Norwegian electrolyser manufacturer Nel said today it is confident that major orders will materialise this year after a "disappointing" 2024, as hydrogen firms are securing equipment later in the project development process because of reduced concerns about availability.
Nel registered a higher order intake in January alone than in the final quarter of last year, chief executive Hakon Volldal said during the company's results call today, adding that "2024 was a disappointment" but that "2025 is expected to be much better."
Nel chief financial officer Kjell Christian Bjornsen said customers in the past anticipated an electrolyser shortage, so would place orders at an earlier stage of project development to secure the equipment.
Some years ago, "clients signed up to engineering work, concept work and the equipment package at the same point in time" before securing project financing, he said. Now developers "get the full funding stack in place", including agreements with banks and lenders, when they place the electrolyser order, according to Bjornsen.
"That's the major difference," he said.
As many renewable hydrogen projects have been delayed or cancelled, electrolyser manufacturers have struggled to secure firm orders. Many industry participants now expect global electrolyser manufacturing capacity to far outstrip demand at least in the near future, arguably alleviating the need for developers to place orders early in the development process.
While clearer regulations in Europe and the US, along with subsidies for projects, could help projects move ahead, the main factor behind Nel's optimism is "real client conversations," Volldal said. At this stage, project developers have a "much more realistic view on what the market is willing to pay for" renewable hydrogen, he said.
Because of the change in approach Nel's customers often have completed permitting and engineering, and at times "there is an offtaker" by the time they place an electrolyser order, Volldal said. This means incoming orders are of a more firm nature and a number of Nel's customers are set to take final investment decisions (FID) for their projects "in the next quarters," he said.
These are mid-sized projects with 20-100MW capacity, because larger projects of 500MW or more "have been pushed out in time," Volldal said. The "appetite to go green" seems less strong than it was a couple years ago, so projects are required to have a strong business case to reach FID, he said.
Over the past quarter Nel saw "one large project in the US and one in Germany" at risk of cancellation, it said without naming the companies. In October, US developer Hy Stor cancelled an order for a 1GW electrolyser system.
The customer in Germany might refer to developer HH2E which entered bankruptcy proceedings last November and said possible delays and changes in project timelines "depend on how fast a new investor comes on board".
HH2E had placed an order for a 120MW electrolyser with Nel in early 2023 for its project in Lubmin.
Nel expects "no more negative impact" from the two contracts in question beyond what it accounted for during the fourth quarter of 2024, Volldal said.
The firm expects to be able to fulfil upcoming deliveries despite a halt in production at its facility in Norway — in response to weak demand — because it has sufficient inventory, Bjornsen said.
"New order intake that will determine when we switch [the factory back] on," he said.
