG reporting, which also gives insights to how to
structure efficient internal reporting standards.
Photo: Ferenc Horvath
Nel ASA
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Annual report 2022
31
UNITED NATIONS SUSTAINABLE
DEVELOPMENT GOALS
Nel supports the United Nations Sustainable Development
Goals, and the company strive to document the actions
made to meet the targets. Presented in 2015, the 17 goals
were developed to address the most prominent sustainability
concerns the society is facing. The Sustainable Development
Goals are the most unifying and universally accepted set of
goals and aspirations that are to be met by 2030, to protect
our planet and the people who inhabit it. Nel continues the
commitment through investments and organisational changes
to optimise the company’s contribution to this transformative
agenda. The company will contribute to the industrialisation
of the green hydrogen economy, paving the way for the
development of a global hydrogen economy and the trading
of renewable hydrogen as a global commodity. Nel is fully
committed to the promotion and implementation of the
United Nations Sustainable Development Goals and limiting
global warming to 1.5 degrees Celsius.
Nel support all the sustainability goals outlined by the United
Nations; however, we have chosen to focus on those where
we can make a significant direct impact:
MATERIAL ISSUES IMPACTING
STAKEHOLDERS
Material topics have been identified by assessing relevant
issues that are of importance to key stakeholders and how
these issues impact Nel’s operations and strategy. Nel defines
material topics as areas that have potential to substantially
impact the enterprise value of the company. These material
topics will be disclosed and elaborated in the following annual
report sections. The material topics has been categorized
within the three main sustainability categories: Environmental,
Social, and Governance factors and presented in the matrix
on the next page.
Our selected goals are:
Nel provides clean energy production solutions to a vast range of industries and applications. Nel’s product
offering is an enabler of clean energy infrastructure, and thus contributes to an increasing adaptation of
renewable energy. The main contribution towards SDG #7 is in line with its strategic ambitions of 1) capitalize
on the rapid development in the renewable industry by an extensive expansion of the company’s organizational
capabilities, and 2) to significantly decrease total cost of ownership for renewable hydrogen production and
consequently improve the applicability of renewable energy.
At Nel, employees work in a safe and healthy environment. Nel never compromise on safety. The company
strongly believe this is an absolute minimum to any successful long term sustainable business. All Nel sites
have management systems put in place that safeguards employees’ health and safety. Nel aims to offer a
workplace free of harmful incidents and injuries, and to promote a culture that identifies and create awareness
through incident reporting and self-accountability. The company has set a HQSE target of zero-tolerance for
discrimination of any kind, and grievance mechanisms should such a case emerge.
Nel is committed to reducing the cost of green hydrogen production to enable affordable and easier available
renewable energy, and thus also adaptation. This is aligned with the company’s vision to empower generations
with clean energy forever. Nel is committed to offer market leading equipment for water electrolysis. The
company is a frontrunner in technology development, efficiency, and cost reductions. Another key element is to
industrialize equipment production at a scale with manufacturing concepts that allow for further technological
advancements.
Nel’s vision is to empower generations with clean energy forever. The business model is built on facilitating
and enabling the energy transition towards a more sustainable society making renewable energy solutions
commercially viable. Nel’s product offerings are key enablers for a green hydrogen economy, making it possible
to decarbonize various industries such as transportation, refining, steel, and ammonia.
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Report from the Board of Directors
ESG MATERIAL TOPIC PAG E SDGS 2021 2022
TARGET
2023
TARGET
2025
E Climate change opportunity and emissions avoided 27 7, 13
Revenue eligible with EU Taxonomy na* 92% 95% 100%
Revenue non-eligible with EU Taxonomy na* 0% 0% 0%
Unallocated revenue na* 8% 5% 0%
E GHG emissions 29 13
GHG intensity (excluding scope 3) 2.69 1.64 1.30** 1.00**
Total GHG emissions (in ktCO2e) - scope 1 0 0 0 0
Total GHG emissions (in ktCO2e) - scope 2 2 1 2** 4**
Total GHG emissions (in ktCO2e) - scope 3 na* 7 15** 30**
E/S Sustainability in electrolyser production 30 9, 13
Overall equipment effectiveness (own production) 50% 70% ~80% >80%
Alkaline stack yield >80% >90% >95% >95%
PEM stack yield 95% 95% >95% >98%
E/S Responsible supply chain 33 8, 9, 13
S/G Transparency Act 33 8
Supplier audits concluded within the fiscal year 15 21 10 10
Third-party Integrity Due Diligence na* 85% 100% 100%
S Operational health and safety 32 8
Total recordable injuries frequency (TRIF) 4.9 11.5 0 0
Fatality rate 0 0 0 0
S Well-being at work 32 8
Gender balance 18.4% 18.5% >18.5% na
Sick leave rate 2.4% 2.7% <2.7% na
Employee turnover rate na* 20% <20% na
S Product safety 33 8, 9
Product-related safety incidents 0 0 0 0
S Cyber security 34
Cyber Security Training Awareness 87% 90% 100% 100%
G Ethical business conduct and compliance 37 8
Compliance training (Nel's employees) na* 93% 100% 100%
Compliance training (Management and BoD***) 100% 82% 100% 100%
G Innovation and R&D 40 9
R&D spend in % of annual revenue and other income 22% 25% 10% 10%
Total R&D spend (NOK millions) 173 248 na na
* Accurate comparable numbers not available.
** Nel has initiated increased production capacity in Norway from 0.5 GW to 1 GW. Norway
has a lower GHG emission per kWh than average in Nel, therefore, it is expected that the
increased activity in Norway will reduce the GHG intensity for scope 2 in particular.
*** Board of Directors
Photo: Melissa Rose
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Annual report 2022
33
Environment
CLIMATE CHANGE OPPORTUNITY AND
EMISSIONS AVOIDED
Global emissions will have to fall more than 70% from 2020
until 2050 according to current pledges by governments
in order to reach net zero collectively. in absolute terms,
emissions would be reduced from 34 Gt today to below 10
Gt in 2050. If today’s trajectory continues the estimate is 43
Gt, clean hydrogen can contribute 7% reduction, i.e., 3 Gt
reduction in 2050 .
The use of renewable hydrogen will be an increasingly
important part of tomorrow’s energy mix. It promotes energy
security and resilience as well as provides economic value
and environmental benefits for diverse applications across
multiple sectors in the economy.
Green hydrogen holds a central role in the global megatrend
that is climate change. This is because efforts to limit global
warming to 1.5 degrees Celsius, as recommended by the
Paris Climate Agreement and the IPPC special report, has
accelerated the drive towards low carbon solutions in all
sectors, including industries and transport. It has generated
renewed interest from governments and business owners in
renewable hydrogen as an important part of the solution.
Governments are recognizing renewable hydrogen’s ability
to decarbonize sectors that would otherwise be impossible
to fully decarbonize – such as personal or public transport,
freight logistics, industrial heating and industry feedstock –
and its role in energy security. There are numerous ways of
producing renewable energy, but there is a lack of flexible
storage and distribution solutions. Green hydrogen is a fully
functional energy carrier produced from renewable energy
sources but can also be an intermediary storage solution in
situations where production and use occur at different points
in time. Also, to produce renewable energy where it is cheap
and in abundance, and transport to where the demand is,
hydrogen could play a crucial role. This is integrated in Nel’s
vision of empowering generations with clean energy forever,
as hydrogen is unlocking the potential of renewables and
enables global decarbonization.
EMISSIONS AVOIDED
Nel’s mission is to unlock the potential of renewables
and enable global decarbonization. Nel believes that the
emissions avoided from reference hydrogen products based
on comparative assessments to renewable hydrogen will be
substantial. According to IEA there was demand for 94 million
metric tons of hydrogen in 2021, hydrogen predominantly
derived from fossil sources. Current production of hydrogen is
responsible for more than 900 million tons of CO2 emissions.
Water electrolysis from renewable energy can reduce these
emissions substantially, a transformation is relatively easy from
a technical point of view. The generally accepted accounting
methodologies for measuring emissions avoided in the
next years (before climate related scenario of abundance
renewable energy) has not been readily available to Nel.
Nel has therefore not been able to report on the relative
emissions avoided for Nel’s customers globally current
year. Nel will follow the requirements within the ‘European
Sustainability Reporting Standard” when in force, and
report the emissions avoided in accordance with accepted
methodology, when available. The sections below showcase
some of the significant opportunities for renewable hydrogen,
with emissions avoided as the basis for such assumption.
FOSSIL FUEL PARITY
To increase the distribution and adaptation of green
hydrogen it must be cost competitive with hydrogen made
from natural gas. The hydrogen market is already massive.
94 million tonnes per year is already produced and used
in various applications. According to IRENA, about 4% of
hydrogen production comes from electrolysis, though with
a global average renewable share of about 33%, about 1%
of hydrogen production was derived directly from renewable
sources. The rest is derived using fossil fuels, which create
carbon emissions and are damaging to the environment.
It will therefore be a lower hurdle for companies to reduce
emissions when green hydrogen reaches the same price
level as fossil-based hydrogen. Nel is committed to continue
with cost reductions and efficiency improvements for its
technology in order to enable a green hydrogen economy.
Electrolyser climate-related opportunities
1
Everything Nel is involved in relates to renewable hydrogen,
and the energy transition. As such, climate related
opportunities are the only opportunities for the company.
Nel’s capital expenditures (Capex) and operating expenditures
(Opex) are all related to renewable hydrogen technology.
Case 1: Decarbonizing ammonia (“industrial application”)
- How hydrogen is vital to sustainable farming
Renewable hydrogen production by electrolysis is proving
a viable pathway to sustainable ammonia, making fertilizer
manufacturing and modern agriculture green.
1 Nel is a pure play renewable hydrogen company consisting of two operating segments,
electrolyser and fueling. Both segments focus fully on the climate related opportunities. The
percentage presented for each segment ties to financial statements disclosures for revenue,
order backlog, capital expenditures and operating expenses, refer to disclosure 2.3, 2.1,
2.3 and 2.3, respectively. Corporate operating expenses are business and support related
expenses for both electrolyser and fueling division
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Report from the Board of Directors
Renewable hydrogen is critical to sustainable ammonia
production. It can reduce costs, boost capacities, and achieve
decarbonization for the energy, mobility, and industrial
sectors.
This is to the benefit of the environment, as more than
235 million tons of ammonia produced globally every year
represent 1-2% of the world’s energy consumption and
around 1% of all human emissions.
The uniquely interesting ammonia
Although hydrogen’s role in producing ammonia for
fertilizer manufacturing is just one of the hundreds of current
and coming uses of hydrogen, ammonia is exceptionally
interesting.
Apart from unlocking the decarbonization potential, it can
play an essential role as a life-sustaining commodity and
be a high-density carrier of hydrogen energy, allowing the
exportation of hydrogen and, thereby, cost-effective energy.
Furthermore, it is relatively easy to ‘crack’ the ammonia to
liberate hydrogen at the point of use for various applications.
Also easing the cost is the fact that a massive ammonia
distribution infrastructure is already in place.
Meeting the fast-growing demand
Nel has delivered electrolyser equipment to green ammonia
projects, among them one of Europe’s largest renewable
hydrogen plants, located in Puertollano, approximately 250
km south of Madrid. There, the energy company Iberdrola
produces renewable hydrogen for Fertiberia’s fertilizer
plant. The 20 MW PEM electrolyser plant will reduce the
CO2 emissions from fertilizer production as green hydrogen
replaces fossil fuels.
Nel will also deliver an alkaline electrolyser system for
Skovgaard Energy to produce green ammonia in the small
village of Ramme in Western Jutland, Denmark. The plant,
to be built by Skovgaard Energy and their Danish project
partners, Topsoe and Vestas, will be the world’s first dynamic
green ammonia plant, where renewable electricity from wind
and solar will be connected directly to the electrolyser.
Case 2: Mobility (“fuel cell electric vehicles”) - Fueling
future transportation
Green hydrogen is witnessing a surge in demand, also in
the heavy-duty transportation sector, as companies and
governments strive to adopt greener energy sources. This
shift towards clean energy opens new opportunities for green
hydrogen technology companies like Nel.
Electrolyser
75 %
Fueling
25 %
R E V E NUE
Electrolyser
85 %
Fueling
15 %
O RDER BACK L OG
Electrolyser
59%
Fueling
34%
Corporate
7%
O P E X
Electrolyser
81 %
Fueling
19 %
CAPEX
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Annual report 2022
35
Today, the transport sector accounts for as much as 15% of
the world’s greenhouse gas emissions. Many governments
are therefore setting ambitious targets to reduce their carbon
emissions, and hydrogen is seen as a promising solution
for reducing the footprint of the transportation sector. For
example, the EU aims to develop a network of hydrogen
fueling stations for every 100-150 km in Europe.
Green hydrogen, produced using renewable energy sources
such as wind and solar power, is particularly attractive
because it has no emissions during use, making it a cleaner
alternative to fossil fuels. In addition, hydrogen fuel cell
vehicles have a range like conventional vehicles and can
be fueled quickly, making it a practical choice for use cases
needing high utilization.
Nel is therefore investing in developing fueling stations and
electrolyser equipment. In 2022 Nel entered a collaboration
with General Motors, which has decades of experience
developing fuel cells for hydrogen vehicles. The partnership
aims to create more efficient and cost-effective hydrogen
production equipment, making renewable hydrogen
competitive with fossil fuels.
Many of Nel’s customers are planning to produce hydrogen for
heavy-duty vehicles. One of them is Woodside Energy, which
has ordered large-scale electrolyser equipment for a hydrogen
facility in Ardmore, Oklahoma, an area well suited for hydrogen
production with good availability of water and energy. This
further demonstrates Nel’s commitment to supporting the
growth of renewable hydrogen in heavy-duty transportation
and reinforces its position as a leader in the industry.
Furthermore, Nel is delivering fueling station systems to high-
quality energy companies, such as Shell, that firmly believe
tomorrow’s heavy-duty vehicles will be powered by green
hydrogen. First, however, the technology must be further
developed and improved to meet society’s growing demand
for fueling stations. Nel will therefore focus on developing
high capacity fueling stations for heavy-duty transportation,
phasing out old product platforms and technology, and
cultivating a smaller and better product portfolio.
In addition, Nel will focus on developing its core technology
with a particular focus on high-pressure compression,
cooling, and control. Nel will also collaborate with world-class
partners on other components to offer the best product,
reduce technology risk, and improve overall profitability.
CLIMATE-RELATED RISK FACTORS
Nel assesses climate transition risks into two major categories:
(1) risks related to the transition to a low-carbon economy
and (2) risks related to the physical impacts of climate change.
Nel constantly monitors product failure and technology
obsolescence. There is a risk of reputational damage from
product failure and failure to meet high expectation from our
customers that Nel’s technology will deliver efficient products
within an acceptable price range.
Local authorities and governments have an important role in
the renewable hydrogen sector by enacting legislations that
support research and innovation and scalable investments
in production and infrastructure. Reduced and/or delayed
support from governments will halt the developments of the
renewable hydrogen industry. In 2022, the United States took
an important step by enacting the Inflation Reduction Act
of 2022 and we believe that other developed countries and
the European Union can enact similar legislations between
2023-2025.
Raw materials supply issues could surface when the value
chain experience exponential growth driven by efforts to
abate climate change. For example, raw material Iridium is
important for the manufacturing of PEM electrolysers. The
total supply is limited and a significant reduction of Iridium
consumption in PEM products and very high recycling rates
will be necessary to reduce the risk. Our net zero target by
2050 depends on the supply of green steel sources for our
production chain.
No physical risks from i) temperature increases, or associated
changes ii) weather patterns, sea levels, ecology or human
habitation. Nel’s electrolysers requires water and may not be
relevant to geographies with water stress prior to additional
investments.
36
Report from the Board of Directors
EU TAXONOMY
The Taxonomy Regulation entered into force on 12 July
2020 within EU. In 2021, Norwegian law adopted a new
act on sustainable finance that implements that Taxonomy
Regulation and the Disclosure Regulation. It has been decided
to incorporate the regulations into the EEA Agreement and
the decision enter into force in 2023. The purpose of the
framework is to have common definitions for what constitutes
sustainable activities and to be used by any relevant market
participant.
Nel’s business activities are covered by the EU Taxonomy on
Sustainable activities for Climate Mitigation listed in economic
activity 3.2 Manufacture of equipment for the production and
use of hydrogen. Nel’s equipment has the quality to comply
the technical screening in 3.10 for the life-cycle emissions
savings assuming a scenario including sufficient renewable
energy in the grid. Therefore, Nel’s revenue of core equipment
is an eligible economic activity within the EU Taxonomy
framework. All of Nel’s activity is within renewable hydrogen
sector, therefore, capital expenditures (Capex) and operating
expenditures (Opex) are all generally related to renewable
hydrogen technology.
