number one by nature
Annual report
2023
The publication can be downloaded on
nelhydrogen.com
Title:
Annual report 2023
Published date:
Oslo, 28 February 2024
info@nelhydrogen.com
+47 23 24 89 50
Karenslyst allé 49, PB 199 Skøyen,
0212 Oslo, Norway
Table of contents
Annual report 2023
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 ................................. 72
6 Consolidated financial statements 2023 Nel group ......................................... 78
Notes to the consolidated financial statements ................................................ 86
7 Parent company financial statements .................................................................. 142
7.1 Notes to the parent company financial statements ............................... 150
8 Alternative performance measures ...................................................................... 167
9 Auditor’s report ......................................................................................................... 169
Nel ASA
I
Annual report 2023
5
A mixed year
Nel is on a journey towards a decarbonized society where
renewable hydrogen plays a critical role. Over the past
couple of years, Nel and the hydrogen industry have made
enormous progress toward this vision. With unprecedented
speed, we have transitioned from building small hydrogen
plants to planning and installing large-scale plants with
hundreds of megawatts of electrolyser capacity. Since 2019,
Nel’s revenues have tripled.
In the first half of 2023, Nel received large electrolyser
purchase orders from HH2E in Germany, Bondalti in
Portugal, and Hyd’Occ in France. Furthermore, a record-
size contract for 16 fueling stations in California was signed.
These are all excellent contracts with Nel’s preferred scope
of supply and favorable terms and conditions. Still, our
expectations were higher. We had hoped to sign more
large-scale orders and end the year with a higher backlog.
Unfortunately, the whole hydrogen industry faced
headwinds in the second half of 2023. Market momentum
slowed down due to higher interest rates, tighter capital
markets, and cost escalations. Projects became more
challenging to qualify and took longer to mature. However,
I assure you we did not sit on our hands waiting for orders
to arrive. In 2023, we built a more robust Nel, uniquely
positioned when market demand picks up again.
A more robust company
Even if 2023 was a challenging year, we had a very clear
direction. We implemented our “Bigger Better Focused”
strategy and are taking the fastest route toward hydrogen
technology leadership by growing our production capacity,
improving our technology, and focusing on a smaller scope
of supply.
• Bigger: We increased actual output from Line 1 at
Herøya by a factor of 2.5 versus 2022 and started to build
Line 2. When this line is put into commercial operation in
Q2 2024, Nel will have 1 GW of fully automated annual
alkaline electrolyser production capacity. Similarly, we are
ramping up the production capacity for PEM electrolysers
in Wallingford by a factor of 10. Further capacity
expansion is possible in current locations, yet Nel has
secured financial support from the state of Michigan for a
future gigafactory in Plymouth. In the Fueling division, we
progressed our high-capacity station concept targeting
heavy-duty vehicles.
• Better: In a year troubled by inflation and cost increases,
Nel managed to reduce the cost of its electrolysers and
further enhance their energy efficiency. Equally important,
significant progress was made on the next-generation
PEM technology developed in partnership with General
Motors. We also took significant steps in developing Nel’s
pressurized alkaline system. Another key objective met
in 2023 was the massive reduction in the warranty cost
of installed fueling stations, which was made possible
by targeted hardware and software upgrades. These
improvements have also had a very positive impact on
station uptime.
• Focused: Europe and North America have remained
Nel’s target geographies in 2023, ensuring efficient
use of resources. In the Electrolyser division, Nel has
implemented its preferred scope of supply, which is stack
and balance of stack (including control system) on all
major contracts. We even changed the old contracts,
which initially had a larger scope for Nel. This reduces
Nel’s execution risk, improves margins, and enables the
company to run more projects in parallel. On the Fueling
side, Nel discontinued old product models and signed
development contracts with third-party companies for
modules outside Nel’s core scope.
Strategic adjustments are already starting to pay off
financially: Nel generated close to 1.8 billion NOK in
revenues in 2023, up almost 80 percent from 2022, and
profitability improved by more than NOK 300 million.
Although I am pleased with this development, the real
significance of the 2023 financial figures is that Nel’s
business model scales well. We know that if we continue to
grow revenues, we will be able to deliver positive earnings.
