Nel ASA’s Defence Pivot Can’t Paper Over a 73% Order Collapse

The Norwegian electrolyser maker is chasing military and security clients as its core business suffers its worst quarter in recent memory. Nel ASA’s new pressurised alkaline platform, unveiled on 6 May after eight years of development, promises to slash system costs below $1,450 per kilowatt — roughly half the industry norm. Yet the technology breakthrough is struggling to mask a brutal operating reality.

Orders tumbled 73% in the first quarter to just 85 million Norwegian kroner, while the backlog shrank 24% to around 1.1 billion kroner. Revenue from customer contracts slipped 5% to 148 million kroner. The net loss narrowed to 144 million kroner from 179 million a year earlier, but the underlying picture remains bleak.

Chief Commercial Officer Todd Cartwright has identified a new sales channel: defence contractors and critical infrastructure operators. “Customers are increasingly asking for solutions that are easier to install and finance — including for security-sensitive applications like energy supply and defence,” he said. The modular, skid-mounted system operates at 15 bar pressure, reducing the need for downstream compression and improving efficiency.

The pivot comes as Nel grapples with two idled production lines for atmospheric electrolysers at its Herøya plant. The company already took roughly 799 million kroner in impairments in 2025, and analysts warn further writedowns may be coming.

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On the positive side, the EU Innovation Fund is backing the industrialisation push with a grant of up to €135 million, covering as much as 60% of eligible costs. A first tranche of more than €10 million is expected in the second quarter of 2026. Nel is building out 1 GW of annual capacity at Herøya, with the first 500 MW due to come online this year.

The balance sheet offers some breathing room. Cash reserves of 1.4 billion kroner should fund operations through the end of 2026. The US-based PEM division also delivered a rare bright spot, winning a $7 million order from an American utility for green hydrogen equipment, while a European customer placed a similar-sized order around the same time.

CEO Håkon Volldal says the company is in active discussions with multiple potential clients for projects ranging from 50 to 150 MW in Europe and North America. But concrete orders remain elusive.

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The stock tells a two-speed story. At around €0.26, Nel shares have gained roughly 37% since the start of the year, though they sit 17% below the 52-week high of €0.32 hit on 5 May. Analyst consensus remains bearish, with a median price target of 2.14 kroner and a majority “sell” rating. Berenberg recently trimmed its target to 2.30 kroner with a “hold” recommendation.

All eyes are now on 15 July, when Nel reports its half-year results. By then, investors will want to see whether the defence-sector push and the new platform can convert conversations into contracts — or whether the recent share price rally has simply run ahead of the fundamentals.

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