To be fully aligned with the EU Taxonomy framework, Nel needs
to qualify on the basis of i) Substantial Contribution, ii) Do
No Significant Harm to other sustainability objectives and iii)
Minimum Safeguards. In the course of 2023, Nel will report on
the percentage of its activities that are taxonomy aligned after
completing the necessary analyses of the above requirements.
As all Nel’s current economic activities have the potential to
be taxonomy aligned Nel regards the potential for close to full
alignment with the EU taxonomy as high.
Eligible
92%
Non-eligible/
unallocated 8%
Revenue
The measure of 92% eligible activity refers to the sum of
turnover of equipment in Electrolyser and Fueling compared to
total turnover, in 2022. The remaining 8% is for now reported
as unallocated non-eligible pending on conclusive analysis on
whether services delivered in conjunction with the equipment
delivery will qualify. Examples of such revenue streams in Nel
includes FEED study, EPC, installation, commissioning and
operating and maintenance.
Eligible 99%
Non-eligible
1 %
Capex
All capital expenditures relevant for the manufacturing facilities
and related technology development has been included
as eligible economic activities. The non-eligible economic
activities comprise capital expenditures related to other
corporate capital expenditures.
Aligned activities include Opex related to assets or processes
associated with Taxonomy-aligned economic activities,
including training and other human resources adaptation
needs, and direct non-capitalised costs that represent research
and development. Nel understands that the definition of Opex
in the numerator and denominator is not readily available and
that the establishment of standard interpretation and practice
might vary.
Eligible
80 %
Non-eligible
20 %
Opex
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Water consumption and withdrawal in water-stress areas
Based on the atomic properties of water, 1 kg of hydrogen
requires 8.92 litres of water. Comparing water consumption
for electrolysis with other energy processes, the water
footprint of certain fossil-based pathways exceeds that of
hydrogen. Crude oil recovery and diesel refining uses around
40% more water than the production of green hydrogen
per unit of energy.
2
From a circular economy perspective,
hydrogen technology doesn’t consume water as water
is produced, in its purest form, at the end of the cycle. It
also avoids water contamination associated with various
fossil-fuel processes. Water is also produced as a biproduct
when hydrogen is used in mobility applications. However,
distribution of water could offer a challenge.
Currently, electrolyser technology uses highly purified water.
This does not mean, however, additional strain on freshwater
systems. The water needed for large-scale electrolysis, can
be provided by any water resource (sea water, wastewater,
2 (PDF) Development of a Life Cycle Inventory of Water Consumption Associated with the
Production of Transportation Fuels (researchgate.net)
etc.) once demineralised via reverse osmosis (RO) plants.
3
Continuous development of adjoint water desalination
plants, alternative modes of low-grade and saline surface
water electrolysis
4
, and water provision via wastewater
treatment plants provide evidence of their feasibility and cost-
effectiveness.
Water stress can also be minimised by adding desalination
plants at the electrolyser site. This investment acts as a
precautionary instrument to shield local population from water
resource deprivation. In fact, should the need exist, water
desalination plants for electrolysis could be planned to produce
water not just for the production of hydrogen, but also for local
use as a freshwater resource for human consumption and/or
irrigation, thus creating multiple benefits to the local area.
3 Quantification of freshwater consumption and scarcity footprints of hydrogen from water
electrolysis: A methodology framework - ScienceDirect
4 Electrolysis of low-grade and saline surface water | Nature Energy
GREENHOUSE GAS (“GHG”) EMISSIONS
Nel strives to be transparent with regards to our impact on the environment and continue to improve the internal process for
collecting data that provides an overview of our emissions and their origins.
The inclusion of scope 3 emissions is dependent on data from several sources, e.g., travel agencies, freight forwarders, other
logistics and meters. To date, this is not included in our calculation of CO2 intensity as it has been challenging to gather complete
and accurate data. For future reports, the company aims to extend the reporting scope and to include a selection of scope 3
emissions. These have been identified to be business travel, waste, and downstream distribution.
Fueling PEM AWE ASA
Scope 1
yes yes yes yes
Scope 2
yes yes yes yes
Scope 3
yes yes yes
Business travel
yes yes yes
Waste
yes yes
Purchased goods and services**
yes
Use of sold products
yes yes yes
*yes = data points have been included in the reported scope 1-3 emissions, while blank means it has not been included. All other scope 3 emissions categories not listed has not been included
in the scope 1-3 GHG inventory reported in 2022. While there will be emissions in all categories, Nel is a global company with global distribution and therefore estimates that transportation
(inbound and outbound) is the main data point missing for complete data.
**Purchased goods and services includes the emissions from significant raw materials.
38
Report from the Board of Directors
GHG consolidation method
The greenhouse gas emissions disclosed in this report
were consolidated using the control approach. Under the
control approach, a company accounts for 100% of the GHG
emissions from operations over which it has control.
0 0 0 0
1
1
2
1
7
0
1
2
3
4
5
6
7
8
9
10
2019 2020 2021 2022
ktCO2e
Total GHG emissions (in ktCO2e)
ktCO2e (scope 1) ktCO2e (scope 2)
ktCO2e (scope 3)
Scope 1
Nel has 29 cars and 11 forklifts. Around 50 % of the vehicles are
either battery electric or fuel cell electric. The majority of the
scope 1 emissions of 401 tCO2e is therefore fuel consumption.
Scope 2
The majority of emissions from scope 2 of 1 223 tCO2e is the
use of electricity from grid connected production in company
owned or leased locations. The electrolyser division consumes
energy while performing tests on our products before they are
shipped to our customers. Nel’s absolute emissions the next
years will correlate with the activity level achieved. An increase
will occur if Nel continue to increase production capacity. Nel’s
goal is to decrease the CO2 footprint per product produced.
We will achieve this by improving the stability and scalability of
our production processes. In addition, Nel pledges to become
fully electrified and use renewable energy to the extent
available.
The measurement of the reported greenhouse gases is the
energy consumption multiplied with emissions factor for the
relevant connected grid. Nel’s manufacturing facilities are
connected to the grid in Norway, Denmark and Connecticut,
US. Each grid has its own emission factor based on location-
and marked based emissions. These emissions factors are
updated regularly by the source provider.
Norway
The manufacturing facility in Herøya is connected to the grid
in price area NO1. Norway’s energy production mix comprise
of over 90% of hydro power, however Norway is connected to
the European continent by power cables resulting in a lower
percentage of renewable energy in the mix. Nel has decided
to not purchase green certificates for its electricity, and has
therefore used a ”Nordic Mix” to measure its CO2 emissions
from energy consumption in Norway. The emission factor for
the energy use in Norway is measured at 0.031 kgCO2/kWh.
Denmark
The electricity usage in Herning, Denmark, consist of mainly
heating and input to the production facility. Both location- and
market-based emissions are accounted for. The emission factor
for the energy use in Denmark is measured at 0.125 kgCO2/
kWh.
Connecticut, United States
The facility in Wallingford, Connecticut, has an energy mix
that consists of approximately gas, nuclear, hydro, wind and
biomass. In total, about 20% of the fuel mix is renewable. The
emission factor for the energy use in Wallingford is measured
at 0.224 kgCO2/kWh.
Scope 3
Purchased goods
A significant portion of Nel’s greenhouse gas inventory stems
from purchased goods, such as metals, steel, nickel, platinum
and iridium.
Use of sold products
The fueling stations, alkaline electrolysers and PEM electrolyser
equipment produced by Nel have no emissions in use when
connected to renewable power sources like wind, solar, or hydro
power, either grid-connected or off-grid. Nel has no control
over the renewable energy mix in its customers production
facilities, and this will not be 100% emission free until there
is sufficient energy production from renewable sources. All
customers producing hydrogen from water electrolysis has its
plan to produce from renewable energy sources to reduce the
carbon footprint from its operations. Nel has in the scope 3
reporting assumed zero emissions from use of sold products.
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GHG intensity
The GHG intensity is presented excluding scope 3 as the
complete scope 3 has not yet been included. The GHG
intensity has decreased in 2022 compared to prior years as
a result of increased revenue in the group from particular
the increased production in Norway. Norway has low GHG
emission, below the group’s average.
2.71
2.18
2.69
1.64
0
1
1
2
2
3
3
2019 2020 2021 2022
ktCO2e/MNOK turnover
GHG intensity (excluding scope 3)
GHG intensity (excluding scope 3)
NET ZERO 2050 - GREENHOUSE GAS
EMISSION (GHG) TRAJECTORY
The outlook for scope 1-3 in Nel includes several forward-
looking data points with significant estimations uncertainty and
involves risk of low reliability and/or comparability. Nel does
not provide any guiding on production volume or revenues,
therefore, Nel has not been able to show the detailed absolute
emission trajectory towards net zero. Nel reported that GHG
emissions this year is not significant, however, it is evident
that the renewable hydrogen industry will witness increasing
GHG emissions when going through industrialisation, while
the total absolute annual GHG emissions should be very
limited comparing to conventional technology. Thus, the
emissions avoided is significant, refer section “Climate change
opportunity and emissions avoided” above.
Nel’s ESG policy include a pledge to reduce greenhouse gas
emissions per produced unit by 25%, 50% and 100% within
2030, 2035 and 2050, respectively, compared to 2020. Nel will
monitor the reduction plan by improved reporting procedures
and data quality for material scope 1, 2 and 3 emissions. The
majority of GHG emissions in Nel would be categorised as
Scope 3 emissions, where reductions will mainly come from
purchased goods and transportation. An example of significant
purchased good in Nel is steel. The timing of decarbonization
of the steel industry is uncertain but roadmaps already include
likely decarbonization from sustainable amendments in steel
production (hot direct reduced iron, hot briquetted DRI, blast
furnace). It is therefore expected that a certain volume will be
available before 2030. Nel’s GHG reduction trajectory includes
estimates that the volume of commercialised renewable steel
will increase from 2030-2040. The steel production market is a
climate-related opportunity for Nel. In addition to reductions
within purchased goods, Nel estimate GHG reductions in the
transportation industry when the mobility fleets become more
sustainable (electrification, e-fuels and biofuels). Also in this
spectrum, Nel’s GHG reduction trajectory estimate the majority
of these reductions become visible beyond 2030. Nel also
estimates that GHG reductions per unit will be achieved by
increased volumes produced, as some GHG emissions are not
fully variable and correlated to the production volume.
Base year
Stabilty and scalability
Electrification
Green steel
Mobility
2030
Stabilty and scalability
Electrification
Other emissions
Green steel
Mobility
2035
Green steel
Mobility
Other emissions
2050
0
10
20
30
40
50
60
70
80
90
100
Greenhouse gas emissions per unit
25 % reduction from base
50% reduction from base
100% reduction from base
SUSTAINABILITY IN ELECTROLYSER
PRODUCTION
Nel is committed through its company ESG Policy to state-
of-the-art sustainable production facilities for both current
productions, committed expansions and if further scaling up.
The environmental footprint of a product throughout its
lifetime, factoring in the hydrogen output and production
costs, is markedly reduced by utilizing hydrogen solutions
compared to traditional energy sources. This does not mean
that the production of our applications is entirely carbon-
neutral, however. Sustainability in production is a vast topic and
is necessary to address in more detail. In our decision to report
in accordance with established international sustainability
standards lies an important commitment to increase our focus
on sustainability in our actions, not just in the opportunities
that arise from our products in operation. This requires an
organizational realignment, and we will continuously pursue
improvements in all our operations going forward.
During 2022, the alkaline electrolyser recertified ISO 9001,
14001 and 45001, and implemented ISO 50001 Governance
system and procedures at Herøya. PEM added ISO 14001 and
45001 certifications to ISO 9001 certification in 2022.
Key metrics and targets include increasing stack energy
efficiency and eliminate the use of dangerous hydrofluoric
acid (HF) from the cell stack assembly room. The plan to
eliminate such use is implementation of a sputtering process.
Sputtering will reduce the number of parts that go through an
electrochemical etching process. Nel will improve on emission
reporting, formalise initiatives through policies and procedures,
and encourage dialogue across divisions to identify key areas
of improvement.
RESILIENCE IN ELECTROLYSER MANUFACTURING
FACILITIES
Nel has expanded electrolyser production to accommodate
large-scale projects by constructing a fully automated
manufacturing facility at Herøya, Norway. The factory is
designed according to lean manufacturing and industry 4.0
principles and represents the first industrial-scale production
of the most efficient electrolysers on the market, at a game-
changing low production cost. The capacity of the facilities
in 2022 was 0.5 GW annually, with committed expansion to
1 GW capacity from second quarter 2024. The Herøya facility
can be expanded further to 2 GW. Nel has announced further
expansion plans in the US, where a site selection process is
expected to be concluded in the first half of 2023. Nel’s new
manufacturing facility in the US is planned to have capacity
to grow to a total of 4 GW, distributed between PEM and
alkaline. The resilience in Nel’s manufacturing facilities is robust
considering new state-of-the-art fully automatized production
concept located close to highly skilled technology personnel,
capacity aligned to the market, and also close to the customers.
Sustainability in electrolyser production metrics and targets as of end of 2022:
KPI
2021 2022 2023 2025 2030
Electrolyser production, Alkaline
Stack yield >80% >90% >95% >95% >98%
Overall equipment effectiveness 50% 70% ~80% >80% >85%
Electrolyser production, PEM
Stack yield 95% 95% >95% >98% >98%
System yield 85% 85% >85% >90% >90%
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Annual report 2022
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Social
ORGANISATION AND OCCUPATIONAL
HEALTH AND SAFETY
At Nel, social responsibility refers to how we address social
issues that ultimately impacts our contribution to society at
large. Nel’s focus on safety is integrated into a company-wide
programme. The purpose of the programme is to foster a
common, sustainable safety culture that drives a zero-tolerance
attitude towards HSE incidents for all Nel employees. This
ongoing effort drives a culture of continuous improvement and
a sustainable safety culture at Nel. The approach is anchored
with Nel’s executive management team and Board of Directors
and is reviewed on a regular basis by a steering group.
The programme focuses on all aspects of safety including,
workplace safety, product safety and stakeholder safety.
Following HSE and quality being #1 priorities within Nel, all
Nel sites have management systems in place that safeguard
our employees’ health and safety. Relevant indicators on work
related injuries and illness are monitored and reported at a
corporate, divisional and local level. Nel aims to provide a
workplace for everyone that is free of incidents and injuries,
and to promote a culture of hazard identification and
awareness through incident reporting and self-accountability.
Employees are provided with appropriate training and
equipment to perform their job safely. The guiding principles
for workplace safety are laid out in the Nel Code of Conduct.
TRIR (total recordable injuries per million hours worked) in 2022
was 11.5 (4.9) and there were 0 (0) fatal accidents.
Nel recognises that ensuring i) workplace, ii) stakeholder and
iii) product safety in a diligent manner is a license to operate
within the Hydrogen industry.
The above three categories will have the following focus
areas:
1. Transition to a “HSE-first” mindset and development of a
commitment culture
2. Ongoing development and implementation of a Nel HSE
management system
3. Standardization of programme activities where relevant
throughout the organization
4. Training and evaluation of the organization and system
effectiveness
PRODUCT SAFETY
Safety is the number one priority at Nel. Management and all
employees are strongly committed to the company’s promise
of delivering fail-safe products to our customers. The product
safety risks include the risk range from major accidents to
near misses related to malfunctions in our products and/
or insufficient service during operations and maintenance.
Each division and legal entity in Nel are responsible for the
development, implementation and maintenance of risk
management framework and system within each discipline.
In our development of products, Nel never compromises on
safety requirements, codes and standards.
Where applicable, safety requirements include third-party
product certification for design and manufacturing. In addition,
a Nel HSE committee that works across the organization
and consists of participants from each legal entity, as well
as the corporate function, ensures learning across sites and
the establishment of best practice. Third-party experts are
involved as subject matter experts when applicable. In 2023,
Nel will continue the implementation of even more rigorous
methodologies, e.g., a review system where specific areas will
be assessed to identify areas of improvements.
In 2022, Nel implemented Nel Business System (NBS) across
the whole organisation. NBS focuses on how Nel will achieve
customer satisfaction and have HSE, quality and ethics as first
priorities to achieve this. The introduction and training for both
leadership and Nel as a whole for this initiative was started in
2022. The Nel Business System is a part of our employee value
programme.
