Nel ASA: CEO Steps Down as Alkaline Orders Stay Frozen and Revenue Falls 12%
Q2 2026 earnings call, July 15, 2026
Nel ASA capped its second-quarter 2026 earnings call with news that overshadowed the numbers: Chief Executive Officer Hakon Volldal is stepping down to pursue another professional opportunity. Volldal, who has led the Norwegian electrolyzer maker since July 2022, will remain in his post through a six-month notice period while the board runs a search for his successor. He was careful to frame the departure as a personal transition rather than a strategic pivot, telling investors that "the strategy remains intact and it remains unchanged going forward," and that the roadmap is "anchored with the rest of the management team and the Board of Directors." Still, leadership uncertainty arrives at an inconvenient moment for a company that is simultaneously launching new technology, cutting headcount, and still burning cash.
Revenue Declines, Alkaline Order Drought Persists
Revenue from customer contracts came in at NOK 153 million, down 12% year-on-year, with alkaline revenue falling 14% and PEM revenue down 10%. Reported EBITDA of negative NOK 55 million looked better than last year's NOK 86 million figure only because of a one-off settlement with Ivatani; adjusting for that, EBITDA was roughly flat versus the prior-year period. Management was candid that the alkaline weakness was self-inflicted by design: with few orders coming in for the legacy atmospheric alkaline platform, the company deliberately paused to develop a new product, a gap that will take further quarters to close.
Analyst Kulwinder Rajpal pressed the point directly, telling management that the lack of alkaline bookings "is now starting to get to a point where it's concerning investors quite a lot." CFO Kjell Bjornsen did not dispute the characterization, acknowledging "we have not seen a lot of large alkaline orders for Nel" and that Nel has been "on the losing side of some of these bids." Management's own framing is that the shift from atmospheric to pressurized alkaline technology needs to play out before order intake recovers, a process expected to take "a few quarters" given the platform only launched in May.
New Pressurized Alkaline Platform: The Numbers Behind the Pitch
The technology update was the most detailed portion of the call. Nel's new PA series, unveiled on May 8, is being pitched as a step change versus the company's older platform: an 80% reduction in footprint, a 40% to 60% reduction in system capex, and specific energy consumption in the 51 to 53 kilowatt-hours per kilogram range, which Volldal called "best-in-class today if you look at real performance." For a 25-megawatt module, Nel priced the all-in system cost at approximately $1,400 per kilowatt versus roughly $3,000 per kilowatt for comparable projects on the old technology, translating into a levelized cost of hydrogen reduction from $7.80 to $4.50 per kilogram at 30 bar for a 20 to 30 megawatt reference project. Management emphasized these figures apply to small-scale projects and would improve further at hundreds of megawatts or gigawatt scale.
Critically, the company has already built a quarter-scale prototype at its Herøya site in Norway, delivering 6 megawatts of a system designed to scale to 25 megawatts, and opened it to public inspection in early May. A dedicated production line is under construction, targeting 500 megawatts of installed capacity by the end of 2026, expandable to 1 gigawatt by 2027. The project carries EUR 135 million in European Union funding, with the first milestone payment already received in the quarter, a modest but tangible sign of external validation.
Order Backlog Improves, But Break-Even Remains Distant
Order intake of NOK 230 million was a meaningful improvement versus a weak second quarter of 2025 and versus the first quarter of 2026, lifting the order backlog to NOK 1.2 billion, still dominated by PEM orders. The company secured two purchase orders for containerized PEM solutions worth approximately $7 million each, including a repeat order from French customer Made in France, plus a notable first: a sale to Douglas County in the United States, marking Nel's first system to be owned and operated by a public utility, deployed near a hydropower plant for grid-balancing purposes.
Bjornsen was explicit about the scale needed to reach profitability, telling investors that PEM plant utilization needs to reach roughly 20% to 24% of installed capacity, with alkaline requiring somewhat higher utilization, and that overall volumes need to reach "hundreds of megawatts per year on alkaline and tens of megawatts for PEM" before the business turns sustainably profitable. Headcount has already been cut from 430 to 313, concentrated in production and project delivery rather than R&D, a move management framed as a necessary offset to insufficient order volume.