In March, we raised NOK 1.6 billion, which contributed
to Nel ending the year with a solid cash balance of close
to NOK 3.4 billion. Nel is now one of the world’s best-
capitalized and well-funded electrolyser OEMs. Although
we will be prudent and spend our money wisely, we
have enough money to continue to invest in technology
development and further capacity increases if needed.
Fundamental market drivers remain unchanged
Roy Amara was an American scientist and futurist,
probably best known for coining Amara’s law on the effect
of technology. “We tend to overestimate the effect of a
technology in the short run and underestimate the effect
in the long run,” he said. This is a fitting description of how
1 Letter from the CEO
6
Letter from the CEO
Best regards,
Håkon Volldal, CEO
the interest in renewable hydrogen has developed in recent
years. If hydrogen was overhyped before, the pendulum
has now swung too far in the other direction. Renewable
hydrogen plays a pivotal role in the energy transition, and
the fundamental market drivers remain unchanged.
Throughout the last few years, it has become clear that
energy security and supply must be rethought amid rising
geopolitical tensions. Dependence on hydrocarbons
produced by autocratic or unstable regimes is a short-
sighted energy policy. Hydrogen allows new energy markets
to be connected. It will work as a vector from areas where
it is cheap and possible to produce renewable energy to
areas where energy demand is high and local production is
insufficient.
Moreover, burning more hydrocarbons is not the answer to
a world increasingly suffocated by carbon dioxide emissions.
The world has agreed to cut carbon emissions dramatically,
and everyone has realized it is nearly impossible to
decarbonize the refinery, steel, and chemical industries
without renewable hydrogen. What is currently slowing
down the adoption of green hydrogen is the extra cost of
switching from fossil fuels. Fossil fuels are cheaper today
because the true cost of carbon is ignored: only a fraction
of CO2 emissions is taxed, and carbon prices are way too
low to reflect the real cost to society. Subsidies for green
hydrogen, through, for example, the Inflation Reduction Act
(IRA) in the US and the Hydrogen Bank in the EU. Ratified
mandatory targets for the use of green hydrogen in industry
and transportation and increasing demand for carbon-free
or low-carbon products among consumers and businesses
despite higher prices will also help.
A bright future
Nel’s fundamental business idea is based on the conviction
that global society will have to change from a polluting
and damaging fossil economy to a greener economy. This
transition has started and will accelerate dramatically in the
coming years. We know this, and our customers know this.
This is why our pipeline of large-scale prospects is growing
fast.
In 2022, our largest delivery project was a 20 MW plant.
Today, we are looking at initiatives involving hundreds
of megawatts of electrolyser capacity. These large-
scale projects will have a real positive impact on global
emissions and, not coincidentally, on Nel’s financials. When
projects increase in size, risk, and complexity, the need for
competence and experience rises accordingly. This plays to
Nel’s advantage, given our unrivaled track record: almost
a century of experience in combination with tested and
proven technology.
Building on this experience, we are continuously improving
efficiency and reducing the cost of our solutions while
rapidly progressing with game-changing next-generation
technology. Because of our 2.4 billion NOK order backlog
and solid cash balance we are better positioned for success
than most of our peers, and we have a workforce of close
to 700 highly skilled and passionate employees with the
deepest hydrogen knowledge in the industry.
So, even though we have been developing hydrogen
technology for almost a century, there is no doubt that the
most exciting part of the journey is still ahead of us. In 2023
we have taken further steps to ensure that Nel will be ready
to succeed on this journey
MORE THAN 90 YEARS OF HYDROGEN INNOVATION.
AND THAT’S JUST THE BEGINNING.
PROVEN TECHNOLOGY, TRUSTED PARTNER -
PIONEERING RENEWABLE HYDROGEN FOR
MORE THAN 90 YEARS
Started development of next generation PEM electrolyser platform with General Motors
Signed the first large scale 200MW electrolyser contract
Starting up the Herøya plant, first line
Record order sizes within both Electrolyser and Fueling
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
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
2023
2022
2021
2020
2020
2019
2018
2017
2015
2014
2003
2001
1998
1974
1959
1953
1940
1927