Product safety targets for 2023:
• Zero product-related incidents, including at sites with Nel
equipment
• Recognized safety leader within the industry, setting new
industry safety standards across the value chain
42
Report from the Board of Directors
RESPONSIBLE SUPPLY CHAIN
A well-functioning supply chain is determined to be one of
Nel’s key success factors. Nel’s spend on purchasing goods
and services in 2022 was a significant part of total revenue,
equalling about NOK 1 100 million. Nel expects that the total
spend will increase in line with Nel’s increased activity level. A
responsible supply chain is therefore an integral component
of our sustainability efforts, and we seek to select and further
develop suppliers with high standards. Nel is committed to
work with the whole supply chain in a structured approach to
meet the company’s overall targets within ESG.
One of the key activities in 2022 was to continue to
strengthen the supplier base with new competitive suppliers
capable of managing the marked growth and also being
able to deliver large and complex systems at the highest
standards. Although 2022 was a very challenging year due
to post-pandemic issues and the war situation in Europe,
Nel continued to qualify and enter supplier agreements with
a number of new key suppliers, while also strengthening
the relations with existing core suppliers. This sums up in a
robust supply chain which provides Nel the predictability and
capability for continued growth.
The effects from the corona pandemic continued to challenge
the process of conducting on-site supplier audits, most
considerably in the first quarters. Despite the challenges, Nel
managed to conduct 21 audits in 2022 well above the target
of 10 key supplier audits. We continue to perform supplier
audits as a part of Nel’s supplier selection process and aim to
conduct audits on 100% of our new key suppliers.
Nel has met its 2022 target of developing and screening new
direct high-risk suppliers using the revised pre-qualification
process. The supplier pre-qualification process has been
implemented across the Nel Group for complex projects. It
contains a foundation of common questions for all business
units, with adjustments made to fit the objective for each
case or business unit. The process is formalised in a digital
environment to optimize the pre-qualification process.
Nel experiences a continued increase of focus and
expectations related to ESG topics. The established dedicated
Nel Procurement Community has had quarterly meetings
throughout 2022, and consistently included ESG as the
backbone in all meetings. By working systematically with
ESG, the company ensures compliance with both legal
requirements as well as alignment with initiatives in which Nel
has committed to. As a result, ESG was prominent in supply
chain efforts in 2022, and the company will continue its
efforts of identifying synergies in supply chain activities across
Nel going forward as well.
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Annual report 2022
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Other significant organizational developments:
• Centralized responsibility for planning, sale and execution
of large-scale projects
• Areas of strategic purchasing competence have been
strengthened throughout the year
• Development of best practices and the procurement
toolbox
• Strengthen the supply chain organization significantly to
scale-up for increased size and number of projects
Significant supply chain changes
• Ramp up of Supplier capacity to meet the increasing
demand
• Opening of Herøya facility
• Continued to develop the partnerships with major EPC
companies
• Increased local contractor capacity.
Building on the goals and targets laid out for this year, the
Nel Procurement Community has identified a selection of
key areas for development throughout 2023. This includes
continuing to develop the pre-qualification and supplier
development programme, and to:
• Implement a supplier declaration to secure commitment
to good business ethics throughout the supply chain.
• Establishing a supplier portal enabling Nel suppliers
readily available access to amongst other our
whistleblower programme, the “Nel Ethics Hotline”, key
documents, including code of conduct, Nel’s values and
other information and relevant tools for the engagement
with Nel
• Secure the required capacity and supply of goods in
a challenging market, so the supply of goods will be
delivered on time and with no or limited delays in
operations and installation
• Ensure highest quality and HSSE performance through
additional supplier audits and launch of supplier
development programme
TRANSPARENCY ACT
According to the Norwegian Transparency Act which entered
into force July 1st, 2022, Nel has a duty to carry out a due
diligence assessments related to fundamental human rights
and decent working conditions in its own businesses and
supply chains.
Guidelines and Measures
To ensure awareness in Nel’s organisation concerning the
challenges related to fundamental human rights and decent
working conditions and to prevent adverse impact on human
rights in Nel’s business activities Nel has implemented a
Human Rights policy. The policy describes how Nel shall
manage human rights in our operations, as well as in the
communities affected by Nel’s business operations. The
policy is applicable to Nel ASA, its subsidiaries and to all Nel
employees. The policy also applies to all suppliers of Nel.
Furthermore, as part of Nel’s procurement process, and
in accordance with Nel’s Third Party Management and
Integrity Due Diligence Procedure (the “IDD Procedure”), Nel
performs an integrity due diligence (“IDD”) on all suppliers
(and the majority of the parties it contracts with). All IDDs
are performed by a third-party company which specializes in
IDDs, and the extent of the IDD will depend on an initial risk
assessment of the supplier (low, medium or high).
In addition to the IDD, which is performed on all suppliers,
new direct high-risk suppliers will going forward also be
subject to a more thorough pre-qualification process, ref.
Section responsible supply chain above.
Moreover, during 2023 Nel will implement a specific
mandatory supplier declaration to further increased
awareness and secure commitment to good business ethics
throughout its supply chain.
If red-flags are uncovered during the IDD, the IDD Procedure
sets out the process for how such red-flags shall be handled.
If the procurement process is not stopped as a result of the
finding, adequate measure will be put in place to prevent or
mitigate the risk.
Nel also has a system in place where employees, business
partners and stakeholders can report anonymously (the Nel
“Ethics Hotline”), refer separate section “Whistleblowing”
if they have observed or experienced acts that violate
the respect for human rights in connection with Nel or its
business operations. If any such reports are received, they
will be investigated in accordance with Nel’s Investigation
Procedure, and if the investigation finds that there is merit to
the report, appropriate measures will be implemented.
44
Report from the Board of Directors
General Risk Assessment of Nel’s Own Operation and
Nel’s Supply Chain
The risk of human and labour rights abuses differs between
countries and when making a general assessment of the risk
of human rights abuses it is relevant to look at the countries
in question. When assessing country risk Nel has used the
“Corruption Perception Index” published by Transparency
International (the “TI-Index”). The TI-Index scores each
country from 1 – 100 where 100 is the highest score.
Nel ASA and all business units, including subsidiaries, are
based in jurisdictions which score amongst the top 18% of
the 180 countries scored in the index. Norway, Denmark and
the United States, where Nel’s main facilities are located, are
ranked no. 4, 1 and 24, respectively, on the index. Further,
the terms of employment and working conditions of Nel
employees are in accordance with local legislation and
international norms. The risk related to Nel’s own operations
is therefore considered to be low.
Each Nel business unit has its separate supply chain which
must be assessed separately. In the figures below we have
assessed country risk in the supply chain of each business
unit and overall, across all business units. For the purpose of
the diagrams below we have split the index into five intervals
(diagrams are based supply chain information from 2022).
The figures to the right documents that overall Nel
predominantly has suppliers from low-risk jurisdictions. 99% of
Nel’s suppliers are within the top two intervals (55% and 44%
respectively), and there are no suppliers in the two bottom
intervals. For Fueling and Alkaline 86% and 93% respectively
are in the top interval. For PEM, 4% are in the top interval and
95% are in the second interval. For PEM 91% of their suppliers
are based in the United States which is in the second interval
with a score of 69 (ranked 24 of all 180 countries). Based
on an overall assessment of country risk, risk of violations of
fundamental human rights and decent working conditions in
Nel’s Supply chain is considered too be low.
In addition to country risk, the risk of human rights abuses
also differs between product categories. Metals and minerals
are product categories which generally implies a high risk,
related to both the extraction and the processing of the metals/
minerals, and a particular high level of awareness is required
in respect of minerals on the OECDs list of so-called conflict
minerals . Metals are also a key component of Nel’s products.
The Alkaline electrolysers contain steel and nickel, the PEM
electrolyser contain steel, aluminium, nickel, copper, platinum,
titanium and iridium, and the Fueling stations contain steel.
None of these metals are on the OECD’s list of conflict minerals,
but due to the general high risk related to metals, Nel’s supply
chains related to metals demand a specific focus.
SUPPLY CHAIN FUELING
81-100 86%
61-80 14%
41-60 0%
21-40 0%
1-20 0%
SUPPLY CHAIN OVERALL
81-100 55%
61-80 44%
41-60 1%
21-40 0%
1-20 0%
SUPPLY CHAIN PEM
81-100 4%
61-80 95%
41-60 1%
21-40 0%
1-20 0%
SUPPLY CHAIN AWE
81-100 93%
61-80 4%
41-60 3%
21-40 0%
1-20 0%
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CYBER SECURITY
Protecting our operations is essential and will become
increasingly important as the global use of connected devices
continues to rise. Protecting our intellectual property will
remain a priority, especially as the use of big data, such as for
our fueling stations and electrolysers, continues to increase in
importance and being part for critical infrastructure.
Nel continues to invest in protection measures to mitigate
exposure to safety and reliability issues in our production
sites, in addition to leakage of confidential data, legal
and regulatory compliance violations, insider threat from
dismissed employees or contractors and loss or malicious
modification of business-critical data. The inherent cyber
security risk continues to increase as malicious players
innovate and evolve their techniques to increase their success
rate, therefore Nel continue to invest in preparedness.
All employees are required to complete monthly IT-security
training. A total of 90% of Nel employees have completed
monthly cyber security awareness training during 2022. The
training covers essential topics of cyber security. External
consultants have been engaged to uncover and report on
IT-related security threats.
All of Nel’s cloud suppliers have the required certifications
and have been selected after a thorough supplier due
diligence process.
Nel’s manufacturing facilities are only somewhat integrated
into the IT-systems and run mostly independent. Part of the
production process involves higher degree of robotisation
which are connected and consequently constitutes an
increased risk.
There were no breaches of customers’ privacy in 2022, nor
were there any reported cases of identified leaks, thefts, or
loss of customer data.
DIRECTORS & OFFICERS INSURANCE
(D&O)
Based on requirements brought by the Norwegian
Accounting Act section 3-3a, information about our D&O
insurance is provided. Nel has entered into a D&O liability
insurance. This insurance is meant to prevent employees
and members of the Board at Nel from being held
personally responsible for decisions made by the company.
The insurance applies to all material decisions made by
employees on behalf of Nel.
Photo: Unsplash.com
46
Report from the Board of Directors
WELL-BEING AT WORK
In 2022, Nel has strengthened its global HR development with
Nel Business System as backbone for all development.
In January 2022 we introduced a common HR-system across
the different divisions and locations, optimising the HR
processes. The HR-system is module based, which means
it can be combined and configured to meet requirements
of the company. In January, the company introduced
modules for core HR, appraisal and development processes
and the learning management. During the last quarter of
2022, the company implemented the recruitment module
making it customer friendly for both applicants, leaders and
HR. It also contributes to develop and improve our talent
acquisition pool. This implementation ensures a more efficient
recruitment process.
In 2023, Nel will continue to strengthen its HR developments
across the company. One key priority will be to develop and
implement activities that contribute to create a common
culture. These activities will ensure a tighter connection to
its core values and a deeper internal understanding of the
business strategy. A common onboarding program will be
launched, improving the change management and resilience
capabilities and the ability to lead in a continuously changing
global market.
Nel has low sick leave and reduced turnover in current year
and will continue to further improve the working environment
and work-life balance for the employees.
WORKING HOURS POLICY
Nel strives to ensure that employees do not exceed
reasonable working hours to provide a balance between work
and personal life. All managers in Nel are responsible for
monitoring the working hours of their direct reports, making
sure these are within acceptable limits. Nel is also working
to initiate additional measures to prevent employees from
exceeding reasonable working hours. These measures will be
implemented in 2023.
TALENT DEVELOPMENT PROGRAM
Throughout 2022 Nel has onboarded approximately 200 new
employees. Managers are monitoring the needs for on-the-
job training, knowledge adoption and further competence
development needs through the new appraisal and goals
setting process. The purpose is to ensure that development
activities help employees in their current and/or future
role. Based on identified needs, some employees have also
been assigned to specific external learning sessions. The
talent process is at its early stages and will continue to be
developed. Early 2023, a behavioural awareness training
program based on dilemma situations will be launched. The
program helps the organization to face challenging situations
employees can be exposed to through working in the
different geographies. Designing and rolling out a common
culture program anchored in the different locations will be a
key focus in 2023.
ABSOLUTE NUMBER AND RATE OF EMPLOYMENT
PERMANENT EMPLOYEES,
BY REGION AND GENDER
FEMALE (%)
FEMALE MALE TOTAL 2022 2021 2020
Norway 37 156 193 19 % 20 % 22 %
United States 39 147 186 21 % 21 % 23 %
Denmark 33 162 195 17 % 15 % 15 %
Others 3 23 26 12 % 17 % 12 %
Total 112 488 600*
*Employees that defines themselves as non-binary or undefined are excluded due to privacy concerns.
We strive to increase our gender balance across the different locations, we have a focus on diversity through recruitment
ensuring we offer equal opportunity to all relevant applicants. Women in executive management is 1, or 11.1%.
MALE-FEMALE PAY GAP
Norway 12 %
United States 22 %
Denmark 7 %
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The male-female pay gap is the difference between average gross hourly earnings of male paid employees and of female paid
employees expressed as a percentage of average gross hourly earnings of male paid employees. Nel’s remuneration policy was
approved by the General Meeting 15th of April 2021. Refer to remuneration report 2022 which describes how the policy has
been applied during 2022.
EMPLOYEE TURNOVER AND NEW EMPLOYEE HIRE
AGE
Employee turnover <31 31-49 50+ Total
Total number 26 60 17 103
Rate 36 % 21 % 11 % 20 %
Opening count 2022 73 281 153 507
New employee hires <31 31-49 50+ Total
Total number 54 107 38 199
Percentage of hires 27 % 54 % 19 %
The gender balance focus as other diversity focus is included in our recruitment and sourcing activities.
GENDER
EMPLOYEE TURNOVER FEMALE MALE TOTAL
Total number 21 82 103
Rate 22 % 20 % 20 %
Opening count 2022 94 413 507
NEW EMPLOYEE HIRES FEMALE MALE TOTAL
Total number 39 160 199
Percentage of hires 20 % 80 %
AGE DISTRIBUTION OF WORKFORCE
2022 2021 2020
< 31 113 73 62
31-49 314 281 201
50+ 176 153 130
TOTAL 603 507 393
2022 2021 2020
Sick-leave 2.69 % 2.40 % 4.28 %
Coverage of employees 100 % 90 % 91 %
PARENTAL LEAVE
Nel facilitates for all female and male to take out parental leave and assure them to be employed after their leave as it is
important for our employees in terms of work-life balance and well-being.
MALE FEMALE
Entitled to parental leave 30 3
Took parental leave 30 3
Percentage of entitled employees that took parental leave 100 % 100 %
Returned to work after parental leave ended 30 3
Still employed 12 months after their return from parental leave N/A N/A
It has not been possible to report on “still employed 12 months after their return from parental leave” in 2022 as 12 months has
not passed as of 31 December 2022.
48
Corporate governance
COLLECTIVE BARGAINING AGREEMENTS
2022 2021 2020
Norway 24 % 26 % 24 %
Denmark 34 % 34 % 42 %
USA 0 % 0 % 0 %
Other 0 % 0 % 0 %
PERMANENT AND TEMPORARY POSITIONS
PERMANENT EMPLOYEES,
BY REGION AND GENDER
FEMALE (%)
FEMALE MALE TOTAL 2022 2021 2020
Employee contract Female Male Total Female Male Total
Permanent employees 18 % 82 % 571 104 467 571
Time-limited employees 21 % 79 % 29 6 23 29
Total 110 490 600* 110 490 600
Permanent employees
Full-time 90 % 90 % 514 94 420 514
Part-time 10 % 10 % 57 10 47 57
Total 104 467 571 104 467 571
*Employees that defines themselves as non-binary or undefined are excluded due to privacy concerns.
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Governance
ETHICAL BUSINESS CONDUCT
AND COMPLIANCE
Nel conducts business on all continents and the demand
for Nel’s hydrogen solutions is growing. Through the
expanding portfolio of international projects, Nel has a
significant number of third-party relationships, and frequently
collaborates with other companies operating in the hydrogen
industry. For businesses with a significant international
footprint, a robust culture of compliance is vital to achieve
sustainable value creation and success.
In 2022, the Board of Directors and the executive
management team have continued their work to strengthen
Nel’s compliance system. The Board of Directors approves the
content of the overall compliance program and the individual
compliance policies. The individual procedures are approved
by the CEO. The Board of Directors and the executive
management team are enrolled in the compliance training
program and their training is monitored and followed up in
the same manner as for other employees.
The purpose of the compliance program is to prevent and
mitigate compliance risks by enabling all persons and entities
working for or on behalf of Nel to understand, observe, and
adhere to Nel’s governance framework. All Nel’s activities
must comply with national, regional, and international laws.
Through the Nel Code of Conduct, we stipulate the essential
requirements that all Nel’s activities should be conducted in
an ethical and sustainable manner.
During 2022, the Nel Anti-bribery and Corruption Policy was
published on our webpage to increase the general public’s
access and insight on how we work to prevent bribery and
corruption in the organisation.
The first quarter of 2022 saw the completion and launch of
the Nel Data Protection Policy. The purpose of the policy
is to ensure compliance with EU General Data Protection
Regulation (“GDPR”). As a necessary supplement to the
Data Protection Policy, Nel also launched the Procedure for
Handling Data Subject Requests and Procedure for Handling
Data Protection. The Export Compliance Procedure was
completed and released in April 2022 and finally the Human
Rights Policy was completed and released in November 2022
and marks the completion of the process of revising Nel’s
Compliance system. In the third quarter of 2021 Nel Third-
Party Management and Integrity Due Diligence Procedure
(“Third Party Procedure”) was launched, and during the last
part of 2021 and 2022 it has been gradually implemented in
all parts of the organisation. In December 2022 the company
performed an audit to check the organisation’s compliance
with the Third-Party Procedure. The result of the audit shows
that overall, across all divisions and at the corporate level,
the Third-Party Procedure is followed in 85% of dealings with
third parties. Nel will continue to focus on this throughout
2023 to make sure that compliance is increased to an
acceptable level.
Training of employees is crucial for an effective compliance
program, and in 2022 Nel developed an Annual Compliance
Wheel to systemize compliances tasks in regard to e-learning,
physical training and internal audit of Policies and Procedures.
The e-learning includes various compliance topics and is
supplemented by digital training and face-to-face training
conducted by Group Legal and Compliance.
• 93% of the employees have completed training in
accordance with the Annual Compliance Wheel, which
includes training in anti-bribery and corruption including
gifts and hospitality, sexual harassment and introduction
to data protection and privacy.
• 82% of Nel’s executive management team and Board of
Directors have completed the anti-bribery and corruption
training for 2022.
Whistleblowing
The company’s whistleblowing channel – the Nel Ethics
Hotline – has been operational since September 2020. The
whistleblowing channel is operated by a third-party service
provider ensuring full anonymity for the reporter. In addition
to English, the channel is available in Norwegian and Korean
ensuring a low language barrier for reporting a concern.
The whistleblowing channel is open for third parties/external
stakeholders as well as employees of Nel and a link to the
whistleblowing channel is published on Nel’s official website.
That there is an awareness of the whistleblower channel with
external stakeholders is documented by the fact that in 2022
we for the first time also received reports from outside of the
organization.
Following the launch in September 2020 and throughout
2021 and 2022, Nel have consistently worked to raise
awareness of the whistleblower channel within Nel and also
with external stakeholder, and a steady rise in reports has
been seen. In 2021 Nel’s Ethic Hotline received 4 notifications
and in 2022 the number has increased to 15.
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Corporate governance
The notifications received in 2022 can be categorized as
follows:
• Human Resources, 5 cases
• Health & Safety, 3 cases
• Harassment, 3 cases
• Financial, 2 cases, and
• Other, 2 cases
Of the 15 notifications received in 2022, 6 are resolved and
9 are still open. The outcomes of cases resolved differs, but
have resulted in disciplinary sanctions of involved individuals,
and cases have also led to broader initiatives, such as the
development of a behavioural training program which was
initiated in the first quarter of 2023.
All reports of concerns received through Nel’s Ethics
Hotline are handled in accordance with Nel’s Ethics Hotline
Procedure and Nel’s Investigation Procedure. According to
the procedures all reports of concern are received by a team
consisting of three people – the ethics hotline team – which
will initiate the investigation of the report. Depending on the
category of the case, subject matter experts will be involved
on a case-by-case basis. All received reports are kept
confidential and investigated in accordance with fundamental
principles of due process. The extent of management
involvement in a specific case will be determined on each
case dependent on a specific risk assessment.
Compliance targets for 2023:
• 100% of relevant Nel employees to have completed
e-learning compliance training in accordance with the
Annual Compliance Wheel.
• 100% of Nel’s executive management team and Board
of Directors to have completed the anti-bribery and
corruption training during 2023.
• Complete and roll out Code of Conduct behavioural
training during first quarter 2023.
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Corporate governance
INNOVATION AND TECHNOLOGY
FINANCIAL INVESTMENT CONTRIBUTION (NOK million)
FUELING AWE PEM GROUP
2022
Research and maintenance 56 29 44 130
Capitalised technology 27 50 40 118
Total R&D spend (NOK millions) 84 80 85 248
R&D spend in % of annual revenue and other income 34% 23% 21% 25%
2021
Research and maintenance 37 4 14 54
Capitalised technology 39 33 47 119
Total R&D spend (NOK millions) 76 36 61 173
R&D spend in % of annual revenue and other income 23% 64% 15% 22%
All research and development (R&D) work at Nel targeting
safe, high performing, and cost-efficient products for all
our stakeholders. This includes reducing initial capital
expenditures and operational expenses during the
products’ lifetime, at the same time improving performance.
Maintaining a leading position requires that Nel pursues
product optimization and cost-reduction programs reducing
the products total cost of ownership (TCO) for Nel’s
customers. At Nel, being “number one by nature” will always
be our strategic ambition, and consistent R&D is necessary
to maintain and develop this position further. The technology
portfolio includes multiple key development programs for
both electrolysers and fueling stations. Nel has an active IP
protection strategy and has more than 100 active patents.
Nel’s IPR strategy is managed and further developed by a Nel
IPR committee that works across the organization and meets
bi-weekly.
ELECTROLYSER
Our electrode manufacturing process for alkaline electrolysers
in Norway has almost a century-long history. Leveraging
on the extensive experience, the strategy continues to
include further improving and strengthening electrode
manufacturing. The goal is to reduce the number of
processes required, thus reducing the consumption of
energy, raw materials, chemicals, and the factory footprint.
By implementing these changes, Nel will be able to
reduce the cost and emission of electrode manufacturing.
Standardization is an important step for scaling up
manufacturing with related cost-reduction programs in place.
The standardization will be containing prefabricated modules
where all safety standards are embedded in the system. In
addition, Nel sees the potential to improve the efficiency and
capacity of its cell stacks. To achieve this, key enablers are
improvements to the electrode design, increasing the active
electrode area, and increasing current density.
FUELING
Nel has in recent years carried out development activities to
support its light-duty fueling station products. Some of the
core technologies are the control and cooling systems, as
these ensure a fast, safe and complete fueling of the vehicle
according to the SAE J2601 standard, which is required by
the car manufacturers. Some of these components are also
compliant with international emission standards. In addition,
the entire system and platform design are key to achieving
a stable and reliable system, ensuring high availability for
vehicle users. Nel has also initiated a heavy-duty fueling
station product platform development that will serve the
increased need for truck, bus and train hydrogen fueling.
Overall, we see a large increase in utilization of our fueling
stations and are investing in engineering to continuously
improve on their safety and reliability.
Innovation and technology targets for 2023:
• 10 % of revenue to be spent on Innovation and
Technology
• Five new innovative ideas and two new patent
applications/trade secrets to be developed in 2023.
Nel ASA
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Annual report 2022
53
RESPONSIBILITY STATEMENT
“We confirm that, to the best of our knowledge, the financial statements for the period from 1 January 2022, up to and including
31 December 2022, have been prepared in accordance with applicable accounting standards and give a true and fair view of the
assets, liabilities, financial position and profit or loss of the company, and that the directors’ report includes a fair review of the
development and performance of the business and the position of the company as a whole, together with a description of the
principal risks and uncertainties the company faces.”
OSLO, 27 FEBRUARY 2023
THE BOARD OF DIRECTORS
Ole Enger Beatriz Malo de Molina Charlotta Falvin
Chair Board member Board member
(Electronically signed) (Electronically signed) (Electronically signed)
Finn Jebsen Hanne Blume Tom Røtjer
Board member Board member Board member
(Electronically signed) (Electronically signed) (Electronically signed)
Jon André Løkke Håkon Volldal
Board member CEO
(Electronically signed) (Electronically signed)
54
Corporate governance
5 Board of Directors’ report in relation
to the Norwegian Code of practice
for corporate governance
1. Report on corporate
governance
The Board of Directors (also, the board) and management
of Nel are committed to maintaining high ethical standards
and promoting good corporate governance. The company
believes that good corporate governance builds confidence
among shareholders, employees, partners, customers, and
other stakeholders, and thereby supports maximum value
creation over time. The equal treatment of all shareholders
lies at the heart of the company’s corporate governance
policy.
Nel’s Corporate Governance Report is based on the
Norwegian Code of Practice for Corporate Governance
(“the code” from NUES), dated 17 October 2018 and its
amendments. The code is available on www.nues.no
Observance of the recommendations is based on the “comply
or explain” principle. Nel’s board and management have
resolved to follow the recommendations of the Code to the
extent deemed reasonable in view of the company’s size and
stage of development.
2. Business
Nel ASA’s business purpose is defined in the company’s
Articles of Association, section 3: “The Company’s business is
to conduct business, invest in and/or own rights in production
and sale of hydrogen plants, hydrogen fueling stations, or
other related areas.”
Nel is a leading pure play hydrogen technology company
with a global footprint, developing optimal solutions to
produce, store and distribute hydrogen from renewable
energy. Our hydrogen solutions cover important parts of the
value chain: enabling decarbonization of industries such as
cement, steel and fertilizer production, while also providing
fuel cell electric vehicles with the same fast fueling and
long driving range as fossil-fuelled vehicles - without any
emissions. Nel is committed to create value for shareholders
in a sustainable manner.
3. Capital and dividend
The company’s registered share capital as of 31 December
2022 consisted of 1 563 325 304 shares, including both
outstanding shares and treasury shares, with a par value of
NOK 0.20 per share.
Under the company’s strategy, dividends are not currently
planned during this stage of the company’s development.
4. Equal treatment of
shareholders and transactions
with related parties
All shares in Nel carry one vote, and the shares are freely
transferable. The company has only one share class, and all
shareholders have equal rights. Existing shareholders are
given priority in the event of share capital increases unless
special circumstances warrant deviation from this principle.
At the annual general meeting on 21 April 2022, the board
was granted authorisation to increase the share capital
with up to NOK 29 219 985 through one or several capital
increases. The board has also been granted authorisation to
acquire shares in Nel on behalf of the company, for a total
nominal value not exceeding 9% of the share capital at any
given time. In addition, a separate authorisation to increase
the share capital of up to NOK 2 921 598 for issue of shares
in connection with incentive programs for employees was
granted at an extraordinary general meeting on 2 August
2023.
Transactions between the company and related parties,
including members of the board or persons employed by the
company either personally or through companies belonging
to related parties, must be based on terms achievable in
an open, free and independent market, or on a third-party
valuation.
Major transactions with related parties must be approved by
the general meeting.
Nel ASA
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Annual report 2022
55
5. Free transferability
The company’s shares are listed on the Oslo Stock Exchange
under the ticker “NEL” and are freely transferable. The Articles
of Association contain no restrictions on transferability.
6. General meeting
Shareholders can exercise their rights at general meetings,
and the company wants general meetings to be a meeting
place for shareholders and the board. The company will seek
to enable as many shareholders as possible to participate in
general meetings. Meeting documents will be published on
the company’s website no later than 21 days before a general
meeting. The company endeavours to ensure that meeting
documents are sufficiently detailed to enable shareholders to
take a view on all matters to be considered. The deadline for
notifying attendance at a general meeting is set as close to the
meeting as possible.
Shareholders who are unable to participate themselves may
vote by proxy. The proxy form will be designed so that it can
be used to vote on all matters up for consideration, and on
candidates for election.
In 2022, the annual general meeting was held on 21 April and
8.65 percent of the total share capital was represented. The
annual general meeting was conducted digitally, with a live
webcast and electronic voting on each item. An extraordinary
general meeting was held on 2 August and 10.14 percent
of the total share capital was represented. The extraordinary
general meeting was conducted physically at the company’s
headquarters in Oslo, Norway.
The company encourages board members and nomination
committee to attend general meetings. The external auditors
are also invited to attend.
In accordance with the articles of association, general meetings
are chaired by the board chair if no-one else is elected to do
so. Minutes of general meetings are published in the form of
stock exchange notifications and on the company’s website.
7. Nomination committee
In accordance with Nel’s articles of association, the general
meeting shall establish a nomination committee comprising
of three to five members. These must be shareholders
or representatives of shareholders. The nomination
committee evaluates and proposes board members to the
general meeting and makes recommendations on director
remuneration. No board members or representatives of
company management are members of the nomination
committee. Nomination committee members are elected
for a one-year term. At the general meeting on 21 April
2022, the following persons were elected to the nomination
committee and serve until the 2023 annual general meeting:
• Eivind Sars Veddeng, chair
• Leif Eriksrød, member
• Andreas Poole, member
8. Board of Directors
composition and
independence
The board members and chair of the board are elected by
the general meeting. The board’s composition is designed
both to represent the interests of all shareholders and meet
the company’s need for expertise, capacity, and balanced
decision-making. The board should function as an effective
collegiate body.
The board is elected for a one-year term, and board
members may stand for re-election. The CEO is not a
member of the board. According to its articles of association,
Nel’s board must have between four and seven members.
At the annual general meeting 21 April 2022, Ole Enger, chair
of the board, Hanne Blume, Finn Jebsen, Beatriz Malo de
Molina, Charlotta Falvin and Tom Røtjer were all re-elected to
the board. Jon André Løkke was elected as a new member of
the board.
Each of the board members are considered independent
from the company’s day-to-day management. The board
is qualified to assess the day-to-day management and
significant contracts entered into by the company on an
independent basis.
See also note 7.4 (group) and note 12 (parent company) for
transactions with related parties.
9. The work of the Board of
Directors
A plan for the boards’ work is prepared every year. The
board has also adopted instructions for the board and CEO,
detailing the work and responsibilities of the board and CEO,
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Corporate governance
respectively. The board ensures the company’s business is
properly organised and that plans and budgets are prepared.
The board’s plans and rules of procedure ensure the board
is kept informed of the company’s financial position and that
the business, asset management, and accounts are subject to
controls.
Nel’s Code of Conduct includes guidelines for how conflicts
of interests that may arise should be handled with. The
code applies to all members of the board and employees of
Nel. The board are not aware of any transactions that were
material between the group and its shareholders, board
members, executive management or related parties in 2022.
The chair of the board ensures the proper functioning of
the board. The chair of the board leads the board meetings
and prepares board matters in cooperation with the CEO.
The CFO keeps minutes of board meetings, which are
approved and signed by all board members. In addition to
ordinary board meetings, annual strategy meetings are held,
devoted to the in-depth assessment of major challenges
and opportunities for the company. The board manages
the company’s strategic planning and assesses its strategy
regularly.
The board evaluates its composition and the board work at
least once per year. The evaluation may also cover the way
in which the board functions, at both individual and group
level, in relation to the objectives that have been set for its
work. The evaluation reports are presented to the nomination
committee.
In 2022, the board conducted 13 board meetings with 100%
meeting attendance, with the exception of one meeting
where Board member Jebsen was unable to attend but
gave his input in advance. The meetings were held at
group headquarters in Oslo and/or virtual meetings due to
travel convenience, and also treated a number of issues by
circulation of documents.
The company has an audit committee consisting of 2
members from the board, which is governed by the
Norwegian Public Limited Liability Companies Act. The
audit committee assist the board in exercising its oversight
responsibility with respect to the integrity of the company’s
financial statements, financial reporting processes and
internal controls, risk management, compliance system and
the company’s environmental, social and governance (“ESG”)
reporting. With the broader mandate, the committee is
referred to as Board Audit, Risk and Sustainability Committee.
The members of the audit committee are appointed by
and from the members of the board, and currently consist
of Beatriz Malo de Molina as chair and Charlotta Falvin as
member. Current members are independent of the company’s
management. The audit committee conducted 7 meetings
with 100% meeting attendance in 2022.
The company has a remuneration committee, which consist
of 2 members from the board. The committee shall assist the
board in exercising its oversight responsibility, in particular
to compensation matters pertaining to the CEO and other
members of the executive management, compensation issues
of principal importance and strategic people process in the
company, in particular related to succession, recruitment,
talent and diversity and inclusion. The committee currently
consist of Hanne Blume as chair and Ole Enger as member.
The committee has held 7 meeting with 100% meeting
attendance in 2022. The committee was also involved in
discussions related to the recruitment of strategic positions
for Nel and key organisational adjustments through the year.
The Remuneration Committee has onboarded the new CEO
mid-2022.
10. Risk management and
internal controls
Risk management and internal controls are important to
Nel. They enable the company to achieve its strategic
objectives, and are an integral part of management decision-
making processes, the organisational structure, and internal
procedures and systems.
Nel’s enterprise risk management process is value driven
and aims to identify, assess and manage risk factors that
could impact the value of the company. The process is to
mitigate potential damages and loss, and to explore business
opportunities.
The enterprise risk management function has the
responsibility to facilitate the legal and operational risk
management activities and develop risk policies and tools as
well as maintaining an aggregated view of risk exposure. The
function reports to the CFO, with active involvement by Nel’s
General Counsel.
Risk management and internal control requirements have
been evaluated by management and the board, and a set
of appropriate procedures and our established framework
is inspired by the Committee of Sponsoring Organisations
of the Treadway Commission (COSO) ERM framework and
the ISO 31000 risk management standard. The materiality
of each risk factor is determined by assessing the likelihood
and consequence. Risks are evaluated to determine whether
the level is acceptable or unacceptable and to prioritise
those that have the greatest potential to impact our value.
Nel ASA
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Annual report 2022
57
We implement mitigating strategies to ensure that each
risk is optimally managed. Risk mitigation plans are based
on evaluations of the cost of control and potential impacts
relative to the benefits of reducing the risk. The operating
segments are responsible to maintain business continuity
plans. The post-mitigation residual risks are continually
monitored by the operating segments. The mitigation
strategies, residual risks and risk appetite are reviewed and
updated by the executive management during bi-yearly
dedicated business review meetings. The board believes that
expressing the company’s risk appetite within important areas
of its business activity helps to convey how the company
approaches and evaluates risk to investors, customers and
society at large. The audit committee performs ongoing
evaluations of the Company’s Enterprise Risk Management
process.
In this context, emphasis is also given to ensuring that
the company operates in accordance with accepted
ethical guidelines and values, including guidelines on how
employees can communicate matters relating to illegal or
unethical behaviour on the company’s part to the board.
Nel believes that its values and control procedures meet
requirements found within the environmental, social, and
governance domain, and are proportionate to the scope and
nature of its business.
Nel’s regular business activities entail exposure to various
types of risk. The company proactively manages such risks,
and the board regularly analyses its operations and potential
risk factors and takes steps to reduce risk exposure. Nel places
a strong emphasis on quality assurance, and has quality
systems implemented, or under implementation, in line with
the requirements applicable to its business operations.
The most significant risk factors are discussed in more detail
in the notes 6.1-6.4 to the annual accounts.
The company’s financial reporting complies with the laws
and regulations applicable to companies listed on the Oslo
Stock Exchange. The board reviews the company’s financial
position frequently through reporting and reviews at board
meetings and reviews the financial statements at the end of
every quarter. At least once per year, the board assesses the
company’s risk profile by reference to strategic, operational,
and transactional factors.
As a listed company, Nel has a special responsibility relating
to the insider trading rules, the provision of information, and
share trading. The company has guidelines to ensure board
members, senior management, and other insiders comply
with relevant legislation and rules relating to insider trading in
the company’s shares.
11. Board remuneration
Nel’s general meeting determines the remuneration of the
board based on a recommendation by the nomination
committee. Board remuneration must reflect the board’s
expertise and time investment, as well as the complexity
of the business and the fact that Nel is a listed company.
Remuneration takes the form of a fixed annual amount and is
not tied to the company’s performance or share price.
An assessment regarding the independence of the directors
and chair of the board is set out in section 8 above.
The board remuneration for 2022 is outlined in note 7.4 to
the annual accounts.
12. Remuneration of senior
management
The board prepares guidelines on the remuneration of the
company’s senior management. These guidelines, as well as
details of the remuneration packages and incentive schemes of
the CEO and other senior executives, are set out in the note 7.2
to the annual accounts.
The guidelines on the remuneration of senior management
must be submitted to the general meeting. The remuneration
policy was approved by the shareholders at the general
meeting held in 2021. The board considers that the
remuneration paid to senior management reflects market
practice and that the remuneration packages do not include
any unreasonable terms, for example in connection with
resignation or termination of employment.
In accordance with section 6-16b of the Norwegian Public
Limited Liability Companies Act, the board has prepared a
report on salary and other remuneration to the executive
management. The remuneration report for 2022 will be
presented to the general meeting in 2023 for an advisory vote.
The remuneration report will become available during March
2023, on www.nelhydrogen.com.
The shareholdings of executive management are outlined in
note 7.2 (group).
13. Information and
communication
The company publishes a financial calendar on an annual
basis, which includes the dates of general meetings and dates
for the presentation of interim reports. Presentation of the
58
Corporate governance
quarterly reports are broadcasted through webcasts. Press
releases and stock exchange notifications are typically posted
on the company’s website, www.nelhydrogen.com. All stock
exchange notifications are also available at www.newsweb.no.
The company complies with all applicable disclosure laws
and practice, including equal treatment requirements. The
ability to provide information about the company in addition
to published reports is restricted under stock exchange
regulations. Inside information is only released to persons
other than primary insiders when the company considers
it necessary, and then only in accordance with a system of
insider declarations and insider lists. The insider lists are
maintained by the CFO.
Notice to general meetings of shareholders is sent directly
to shareholders with known addresses unless they have
consented to receive these documents electronically. All
information sent to the shareholders is made available on
www.nelhydrogen.com when distributed.
Nel wishes to maintain a constructive, open dialogue with its
shareholders, analysts, and the stock market in general. The
company holds regular presentations for investors, analysts,
and shareholders. The company’s CEO is responsible for
external communication and investor relations. The CEO and
chair of the board are both authorised to speak on behalf of
the company and may delegate their authority in this regard
as they consider appropriate.
14. Company takeovers
In the event of a takeover situation, the company’s board and
management will endeavour to ensure the equal treatment
of shareholders. The board will ensure that shareholders are
given information and time to evaluate any bona fide bid and
will endeavour to provide a recommendation to shareholders
as to whether or not the bid should be accepted. The
board and management will help ensure that there are no
unnecessary disruptions to the business in the event of a
takeover. Moreover, such a situation will be governed by the
provisions applicable to listed companies.
15. Auditor
The external auditor attends the board meeting at which
the annual financial statements are approved. As part of
the approval, the board should at least once a year review
the company’s internal control procedures with the external
auditor, including weaknesses identified by the auditor and
proposals for improvement. The external auditor participates
in all meetings of the audit committee. The auditor presents
an annual audit plan to the audit committee. The summary of
the audit is presented to the audit committee and the board.
The board has adopted guidelines on management’s use of
the auditor for services other than auditing. The new Public
Audit Act entered into force on January 1, 2021. Extended
tasks including purchase of non-audit services and follow-
up of the external auditor are considered by the audit
committee. Non-audit services are subject to pre-approval
as defined by the audit committee. The fee payable to the
auditor is specified in note 7.3 to the annual accounts and
is categorised under the items statutory audit, attestation
and non-auditing services. The board submits proposals
regarding the fees payable for the statutory audit to the
general meeting for approval.
Nel ASA
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Annual report 2022
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OSLO, 27 FEBRUARY 2023
THE BOARD OF DIRECTORS
Ole Enger Beatriz Malo de Molina Charlotta Falvin
Chair Board member Board member
(Electronically signed) (Electronically signed) (Electronically signed)
Finn Jebsen Hanne Blume Tom Røtjer
Board member Board member Board member
(Electronically signed) (Electronically signed) (Electronically signed)
Jon André Løkke Håkon Volldal
Board member CEO
(Electronically signed) (Electronically signed)
60
6 Consolidated financial statements 2022
Nel group
Nel ASA
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Annual report 2022
61
Consolidated statement of comprehensive income ...................................................................................................................................... 62
Consolidated statement of financial position as of 31 December ............................................................................................................ 63
Consolidated statement of cash flows ............................................................................................................................................................... 65
Consolidated statement of changes in equity ................................................................................................................................................. 66
Note 1.1 Corporate information ....................................................................................................................................................................... 68
Note 1.2 Basis of preparation ............................................................................................................................................................................ 68
Note 1.3 Significant accounting policies......................................................................................................................................................... 69
Note 1.4 Changes in accounting policies ....................................................................................................................................................... 70
Note 1.5 Significant accounting judgements and estimation uncertainty ............................................................................................. 70
Note 2.1 Revenue from contracts with customers ....................................................................................................................................... 70
Note 2.2 Other operating income ................................................................................................................................................................... 75
Note 2.3 Segment information ......................................................................................................................................................................... 76
Note 2.4 Raw materials ....................................................................................................................................................................................... 78
Note 2.5 Personnel expenses ............................................................................................................................................................................ 78
Note 2.6 Other operating expenses ................................................................................................................................................................ 81
Note 2.7 Finance income and cost .................................................................................................................................................................. 81
Note 2.8 Income taxes ........................................................................................................................................................................................ 82
Note 2.9 Earnings per share .............................................................................................................................................................................. 84
Note 3.1 Intangible assets .................................................................................................................................................................................. 85
Note 3.2 Property, plant and equipment ....................................................................................................................................................... 92
Note 3.3 Leases .................................................................................................................................................................................................... 93
Note 3.4 Investments in associated companies and joint ventures ......................................................................................................... 98
Note 3.5 Non-current financial assets ............................................................................................................................................................. 99
Note 4.1 Inventories ............................................................................................................................................................................................ 100
Note 4.2 Trade receivables ................................................................................................................................................................................. 100
Note 4.3 Prepaid expenses and other current assets.................................................................................................................................. 101
Note 4.4 Cash and cash equivalents ............................................................................................................................................................... 103
Note 5.1 Share capital and shareholders ....................................................................................................................................................... 104
Note 5.2 Long-term debt and guarantees .................................................................................................................................................... 105
Note 5.3 Deferred income ................................................................................................................................................................................. 106
Note 5.4 Other liabilities ..................................................................................................................................................................................... 107
Note 5.5 Provisions .............................................................................................................................................................................................. 108
Note 6.1 Operational risk factors ..................................................................................................................................................................... 109
Note 6.2 Financial risk factors ........................................................................................................................................................................... 111
Note 6.3 Market risk factors .............................................................................................................................................................................. 114
Note 6.4 Climate-related risks and opportunities ........................................................................................................................................ 115
Note 6.5 Hedge accounting .............................................................................................................................................................................. 115
Note 6.6 Financial instruments .......................................................................................................................................................................... 118
Note 6.7 Contractual commitments and commitments for future investments ................................................................................ 119
Note 7.1 Composition of the group ................................................................................................................................................................ 120
Note 7.2 Executive management remuneration .......................................................................................................................................... 120
Note 7.3 External audit remuneration ............................................................................................................................................................. 121
Note 7.4 Related parties ..................................................................................................................................................................................... 122
Note 7.5 Events after the balance sheet date ................................................................................................................................ ............... 123
Note 7.6 Going concern ..................................................................................................................................................................................... 123
62
Consolidated financial statements
Consolidated statement of
comprehensive income
(Amounts in NOK thousands) Nel group
NOTE 2022 2021
Revenue from contracts with customers
2.1, 2.3
Other operating income 2.2 78 728 44 905
Total revenue and operating income 993 581 798 001
Raw materials 2.4 584 815 551 695
Personnel expenses 2.5 664 815 472 010
Depreciation and amortisation 3.1, 3.2 171 483 103 116
Impairment of tangible and intangible assets 3.1, 3.2 327 298 4 500
Other operating expenses 2.6 523 824 249 533
Total operating expenses 2 272 235 1 380 854
Operating loss -1 278 654 -582 853
Finance income 2.7 97 629 28 276
Finance costs 2.7 -5 972 -1 129 224
Share of profit (loss) from associates and joint ventures 3.4 0 -35
Pre-tax income (loss) -1 186 997 -1 683 836
Tax expense (-income) 2.8 -15 828 -16 984
Net income (loss) attributable to equity holders of the company -1 171 169 -1 666 852
OTHER COMPREHENSIVE INCOME THAT ARE OR MAY SUBSEQUENTLY BE RECLASSIFIED TO PROFIT OR LOSS (NET OF TAX)
Currency translation differences 65 035 -7 108
Cash flow hedges, effective portion of changes in fair value 6.5 -6 900 -3 086
Cash flow hedges, reclassified 6.5 -6 848 -3 244
Comprehensive income attributable to equity holders of the company -1 119 882 -1 680 290
Earnings per share (NOK) attributable to Nel shareholders 2.9 -0.76 -1.15
Diluted earnings per share (NOK) attributable to Nel shareholders 2.9 -0.76 -1.15
The accompanying notes are an integral part of the consolidated financial statements.
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(Amounts in NOK thousands) Nel group
ASSETS NOTE 2022 2021
NON-CURRENT ASSETS
Technology 3.1 547 387 496 579
Customer relationship 3.1 21 489 32 381
Goodwill 3.1 365 580 615 184
Property, plant and equipment 3.2, 3.3 785 488 623 514
Investments in associates and joint ventures 3.4 2 886 2 298
Non-current financial assets 3.5 250 072 92 889
Total non-current assets 1 972 902 1 862 845
CURRENT ASSETS
Inventories 4.1 504 595 328 465
Trade receivables 4.2 460 735 211 408
Contract assets 2.1 96 322 178 769
Other current assets 4.3 777 408 702 728
Cash and cash equivalents 4.4 3 138 550 2 722 769
Total current assets 4 977 610 4 144 139
TOTAL ASSETS 6 950 512 6 006 984
The accompanying notes are an integral part of the consolidated financial statements.
Consolidated statement of
financial position as of 31 December
64
Consolidated financial statements
(Amounts in NOK thousands) Nel group
EQUITY AND LIABILITIES NOTE 2022 2021
EQUITY
Share capital
5.1
Treasury shares 5.1 -84 -81
Share premium 5.1 7 098 186 5 596 248
Other capital reserves 5.1 61 768 53 422
Retained earnings 5.1 -2 142 805 -971 636
Other components of equity 5.1 119 878 68 591
Total equity 5 449 608 5 038 704
NON-CURRENT LIABILITIES
Deferred tax liabilities 2.8 45 529 48 543
Long-term debt 5.2 22 431 23 191
Lease liabilities 3.3 170 177 113 505
Deferred income 5.3 64 049 69 537
Other non-current liabilities 5.4 7 102 8 452
Total non-current liabilites 309 288 263 228
CURRENT LIABILITIES
Trade payables 201 744 132 962
Lease liabilities 3.3 30 438 19 916
Contract liabilities 2.1 672 291 360 821
Other current liabilities 5.4 133 704 103 246
Provisions 5.5 153 440 88 106
Total current liabilities 1 191 617 705 051
Total liabilities 1 500 905 968 279
TOTAL EQUITY AND LIABILITIES 6 950 512 6 006 984
The accompanying notes are an integral part of the consolidated financial statements.
Consolidated statement of
financial position as of 31 December
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(Amounts in NOK thousands) Nel group
NOTE 2022 2021
CASH FLOWS FROM OPERATING ACTIVITIES
Pre-tax income (loss)
-1 186 997
-1 683 836
Adjustments for interest expense 2.7 11 166 3 678
Depreciation, amortisation and impairment 3.1, 3.2 498 781 107 616
Change in fair value equity instruments 2.7, 4.3 30 614 1 113 189
Equity-settled share-based compensation expense 2.5 8 342 9
Change in provisions 5.5 65 334 13 371
Change in inventories 4.1 -176 130 -91 336
Change in trade receivables and contract balances 2.1, 4.2 144 590 6 987
Change in trade payables 68 782 51 392
Changes in other balances 4.3, 5.4 -155 062 29 471
Net cash flow from operating activities -690 580 -449 458
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment
3.2
-160 486 -258 283
Payments for capitalised technology 3.1 -118 251 -118 870
Purchase of other investments 3.5, 4.3 -206 450 -46 966
Investments in other financial assets 3.5 -5 296 -13 125
Proceeds from sales of property, plant and equipment 3.2 0 26 056
Investments in associates and joint ventures 3.4 -1 160 -1 272
Proceeds from sales of other investments 3.5, 4.3 88 555 38 844
Net cash flow from investing activities -403 088 -373 616
CASH FLOWS FROM FINANCING ACTIVITIES
Interests paid
2.7
-11 166 -3 678
Gross cash flow from share issues 5.1 1 545 866 1 255 103
Transaction costs from share issues 5.1 -23 426 -15 562
Payment of lease liabilities 3.3 -14 400 -15 467
Payment of non-current liabilities 5.2 -1 889 -4 464
Net cash flow from financing activities 1 494 985 1 215 932
Effect of exchange rate changes on cash 14 464 -2 943
Net change in cash and cash equivalents 415 781 389 915
Cash balance as of 01.01 4.4 2 722 769 2 332 854
Cash balance as of 31.12 4.4 3 138 550 2 722 769
The accompanying notes are an integral part of the consolidated financial statements.
Consolidated statement
of cash flows
66
Consolidated financial statements
(Amounts in NOK thousands) Nel group
SHARE
CAPITAL
TREASURY
SHARES
SHARE
PREMIUM
OTHER
RESERVE
RETAINED-
EARNINGS
CURRENCY
TRANSLATION
DIFFERENCE
HEDGING
RESERVE
TOTAL
EQUITY
Equity as of 31.12.2020 281 559 -79 4 367 306 43 937 693 563 70 585 11 444 5 468 316
Total comprehensive income -1 666 852 -7 108
-6 330 -1 680 290
Increase of capital 2021 10 600 1 228 940 1 239 541
Options and share program -1 1 9 485 9 485
Other changes 1 653 1 653
Equity as of 31.12.2021 292 160 -81 5 596 248 53 422 -971 636 63 477 5 114 5 038 704
Total comprehensive income -1 171 169 65 035
-13 748 -1 119 882
Increase of capital 2022
Options and share program
-3 3 8 346 8 346
Other changes - 0
Equity as of 31.12.2022 312 665 -84 7 098 186 61 768 -2 142 805 128 512 -8 634 5 449 608
Consolidated statement
of changes in equity
OSLO, 27 FEBRUARY 2023
THE BOARD OF DIRECTORS
Ole Enger Beatriz Malo de Molina Charlotta Falvin
Chair Board member Board member
(Electronically signed) (Electronically signed) (Electronically signed)
Finn Jebsen Hanne Blume Tom Røtjer
Board member Board member Board member
(Electronically signed) (Electronically signed) (Electronically signed)
Jon André Løkke Håkon Volldal
Board member CEO
(Electronically signed) (Electronically signed)
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Parent company financial statements
124
7 Parent company
financial statements
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Statement of comprehensive income ................................................................................................................................................................ 126
Statement of financial position as of 31 December ....................................................................................................................................... 127
Statement of financial position as of 31 December ....................................................................................................................................... 128
Statement of cash flows ........................................................................................................................................................................................ 130
Statement of changes in equity .......................................................................................................................................................................... 131
Note 1 Company information ........................................................................................................................................................................... 132
Note 2 Basis for preparation and significant accounting principles ........................................................................................................ 132
Note 3 Revenue from contracts with customers .......................................................................................................................................... 135
Note 4 Personnel expenses ............................................................................................................................................................................... 135
Note 5 Property, plant and equipment .......................................................................................................................................................... 137
Note 6 Other operating expenses ................................................................................................................................................................... 138
Note 7 Finance income and cost ..................................................................................................................................................................... 138
Note 8 Subsidiaries, associates and joint ventures ...................................................................................................................................... 139
Note 9 Income taxes ........................................................................................................................................................................................... 139
Note 10 Specification of balance sheet items ............................................................................................................................................... 141
Note 11 Other investments ............................................................................................................................................................................... 142
Note 12 Transactions with related parties ...................................................................................................................................................... 142
Note 13 Cash and cash equivalents ............................................................................................................................................................... 144
Note 14 Share capital and shareholders ........................................................................................................................................................ 144
Note 15 Lease liabilities ...................................................................................................................................................................................... 144
Note 16 Financial risk and derivatives ............................................................................................................................................................. 145
Note 17 Financial instruments........................................................................................................................................................................... 146
Note 18 Guarantees ............................................................................................................................................................................................ 147
Note 19 Subsequent events ............................................................................................................................................................................. 147
126
Parent company financial statements
Statement of
comprehensive income
(Amounts in NOK thousands) Nel ASA
NOTE 2022 2021
Revenue from contracts with customers
3
87 989 75 613
Other operating income 1 958 36
Total revenue and operating income 89 947 75 649
Personnel expenses 4 69 070 52 032
Depreciation and amortisation 5 3 463 2 645
Other operating expenses 6 57 251 42 050
Total operating expenses 129 783 96 728
Operating loss -39 837 -21 079
Finance income
7
133 857 46 853
Finance costs 7 -1 545 964 -50 195
Share of loss from associate and joint venture 8 0 -35
Net financial items -1 412 107 -3 377
Pre-tax income (loss) -1 451 943 -24 456
Tax expense 9 0 0
Net income (loss) attributable to equity holders of the company -1 451 943 -24 456
Other comprehensive income 0 0
Comprehensive income (loss) attributable to equity holders of the company -1 451 943 -24 456
Appropriation of comprehensive income (loss) and equity transfers
Dividends proposed
0 0
Retained earnings
-1 451 943 -24 456
Total appropriation
-1 451 943 -24 456
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Statement of financial position
as of 31 December
(Amounts in NOK thousands) Nel ASA
ASSETS NOTE 2022 2021
NON-CURRENT ASSETS
Property, plant and equipment
5
14 301 9 799
Investments in subsidiaries 8 2 485 429 2 784 947
Investments in associates and joint ventures 0 572
Non-current financial assets 10, 16, 17 159 011 13 118
Long-term receivables group 12 306 779 463 095
Total non-current assets 2 965 521 3 271 530
CURRENT ASSETS
Trade receivables 74 82
Other current assets 10, 11, 16, 17 80 828 108 779
Cash and cash equivalents 13 2 931 508 2 540 734
Receivables group 12 148 019 96 617
Total current assets 3 160 430 2 746 212
TOTAL ASSETS 6 125 950 6 017 742
128
Parent company financial statements
Statement of financial position
as of 31 December
(Amounts in NOK thousands) Nel ASA
EQUITY AND LIABILITIES NOTE 2022 2021
EQUITY
Paid in capital
Share capital 14 312 665 292 160
Treasury shares 14 -84 -81
Share premium 14 7 098 185 5 596 247
Other capital reserves 14 61 764 53 420
Accumulated deficits / Retained earnings 14 -1 431 539 20 405
Other components of equity 14 0 0
Total equity 6 040 992 5 962 150
NON-CURRENT LIABILITIES
Lease liabilities 15 9 631 6 983
Long-term debt group
12 16 098 1 555
Other non-current liabilities
10, 17 2 182 163
Total non-current liabilites
27 912 8 702
CURRENT LIABILITIES
Current liabilities
Trade payables 13 342 10 047
Lease liabilities
15
3 574 1 958
Provisions 2 399 445
Short-term liabilities group 12 12 565 17 792
Other non-current liabilities
10, 16, 17
25 166 16 646
Total current liabilities 57 046 46 889
Total liabilities
84 958 55 591
TOTAL EQUITY AND LIABILITIES
6 125 950 6 017 742
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OSLO, 27 FEBRUARY 2023
THE BOARD OF DIRECTORS
Ole Enger Beatriz Malo de Molina Charlotta Falvin
Chair Board member Board member
(Electronically signed) (Electronically signed) (Electronically signed)
Finn Jebsen Hanne Blume Tom Røtjer
Board member Board member Board member
(Electronically signed) (Electronically signed) (Electronically signed)
Jon André Løkke Håkon Volldal
Board member CEO
(Electronically signed) (Electronically signed)
130
Parent company financial statements
(Amounts in NOK thousands) Nel ASA
NOTE 2022 2021
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before tax
-1 451 943
-24 456
Adjustments for interest expense 7 614 543
Adjustments interests received 7, 12 -46 192 -27 118
Share of loss from associate and joint venture 8 0 35
Equity-settled share-based compensation expense 4 1 525 1 776
Depreciation 5 3 463 2 645
Impairment of financial assets 7 1 484 984 0
Change in fair value equity instruments 11 10 014 47 757
Change in provisions 1 954 -216
Change in account receivables, group receivables -51 395 -13 714
Change in trade payable and group payables -1 933 7 290
Changes in other current assets and other liabilities -32 794 -65 671
Net cash flow from operating activities -81 704 -71 127
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment
5 -841 -499
Loan given to subsidiaries
7 -917 931 -871 099
Investments in associates and joint ventures
8 0 -1 272
Investments in other financial assets
10 -206 451 -10 572
Proceeds from sales of other investments
10 78 735 39 509
Net cash flow from investing activities
-1 046 487 -843 932
CASH FLOWS FROM FINANCING ACTIVITIES
Interests paid
7 -614 -543
Gross cash flow from share issues
14 1 545 866 1 255 103
Transaction costs related to capital increases
14 -23 426 -15 562
Payment of lease liabilities
15 -2 861 -2 233
Net cash flow from financing activities
1 518 966 1 236 765
Net change in cash and cash equivalents
390 774 321 706
Cash balance as of 01.01
13 2 540 734 2 219 029
Cash balance as of 31.12
13 2 931 508 2 540 734
Statement
of cash flows
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(Amounts in NOK thousands) Nel ASA
SHARE
CAPITAL
SHARE
PREMIUM
OTHER
RESERVE
TREASURY
SHARES
RETAINED EARN-
INGS
TOTAL
EQUITY
Equity as of 31.12.2020 281 559 4 367 305 43 934 -79 44 861 4 737 580
Increase of capital 2021 10 600 1 228 940 1 239 541
Options and share program 1 9 486 -1 9 486
Total comprehensive income -24 456 -24 456
Equity as of 31.12.2021 292 160 5 596 247 53 420 -81 20 405 5 962 150
Increase of capital 2022 20 505 1 501 935 1 522 440
Options and share program 3 8 344 -3 8 344
Total comprehensive income -1 451 943 -1 451 943
Equity as of 31.12.2022 312 665 7 098 185 61 764 -84 -1 431 539 6 040 992
Statement of
changes in equity
132
Notes to the financial statements parent company
Note 1 Company information
Nel ASA (Nel) is a global, dedicated hydrogen company,
delivering optimal solutions to produce, store and distribute
hydrogen from renewable energy. The company is domiciled
in Norway. The company specializes in electrolyser
technology for production of renewable hydrogen, and
hydrogen fueling equipment for road-going vehicles. Nel’s
product offerings are key enablers for a renewable hydrogen
economy, making it possible to decarbonize various industries
such as transportation, refining, steel, and ammonia.
The group has two divisions: Nel Hydrogen Electrolyser and
Nel Hydrogen Fueling.
Nel ASA (org. no 979 938 799) was formed in 1998 and is a
Norwegian public limited company listed on the Oslo Stock
Exchange. The company’s head office is in Karenslyst allé
49, N-0279 Oslo, Norway. The parent company financial
statements were approved by the Board of Directors on 27
February 2023.
Note 2 Basis for preparation
and significant accounting
principles
STATEMENT OF COMPLIANCE
The financial statements of Nel ASA have been prepared and
presented in accordance with simplified IFRS pursuant to
section 3-9 of the Norwegian Accounting Act.
BASIS FOR PREPARATION
These financial statements have been prepared on a historical
cost basis, except for certain financial instruments, which are
measured at fair value.
ACCOUNTING ESTIMATES AND
JUDGEMENTS
In preparing the financial statements, assumptions and
estimates that have had effect on the amounts and
presentation of assets and liabilities, income and expenses
and contingent liabilities must be made. Actual results could
differ from these assumptions and estimates.
FOREIGN CURRENCY TRANSLATION
The functional currency and presentation currency of the
company is Norwegian kroner (NOK). Transactions in
foreign currency are translated at the rate applicable on
the transaction date. Monetary items in a foreign currency
are translated into NOK using the exchange rate applicable
on the balance sheet date. Non-monetary items that are
measured at their historical cost expressed in a foreign
currency are translated into NOK using the exchange rate
applicable on the transaction date. Non-monetary items
that are measured at their fair value expressed in a foreign
currency are translated at the exchange rate applicable on
the balance sheet date.
CHANGES IN ACCOUNTING POLICIES
A few amendments to IFRS have been implemented for
the first time in 2022. The amendments did not have any
material impact for the parent company. In addition, several
amendments to IFRS are issued up to the date of issuance
of these financial statements but are not yet effective. The
company has not applied the new IFRSs and the impact of
applying the amendments is not expected to have a material
impact on the Company’s financial statements.
DEFINITION AND APPLYING OF
MATERIALITY JUDGEMENTS IN
PREPARATION OF THESE FINANCIAL
STATEMENTS
The financial statements aim to provide useful financial
information which increase the understandability of Nel and
its performance. To meet the information needs of its primary
users, Nel apply materiality judgments which are necessary
to meet this objective, and Nel has made such judgments
related to recognition, measurement, presentation and
disclosures. Within these financial statements information is
considered material if omitting, misstating or obscuring it
could reasonably be expected to influence decisions taken
by primary users based on the information provided. In
practice this will lead to Nel omitting certain information if
7.1 Notes to the financial
statements parent company
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it is assessed it will obscure the material information. The
materiality judgments are reassessed at each reporting
date and updated based on changed facts and Nel specific
circumstances.
SEGMENT INFORMATION
Nel ASA operates with only one operating segments,
providing management services to subsidiaries. A separate
disclosure for segment information is therefore not applicable.
SIGNIFICANT ACCOUNTING JUDGEMENTS
AND ESTIMATION UNCERTAINTY
The preparation of financial statements requires management
to make judgements and estimates that influence amounts
recognised in certain accounts for assets, liabilities, income
and expenses. The actual results may deviate from such
assumptions. Estimates and underlying assumptions are
subject to continuous assessment.
REVENUE FROM CONTRACTS WITH
CUSTOMERS
In general, revenue comprises sale of intercompany services.
These are recognized when the services are delivered based
on intragroup allocation of costs.
PERSONNEL EXPENSES
Wages, salaries, bonuses, pension and social security
contributions, paid annual leave and sick leave are accrued
in the period in which the associated services are rendered
by employees of the company. The company has pension
plans for employees that are classified as defined contribution
plans. Contributions to defined contribution schemes are
recognised in the statement of comprehensive income in the
period in which the contribution amounts are earned by the
employees.
The company has an equity-settled share option program for
all employees. The Company uses the Black-Scholes-Merton
option pricing model at time of grant to determine the impact
of stock option grants in accordance with IFRS 2 - Share-
based payment. Refer to group financial statements note 2.5
for further accounting policies, including assumptions and
social security provisions.
For further information refer note 4 – Personnel expenses.
FINANCIAL INSTRUMENTS AND FAIR
VALUE
Nel uses the following hierarchy for determining and
disclosing the fair value of financial instruments by valuation
technique:
Level 1: Inputs are quoted prices in active markets for
identical assets or liabilities that are accessible at the
measurement date.
Level 2: The fair value of financial instruments that are not
quoted in an active market is determined using valuation
techniques which maximise the use of observable market
price and rely as little as possible on entity-specific estimates.
Level 3: Unobservable inputs are used to measure fair value
to the extent that relevant observable inputs are not available,
thereby allowing for situations in which there is little, if any,
market activity for the asset or liability at the measurement
date. Techniques that use inputs that have a significant effect
on the recorded fair value that are not based on observable
market data.
The Company has assessed that cash and short-term
deposits, trade receivables, other current assets, trade
payables and other current liabilities’ carrying amounts is a
reasonable approximation of their fair value largely due to the
short-term maturities of these instruments.
The Company enters into forward exchange contracts with
financial institutions, where the fair value of such instruments
is based on valuation techniques including market observable
inputs. The most frequently applied valuation techniques
include forward pricing and swap models using net present
value calculations. The models used incorporate various inputs,
including the credit quality of counterparties, foreign exchange
spot and forward rates and interest rate curves. The valuation
is performed by banks or external valuation providers.
INTEREST INCOME AND EXPENSES
Interest income and expenses are recognised in the statement
of comprehensive income within ‘finance income’ and
‘finance cost’ as they are accrued, based on the effective
interest method.
INCOME TAX EXPENSE
Income tax expense in the statement of comprehensive
income for the year comprises current tax and changes
in deferred tax. Income tax expense is recognised in the
statement of comprehensive income.
134
Notes to the financial statements parent company
Current tax is the expected tax payable on the taxable income
for the year and any adjustment to tax payable in respect
of previous years. Uncertain tax positions and potential tax
exposures are analysed individually and the best estimate
of the probable amount for liabilities to be paid (unpaid
potential tax exposure amounts, including penalties) and
virtually certain amounts for assets to be received (disputed
tax positions for which payment has already been made) in
each case are recognised within current tax or deferred tax as
appropriate.
Deferred tax assets and liabilities are recognised for the
future tax consequences attributable to differences between
financial statements and their respective tax bases, subject
to the initial recognition exemption. The amount of deferred
tax provided is based on the expected manner of realisation
or settlement of the carrying amount of assets and liabilities,
using tax rates enacted or substantially enacted at the
balance sheet date.
A deferred tax asset is recognised only to the extent that it is
probable that future taxable profits will be available against
which the asset can be utilised. For a deferred tax asset to
be recognised based on future taxable profits, convincing
evidence is required.
SUBSIDIARIES
Subsidiaries are all entities controlled by Nel ASA. Control
is achieved when the company is exposed, or has rights, to
variable returns from its involvement with the investee and
has the ability to affect those returns through its power over
the investee.
Shares in subsidiaries are presented according to the cost
method. Shares in subsidiaries are reviewed for impairment
whenever events or changes in circumstances indicate
that the carrying amount may exceed the fair value of the
investment. Indications may be operating losses or adverse
market conditions. Fair value of the investment is estimated
based on valuation model techniques. If it is considered
probable that the fair value is below Nel’s carrying value,
the investment is impaired. The impairment is reversed if the
impairment situation is no longer present.
INVESTMENT IN ASSOCIATED COMPANIES
AND JOINT VENTURES
The company’s investments in its associates and joint ventures
are accounted for using the equity method. An associate
is an entity where the company has significant influence. A
joint venture is an entity where the company has joint control
contractually together with one or several other parties.
CASH AND CASH EQUIVALENTS
Cash includes cash in hand and at bank. Cash equivalents
are short-term liquid investments that can be immediately
converted into a known amount of cash and have a
maximum term to maturity of three months.
EVENTS AFTER THE REPORTING PERIOD
New information of the company’s financial position on the
end of the reporting period which becomes known after the
reporting period, is recorded in the annual accounts. Events
after the reporting period that do not affect the company’s
financial position on the end of the reporting period, but
which will affect the company’s financial position in the future
are disclosed, if significant.
STATEMENT OF CASH FLOW
The cash flow statement is prepared using the indirect
method.
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Note 3 Revenue from contracts with customers
(Amounts in NOK thousands)
REVENUES BY GEOGRAPHIC REGION BASED ON CUSTOMER LOCATION 2022 2021
Norway
36,849 16,166
United States
30,922 32,327
Denmark
18,498 22,653
South Korea
1,719 4,466
Total
87,989 75,613
All revenues in 2022 and 2021 are internal revenue from management services. Revenues are recognised over time based
on cost-to-cost input method. Billings occur at the end of each year for all cumulative costs incurred plus recognised profit,
thus, there are no contract balances at year end. Both contract assets and the billings are recognised as current assets within
‘Receivables Group’ in the statement of financial position and is an unconditional right to payment.
Note 4 Personnel expenses
(Amounts in NOK thousands)
SALARIES AND PERSONNEL EXPENSES 2022 2021
Salaries 51,019 36,928
Social security tax
*
9,423 7,729
Pension expense 4,441 3,442
Other payroll expenses
**
4,186 3,933
Total 69,070 52,032
*
Social security tax includes provisions for social security related to the share option program.
**
Included in this amount are expenses amounting to NOK 2.0 (1.8) million related to the share option program.
The company has a share option program for all employees. For information of the company’s share option program refer to
group accounts disclosure 2.5
Average number of FTEs
23 13
Pension
The company has a defined contribution pension plan for its employees that meet the requirements of the Pension Acts of
Norway.
REMUNERATION OF MANAGEMENT 2022 SALARY BONUS
PENSION
EXPENSE
OTHER
REMUNERATION
1)
TOTAL
REMUNERATION
Håkon Volldal, CEO
2)
2 156 589 96 0 2 842
Jon André Løkke, CEO
3)
2 297 1 563 68 1 500 5 428
Kjell Christian Bjørnsen, CFO 2 837 71 191 0 3 099
Anders Søreng, CTO 2 381 62 191 894 3 528
Hans Hide, SVP Projects 2 122 52 191 872 3 236
Stein Ove Erdal, Vice President Legal and General Counsel 2 192 57 191 872 3 311
Caroline Duyckaerts, Chief Human Resources Officer 1 866 50 191 0 2 107
Total 15 852 2 444 1 117 4 137 23 550
1)
Other remuneration is mainly related to share options
2)
Employed in Nel from July 2022. Has a six months notice period, plus is entitled to six months severence pay, if terminated by company.
3)
Left Nel in June 2022
136
Notes to the financial statements parent company
REMUNERATION OF MANAGEMENT 2021 SALARY BONUS
PENSION
EXPENSE
OTHER
REMUNERATION
1)
TOTAL
REMUNERATION
Jon André Løkke, CEO
2)
3 015 753 181 0 3 949
Kjell Christian Bjørnsen, CFO 2 579 0 181 0 2 760
Anders Søreng, CTO 2 226 0 181 596 3 003
Hans Hide, SVP Projects 1 906 0 181 581 2 668
Stein Ove Erdal, Vice President Legal and General Counsel 2 070 0 181 581 2 832
Caroline Duyckaerts, Chief Human Resources Officer 1 632 0 181 0 1 813
Total 13 428 753 1,087 1 758 17 026
1)
Other remuneration is mainly related to share options
2)
Jon André Løkke has a six months notice period, plus is entitled to six months severence pay.
SHARE OPTION PROGRAM
To incentivize and retain key employees, Nel currently have
a share-based incentive plans, a share option program.
Historically, the share option program was groupwide and
included all employees in the group. This program ended in
2022, thus no new share options has been issued in 2022.
All options issued have only service-time based vesting
conditions. Vesting requires the option holder still to be an
employee in the Group. The share-based payment is equity-
settled. Each option, when exercised, will give the right to
acquire one share in the Group. The options are granted
without consideration.
Options granted July 2019:
A total of 2.1 million share options were granted. Pursuant to
the vesting schedule, 40% of the options will vest two years
after the day of grant, and 60% of the options will vest three
years after the day of grant. The exercise price is equal NOK
7.8 per share based on the average price of the Nel ASA
share price the five trading days before grant date (NOK 7.22)
and including an 8% premium. Gain per instrument is capped
at NOK 5.00 maximum per share option. The options that
have not been exercised will lapse 4 years after the date of
grant.
Options granted July 2020:
A total of 2.2 million share options were granted. Pursuant to
the vesting schedule, 40% of the options will vest two years
after the day of grant, and 60% of the options will vest three
years after the day of grant. The exercise price is equal NOK
21.72 per share based on the average price of the Nel ASA
share price the five trading days before grant date (NOK
20.11) and including an 8% premium. Gain per instrument is
capped at NOK 5.00 maximum per share option. The options
that have not been exercised will lapse 4 years after the date
of grant.
Options granted July 2021:
A total of 1.3 million share options were granted. Pursuant to
the vesting schedule, 40% of the options will vest two years
after the day of grant, and 60% of the options will vest three
years after the day of grant. The exercise price is equal NOK
15.125 per share based on the higher of the average price of
the Nel ASA share the last five trading days and the closing
price of the Nel ASA share on the grant date (NOK 14.00) and
including an 8% premium. Gain per instrument is capped at
NOK 10.00 maximum per share option. The options that have
not been exercised will lapse 4 years after the date of grant.
SHARE OPTION
PROGRAM
OPENING
BALANCE GRANTED
EXER-
CISED FORFEITED
CLOSING
BALANCE STRIKE PRICE VALUE
1)
REMAINING
CONTRACTUAL
LIFE
July 2019
2)
888 0 -592 -590 -294 7.80 5.00 0.51
July 2020
2)
1 865 0 0 -326 1 539 21.72 - 1.51
July 2021
2)
1 348 1 348 0 0 2 697 12.10 - 2.51
TOTAL 4 101 1 348 -592 -916 3 942
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NAME 2023 2024 2025 TOTAL 2024 2025 2026
EXPENSE
FOR THE
PERIOD
3)
Kjell Christian Bjørnsen 254 93 0 476 0 321 155 250
Anders Søreng 248 93 0 465 0 310 155 277
Hans Hide 254 96 0 476 0 316 160 288
Stein Ove Erdal 274 96 0 510 0 350 160 303
Caroline Duyckaerts 62 93 0 155 0 0 155 114
Other employees 606 1,072 732 1,860 343 568 949 7,300
TOTAL 1,698 1,543 732 3,942 343 1,865 1,734 8,532
1)
The value of the share options equals share price less strike price, capped at NOK 5.0 for 2019 and 2020 program, and NOK 10.0 for 2021 program.
2)
All share options are granted, vested and expired at the beginning of July in a given fiscal year.
3)
Cost of period does not include social security”
Note 5 Property, plant and equipment
Property, plant and equipment comprise owned and leased assets
PROPERTY, PLANT AND EQUIPMENT COMPRISE
OWNED AND LEASED ASSETS
OFFICE MACHINES
AND OTHER
EQUIPMENT
TECHNICAL
INSTALLATIONS
RIGHT-OF-USE
ASSETS TOTAL
Carrying amount as of 31.12.2021 915 85 8 799 9 799
Carrying amount as of 31.12.2022 1 393 63 12 845 14 301
Useful life 3 years 5 years 5 years
Depreciation plan Straight-line Straight-line Straight-line
138
Notes to the financial statements parent company
Note 6 Other operating expenses
SPECIFICATION OF OTHER OPERATING EXPENSES: 2022 2021
Hardware and common cost office premises 1 637 2 474
Administrative costs 14 566 12 690
Professional fees 37 291 26 109
Travel expenses 3 756 777
Total 57 251 42 050
Auditor fees
FEES TO THE AUDITOR 2022 2021
Statutory auditing services 1 610 1 587
Attestation services 75 175
Non-auditing services 0 327
Total 1 685 2 089
Amounts are exclusive VAT
Note 7 Finance income and cost
2022 2021
Internal interest income
46 192 26 839
Interest income 71 442 19 735
Change in fair value equity instruments
13 889 0
Other
2 335 279
Finance income
133 857 46 853
Interest expense
-57
-194
Interest expense lease liabilities -557 -349
Impairment shares in subsidiaries -1 484 984 0
Net foreign exchange gain/(loss) 58 654 -1 871
Expected credit loss receivables from subsidiaries -94 624 0
Change in fair value equity instruments -23 903 -47 757
Other -492 -24
Finance cost -1 545 964 -50 195
Net finance income (cost) -1 412 107 -3 342
The increase in book value of shares in subsidiaries are mainly debt conversions. Refer note 12 for additional information of debt
conversions. In addition, there is an increase in book value from the established group share option program.
Changes in fair value equity instruments is entirely from shareholding in Nikola Corporation, see note 12 for additional
information.
The net foreign exchange gain(loss) is mainly the unrealised currency exchange effectes related to internal loans
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Note 8 Subsidiaries, associates and joint ventures
COMPANY OWNERSHIP
REGISTERED
OFFICE
FUNCTIONAL
CURRENCY
TOTAL EQUITY
IN 2022
(FUNCTION-
AL CURRENCY
THOUSANDS)
NET INCOME(LOSS)
2022
(FUNCTIONAL
CURRENCY
THOUSANDS)
CARRYING
VALUE 2022
(NOK
THOUSANDS)
CARRYING VALUE
2021 (NOK
THOUSANDS)
Nel Hydrogen Electrolyser AS 100 % Norway NOK 511 721 -298 708 1 301 047 799 334
Proton Energy Systems Inc 100 % USA USD 23 944 -19 645 1 147 328 895 509
Nel Hydrogen A/S 100 % Denmark DKK 79 105 -268 418 0 995 953
Nel Hydrogen Inc 100 % USA USD 2 741 -7 230 0 43 249
Nel Korea Co. Ltd 100 % South Korea KRW -10 231 791 -3 503 259 0 13 846
Nel Fuel AS 100 % Norway NOK 457 840 -25 848 37 055 37 055
Total 2 485 429 2 784 947
The increase in book value of shares in subsidiaries are mainly debt conversions. Refer note 12 for additional information of debt
conversions. In addition, there is an increase in book value from the established group share option program.
Note 9 Income taxes
CALCULATIONS OF THE TAX BASE FOR THE YEAR 2022 2021
Income (loss) before tax
-1 451 943
-24 456
Permanent differences 1 598 495 35 847
Change in temporary differences 2 519 940
Use of tax losses carried forward -149 070 -12 331
The year's taxable income 0 0
Tax rate 22 % 22 %
Income (loss) before tax -1 451 943 -24 456
Tax this years loss, estimated -319 428 -5 380
Tax effect of:
Permanent differences 351 669 7 886
Change in temporary differences -11 922 -10 507
Prior years adjustment 0 419
Change in not recognised deferred tax assets (tax liabilities) -20 320 7 581
Total income tax expense (income) 0 0
Income tax expense (income) comprises
Income tax payable
0 0
Change in deferred tax
0 0
Total income tax expense (income)
0 0
140
Notes to the financial statements parent company
CALCULATIONS OF THE TAX BASE FOR THE YEAR 2022 2021
Specification of temporary differences:
Property, plant and equipment and goodwill -288 -353
Leases -360 -143
Provisions for liabilities -4 720 -2 354
Shares and other investments 0 54 189
Tax losses carry forward -374 637 -523 707
Basis for deferred tax asset -380 005 -472 368
Nominal tax rates for next year 22 % 22 %
Deferred tax asset -83 601 -103 921
Deferred tax asset not recognised in Statement of financial position -83 601 -103 921
Deferred tax asset in the Statement of financial position 0 0
The majority of the deferred tax assets are related to loss carry forward. As of 31 December 2022 it is considered not likely that
the tax loss carry forward will be fully utilised in the near future, therefore the deferred tax assets are not capitalised.
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Note 10 Specification of balance sheet items
SPECIFICATION OF OTHER CURRENT ASSETS: 2022 2021
Equity instruments 14 461 96 320
Other short-term investments 61 182 332
Prepayments 3 840 3 762
Fair value of currency contracts 438 8 349
Other current receivables 908 16
Total 80 828 108 779
SPECIFICATION OF NON-CURRENT FINANCIAL ASSETS: 2022 2021
Other non-current investments 158 823 11 242
Fair value of currency contracts 189 1 877
Total 159 011 13 118
SPECIFICATION OF OTHER CURRENT LIABILITIES: 2022 2021
Vacation allowance and other salary related accruals 8 191 8 082
VAT net payables 6 099 1 083
Fair value of currency contracts 7 740 4 127
Other current liabilities 3 136 3 355
Total 25 166 16 646
SPECIFICATION OF OTHER NON-CURRENT LIABILITIES: 2022 2021
Fair value of currency contracts 2 182 163
Total 2 182 163
142
Notes to the financial statements parent company
Note 11 Other investments
The fair value of Nel’s shareholding in Hyon AS per 31. December 2022 is based on quoted prices in an active market (level 1 in
fair value hierarchy) after the listing of Hyon AS on Euronext Growth on January 21, 2022. Fair value of shareholding in Hyon AS
per 31 December 2022 shareholding is 14.5 (0.6) million recognised within ‘other current assets. The shares are subject to a lock-
up period from the IPO. This lock-up period expires on January 21, 2023. Changes in fair value recognised in profit or loss within
‘finance income’ is 13.9 (0) million in 2022.
The company has sold all 1.106.520 Nikola shares during 2022 at an average share price 6.75 and USD/NOK 9.69. Total USD
and NOK received equals 7.471.721 and 72.417.203, respectively. Total realized gain was NOK 30.3 million, or 72% increase since
investment NOK 42.1 mill. P&L loss in 2022 equals NOK 23.9 million.
Note 12 Transactions with related parties
LONG TERM INTEREST BEARING
RECEIVABLES GROUP 2021
LOAN
ISSUE
DEBT
CONVERSION
ACCRUED
INTERESTS 2022
FX TRANSLATION
EFFECTS OTHER 2022
Nel Hydrogen Electrolyser AS
120,876
390,513 -500,000 13,849 0 0 25,238
Proton Energy Systems Inc 90,598 228,384 -249,420 10,682 20,442 0 100,686
Nel Hydrogen A/S 37,388 327,236 -280,020 10,155 13,185 0 107,944
Nel Hydrogen Inc 85,062 59,113 -149,652 5,315 10,460 0 10,298
Nel Korea Co. Ltd 116,443 0 0 6,068 6,348 -94,624 34,235
Nel Fuel AS 10,895 0 0 111 0 0 11,006
Nel Hydrogen Electrolyser Belgium BV 0 1,254 0 12 8 0 1,274
Total 461,261 1,006,501 -1,179,092 46,192 50,443 -94,624 290,681
In the course of the ordinary business, intercompany financing is provided from Nel ASA to its subsidiaries. Long-term financing
is interest bearing and priced at arm’s length terms using a NIBOR 3 month interest rate + 3%-point margin.
LONG-TERM RECEIVABLE FINANCIAL LIABILITY
FINANCIAL GUARANTEES 2022 2021 2022 2021
Nel Hydrogen Electrolyser AS 15 337 772 15 334 717
Proton Energy Systems Inc 588 1 062 591 838
Nel Hydrogen A/S 110 0 110 0
Nel Korea Co. Ltd 63 0 63 0
Total 16 098 1 834 16 098 1 555
Refer note 18 for additional information of financial guarantees.
CURRENT ASSETS 2022 2021
Nel Hydrogen Electrolyser AS 78,656 29,264
Proton Energy Systems Inc 31,391 31,340
Nel Hydrogen A/S 26,190 26,517
Nel Hydrogen Inc 4,990 4,904
Nel Korea Co. Ltd 6,793 4,591
Total 148,019 96,617
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CURRENT LIABILITIES 2022 2021
Nel Hydrogen Electrolyser AS
6,463 12,905
Proton Energy Systems Inc
789 1,978
Nel Hydrogen A/S 3,705 2,910
Nel Hydrogen Electrolyser Belgium BV 1,608 0
Total
12,565 17,792
Current liabilities are mainly related to fair value of hedging instruments offered to subsidiaries. See Note 16 for additional
information.
All related party transactions have been carried out as part of the normal course of business and at arm’s length.
Nel ASA has during 2022 charged NOK 88 (75.6) million for corporate services provided to its subsidiaries. The management
services are priced with the cost plus method applying a 5 % mark-up for low value services. The management fee has been
allocated to the subsidiaries based on revenue, operating expenses and capital expenditures as allocation keys.
INTERNAL REVENUES 2022 2021
Nel Hydrogen Electrolyser AS
36,849 16,166
Proton Energy Systems Inc
26,395 27,731
Nel Hydrogen A/S 18,498 22,653
Nel Hydrogen Inc 4,527 4,596
Nel Korea Co. Ltd 1,719 4,466
Total
87,989 75,613
Board of Directors
Remuneration of Board of Directors is disclosed in note 7.4 in the consolidated financial statements.
144
Notes to the financial statements parent company
Note 13 Cash and cash equivalents
2022 2021
Cash and cash equivalents 2,929,035 2,538,485
Restricted cash (witheld employee taxes) 2,472 2,249
Total 2,931,508 2,540,734
Cash and cash equivalents are 99% in the Norwegian Krone (NOK) at the end of 2022. Approximately NOK 2.5 billion is placed
in 30-days locked interest accounts in several different banks.
Note 14 Share capital and shareholders
For information of shareholders as of 31 December 2022, shares hold by executive management and the board of directors
please refer to Note 7.2 and 7.4, respectively, in the consolidated financial statements. For information of top 20 shareholders in
Nel ASA refer to note 5.1 in the consolidated financial statements.
Note 15 Lease liabilities
Set out below are the carrying amounts of lease liabilities (included under other long-term debt and other current liabilities) and
the movements during the period:
2022 2021
1. January 8,942 786
Additions 7,243 8,996
Remeasurement -119 1,391
Accretion of interest 557 350
Lease payments -3,418 -2,582
Balance as of 31.12. 13,205 8,942
Current 3,574 1,958
Non-current 9,631 6,983
Balance as of 31.12. 13,205 8,942
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145
Maturity analysis for lease liabilities (undiscounted cash flows)
2023 2024 2025 2026 >2026 TOTAL
Lease liabilities 3,662 3,619 3,605 3,187 262 14,335
(Amounts in NOK thousands)
2022 2021
Balance as of 01.01.
8,942 786
Cash flows principal amount
-2,861 -2,231
Cash flows interests -557 -352
Non-cash changes:
Additions and remeasurements 7,124 10,386
Accretion of interest expense 557 352
Balance as of 31.12.
13,205 8,942
Note 16 Financial risk and derivatives
Financial risks in Nel and the use of derivative instruments are described in note 6.2 to the consolidated financial statement.
Nel ASA offers currency derivatives to subsidiaries using such instruments for risk management. The derivatives are measured
at fair value (level 2 in fair value hierarchy), using valuation techniques which maximise the use of observable market price. The
contracts with financial institutions are back-to-back with subsidiaries, thus, the contract has no P&L impact for Nel ASA. At the
end of 2022 and 2021, Nel is committed to the following outstanding forward foreign exchange contracts with subsidiaries:
2022 2021
Forward foreign exchange contracts (Nel Group internal), notional amount:
Current assets
438 8,176
Non-current assets
189 1,877
Current liabilities
-7,740 -4,127
Non-current liabilities
-2,182 -163
Total
-9,296 5,762
The contracts represent the subsidiaries exposure in US dollars, Euro, Swedish Krone and British pounds. The contracts mature
no later than 2024.
146
Notes to the financial statements parent company
Note 17 Financial instruments
Financial instruments and fair values
2022
CARRYING AMOUNT FAIR VALUE
FAIR VALUE
- HEDGING
INSTRUMENTS
MANDATORILY
AT FVTPL
- OTHERS
FINANCIAL ASSETS
AND LIABILTIES AT
AMORTISED COST TOTAL LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
Assets
Financial assets measured at
fair value
Forward exchange contracts 626
626 626 626
Financial asset
- equity instruments 14 461 14 461 14 461 14 461
SUM 626 14 461 15 087 14 461 626 0 15 087
Liabilities
Financial liabilities measured at
fair value
Forward exchange contracts
-9 922 -9 922 -9 922 -9 922
SUM -9 922 -9 922 -9 922 -9 922
2021
CARRYING AMOUNT FAIR VALUE
FAIR VALUE
- HEDGING
INSTRUMENTS
MANDATORILY
AT FVTPL
- OTHERS
FINANCIAL ASSETS
AND LIABILTIES AT
AMORTISED COST TOTAL LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
Assets
Financial assets measured at
fair value
Forward exchange contracts 10 226
10 226 10 226 10 226
Financial asset
- equity instruments 96 320 96 320 96 320 96 320
SUM 10 226 96 320 106 545 96 320 10 226 0 106 545
Liabilities
Financial liabilities measured at
fair value
Forward exchange contracts
-4 290 -4 290 -4 290 -4 290
SUM -4 290 -4 290 -4 290 -4 290
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147
Note 18 Guarantees
Nel provides guarantees arising in the ordinary course of
business including stand-by letters of credit, performance
bonds and various payment, financial guarantees and parent
company guarantees. All commercial guarantees are on
behalf of subsidiaries.
Total financial guarantees recognised as financial liability is
NOK 16.1 (1.6) million as of 31. December 2022. The financial
liabilities will be amortised over the lifetime of the guarantees,
which is in the range of 1-7 years.
Note 19 Subsequent events
Information about the group’s financial position that has
occurred after the balance sheet date is disclosed if the
information is considered to be significant for the group’s
current financial statements and future position.
148
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149
Nel discloses alternative performance measures (APMs) in addition to those normally required by IFRS. This is based on the
group’s experience that APMs are frequently used by analysts, investors and other parties as supplemental information.
The purpose of APMs is to provide an enhanced insight into the operations, financing and future prospect of the group.
Management also uses these measures internally to drive performance in terms of monitoring operating performance and
long-term target setting. APMs are adjusted IFRS measures that are defined, calculated and used in a consistent and transparent
manner over the years and across the group where relevant.
Financial APMs should not be considered as a substitute for measures of performance in accordance with the IFRS.
NEL’S FINANCIAL APMs
EBITDA: is defined as earnings before interest, tax, depreciation, amortisation and impairment. EBITDA corresponds to
operating profit/(loss) plus depreciation, amortisation and impairment.
EBITDA margin: is defined as EBITDA divided by revenue and other operating income.
Equity ratio: is defined as total equity divided by total assets.
Order intake: is defined as firm purchase orders with agreed price, volume, timing, terms and conditions entered within a
given period. The order intake includes both contracts and change orders. For service contracts and contracts with uncertain
transaction price, the order intake is based on estimated revenue. The measure does not include potential change orders.
Order backlog: is defined as firm purchase orders with agreed price, volume, timing, terms and conditions and where revenue
is yet to be recognised.
8 Alternative Performance Measures
150
9 Auditor’s report
Statsautoriserte revisorer
Ernst & Young AS
Dronning Eufemias gate 6a, 0191 Oslo
Postboks 1156 Sentrum, 0107 Oslo
Foretaksregisteret: NO 976 389 387 MVA
Tlf: +47 24 00 24 00
www.ey.no
Medlemmer av Den norske Revisorforening
A member firm of Ernst & Young Global Limited
INDEPENDENT AUDITOR'S REPORT
To the Annual Shareholders' Meeting of Nel ASA
Report on the audit of the financial statements
Opinion
We have audited the financial statements of Nel ASA (the Company) which comprise the financial
statements of the Company and the consolidated financial statements of the Company and its
subsidiaries (the Group). The financial statements of the Company comprise statement of financial
position as at 31 December 2022 and statement of comprehensive income, statement of cash flows and
statement of changes in equity for the year then ended and notes to the financial statements, including a
summary of significant accounting policies. The consolidated financial statements of the Group comprise
statement of financial position as at 31 December 2022, statement of comprehensive income, statement
of cash flows and statement of changes in equity for the year then ended and notes to the financial
statements, including a summary of significant accounting policies.
In our opinion
• the financial statements comply with applicable legal requirements,
• the financial statements give a true and fair view of the financial position of the Company as at 31
December 2022 and its financial performance and cash flows for the year then ended in
accordance with simplified application of international accounting standards according to section
3-9 of the Norwegian Accounting Act,
• the consolidated financial statements give a true and fair view of the financial position of the
Group as at 31 December 2022 and its financial performance and cash flows for the year then
ended in accordance with International Financial Reporting Standards as adopted by the EU.
Our opinion is consistent with our additional report to the audit committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of
the financial statements section of our report. We are independent of the Company and the Group in
accordance with the requirements of the relevant laws and regulations in Norway and the International
Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants
(including International Independence Standards) (IESBA Code), and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit
Regulation (537/2014) Article 5.1 have been provided.
We have been the auditor of the Company for since 2000, and in the period following the initial public
offering of the Company in 2004.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial statements for 2022. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
2
Independent auditor's report - Nel ASA 2022
A member firm of Ernst & Young Global Limited
opinion on these matters. For each matter below, our description of how our audit addressed the matter is
provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial
statements section of our report, including in relation to these matters. Accordingly, our audit included the
performance of procedures designed to respond to our assessment of the risks of material misstatement
of the financial statements. The results of our audit procedures, including the procedures performed to
address the matters below, provide the basis for our audit opinion on the financial statements.
Revenue from sale of customised products and equipment
Basis for the key audit matter
The Group derives a significant part of its
revenues from sale of customised products and
equipment. Such projects involve revenue
recognition over time based on measuring the
progress towards complete satisfaction of the
performance obligation. The assessment of
measuring progress requires subjectivity and
professional judgement and is therefore subject to
uncertainty and potential misstatements. The
main risks include management’s use of
estimates and judgments in relation to measuring
progress, including determining the contract’s
total revenues, expected costs to complete and
estimated project margin. We consider this a key
audit matter because of the significant amounts
and the management judgement applied in the
estimates.
Our audit response
We assessed the application of accounting
principles and routines for monitoring the
customised product and equipment sales. We
discussed the status of contracts with
management, finance and technical staff and tied
estimated revenues and cost to budgets. For new
contracts we tested the estimated revenue
against agreements. We have also recalculated
the measurement of progress and performed test
of details e.g., vouching to invoices and hours
incurred on the projects. We refer to the Groups
disclosures included in note 1.5 and 2.1 in the
consolidated financial statements.
Assessment of impairment of goodwill
Basis for the key audit matter
The Group performed impairment tests to
determine the recoverable amounts and recorded
an impairment loss of NOK 296 million related to
the goodwill in Fueling. At 31 December 2022, the
carrying amount of goodwill was NOK 366 million,
approx. 5 % of total assets. Estimating the
recoverable amount of the goodwill requires
management judgment including estimates of
future sales, gross margins, operating expenses,
growth rates, capital expenditures and discount
rate. Management’s annual impairment
assessment was a key audit matter because the
assessment requires significant judgment and
includes estimation uncertainties.
Our audit response
For each cash generating unit, we evaluated the
assumptions based on the development in the
market and compared the cash-flow projections in
the impairment calculation to board approved
budgets. We considered the accuracy of
management’s prior year estimates and evaluated
the level of consistency applied in the valuation
methodology from previous years. Furthermore,
we compared the risk premiums in the weighted
average cost of capital with external data and
considered management’s adjustments for
company specific factors. We also tested the
mathematical accuracy of the valuation model and
performed sensitivity analysis of the assumptions
used. We assessed the Group's disclosures
included in note 1.5 and 3.1 in the consolidated
financial statements about those assumptions to
which the outcome of the impairment test is most
sensitive.
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Independent auditor's report - Nel ASA 2022
A member firm of Ernst & Young Global Limited
Other information
Other information consists of the information included in the annual report other than the financial
statements and our auditor’s report thereon. Management (the board of directors and CEO) is responsible
for the other information. Our opinion on the financial statements does not cover the other information,
and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information,
and, in doing so, consider whether the board of directors’ report, the statement on corporate governance
and the statement on corporate social responsibility contain the information required by applicable legal
requirements and whether the other information is materially inconsistent with the financial statements or
our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the
work we have performed, we conclude that there is a material misstatement of this other information or
that the information required by applicable legal requirements is not included, we are required to report
that fact.
We have nothing to report in this regard, and in our opinion, the board of directors’ report, the statement
on corporate governance and the statement on corporate social responsibility are consistent with the
financial statements and contain the information required by applicable legal requirements.
Responsibilities of management for the financial statements
Management is responsible for the preparation and fair presentation of the financial statements of the
Company in accordance with simplified application of international accounting standards according to
section 3-9 of the Norwegian Accounting Act and of the consolidated financial statements of the Group in
accordance with International Financial Reporting Standards as adopted by the EU, and for such internal
control as management determines is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s and the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless management either intends to liquidate the
Company or the Group, or to cease operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with ISAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional
scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control.
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Independent auditor's report - Nel ASA 2022
A member firm of Ernst & Young Global Limited
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s and the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Company’s and the Group’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required to
draw attention in our auditor’s report to the related disclosures in the financial statements or, if
such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Company and the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group audit.
We remain solely responsible for our audit opinion.
We communicate with the board of directors regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide the audit committee with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters
that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the board of directors, we determine those matters that were of
most significance in the audit of the financial statements of the current period and are therefore the key
audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Report on other legal and regulatory requirement
Report on compliance with regulation on European Single Electronic Format (ESEF)
Opinion
As part of the audit of the financial statements of Nel ASA we have performed an assurance engagement
to obtain reasonable assurance about whether the financial statements included in the annual report, with
the file name NELASA-2022-12-31-en, has been prepared, in all material respects, in compliance with the
requirements of the Commission Delegated Regulation (EU) 2019/815 on the European Single Electronic
Format (ESEF Regulation) and regulation pursuant to Section 5-5 of the Norwegian Securities Trading
Act, which includes requirements related to the preparation of the annual report in XHTML format and
iXBRL tagging of the consolidated financial statements.
In our opinion, the financial statements, included in the annual report, have been prepared, in all material
respects, in compliance with the ESEF Regulation.
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Independent auditor's report - Nel ASA 2022
A member firm of Ernst & Young Global Limited
Management’s responsibilities
Management is responsible for the preparation of the annual report in compliance with the ESEF
Regulation. This responsibility comprises an adequate process and such internal control as management
determines is necessary.
Auditor’s responsibilities
Our responsibility, based on audit evidence obtained, is to express an opinion on whether, in all material
respects, the financial statements included in the annual report have been prepared in accordance with
the ESEF Regulation. We conduct our work in accordance with the International Standard for Assurance
Engagements (ISAE) 3000 – “Assurance engagements other than audits or reviews of historical financial
information”. The standard requires us to plan and perform procedures to obtain reasonable assurance
about whether the financial statements included in the annual report have been prepared in accordance
with the ESEF Regulation.
As part of our work, we perform procedures to obtain an understanding of the company’s processes for
preparing the financial statements in accordance with the ESEF Regulation. We test whether the financial
statements are presented in XHTML-format. We evaluate the completeness and accuracy of the iXBRL
tagging of the consolidated financial statements and assess management’s use of judgement. Our
procedures include reconciliation of the iXBRL tagged data with the audited financial statements in
human-readable format. We believe that the evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Oslo, 1 March 2023
ERNST & YOUNG AS
The auditor's report is signed electronically
Petter Frode Larsen
State Authorised Public Accountant (Norway)
info@nelhydrogen.com
+47 23 24 89 50
www.nelhydrogen.com
Ofce address:
Karenslyst all é 49,
0279 Oslo, Norway