Funding Position and a Lingering German Bankruptcy Exposure
Nel ended the quarter with NOK 1.3 billion in cash. Analyst Arthur Sitbon asked pointedly whether that was sufficient given ongoing cash burn and a slow-recovering backlog. Bjornsen's response was measured rather than reassuring: "we do have a solid cash position as of now, and we have no urgency to do anything about it," while noting the company has previously used capital raises and the Cavendish spin-out to shore up its balance sheet and would "take actions if required." That phrasing leaves the door open to future dilution if order momentum does not improve.
Separately, the company disclosed it is still carrying a large overdue receivable tied to a German project developer bankruptcy from the prior year. Management reiterated that the net cash impact is expected to be zero, given plans to reclaim inventory, but conceded that German bankruptcy proceedings move slower than Norwegian ones and offered no clear timeline for resolution.
China Competition: An Honest Admission on Cost
Asked directly where Nel's competitive advantage will come from as international, and particularly Chinese, competition intensifies, Volldal gave an unusually candid answer. "I think the Chinese will have an upper hand on CapEx. I think we will have an upper hand on efficiency," he said, attributing Nel's edge to accumulated design experience rather than any unmatchable technology moat. He argued that stack longevity, not just initial cost, will differentiate winners over time: "one thing is to build something to last a year or two, but to make it last seven, eight, nine, ten years is a completely different ball game." Whether that quality argument will hold up against low-cost Chinese suppliers, particularly if they attempt to enter Europe as they did in solar and wind, remains untested and is likely to be a persistent overhang on the stock.
Policy Backdrop: Europe Steady, U.S. Difficult, Regulatory Delay Adds Uncertainty
On the policy environment, management described Europe as the most active market but flagged a fresh source of uncertainty: the European Union's revised delegated act, which was expected in July to clarify hydrogen's qualification as an RFNBO (renewable fuel of non-biological origin), has been delayed until the fall. Few member states have transposed the Renewable Energy Directive into national law, which management said matters more for demand creation than any new hydrogen bank auction. The U.S. market was described in starker terms, with Bjornsen noting "it's hard to see that the government will come up with the subsidies and grants," meaning every American project now has to stand on its own economics without policy support, a notable deterioration in tone versus prior periods.
Strategic Partnerships and the India Gigafactory: Still a Waiting Game
Nel highlighted progress with strategic EPC partners, noting that Samsung E&A completed a 100-megawatt wrap for the new pressurized alkaline solution, branded Compass, enabling bankable offers across all of Nel's technology platforms with full system guarantees. Saipem continues to offer its IV100 solution based on Nel's atmospheric alkaline technology at scales from 20 megawatts to several hundred megawatts. The company's Reliance partnership in India, intended to establish a captive electrolyzer gigafactory, remains described only as "under development," with construction targeted to begin sometime this year, offering investors little concrete evidence of near-term progress on what has been positioned as a significant long-term growth driver.
Nel ASA Deep Dive: A Technological Leap Amidst a Leadership Vacuum and Chinese Price War
Business Model and Revenue Generation
Nel ASA operates as a pure-play manufacturer of electrolyser technologies, the critical hardware required to split water into hydrogen and oxygen using electrical power. Following the strategic spin-off and separate Oslo listing of its cash-burning hydrogen fueling division, Cavendish Hydrogen, in June 2024, Nel successfully amputated a structural drag on its margins. Today, the company generates revenue exclusively through the engineering, manufacturing, and sale of electrolyser stacks, balance-of-plant equipment, and aftermarket services. The company operates across two distinct technological verticals: Alkaline and Proton Exchange Membrane systems. By narrowing its operational focus, Nel has positioned itself as a dedicated equipment supplier to the global green hydrogen economy, aiming to capture value as heavy industries transition away from fossil-based feedstocks.
The company's revenue model is highly cyclical and dependent on large-scale industrial capital expenditure. Nel secures revenue through milestone-based contracts, recognizing income as electrolyser modules are manufactured, delivered, and commissioned. However, the financial reality of mid-2026 reflects a business in a transitional trough. In the second quarter of 2026, Nel reported revenue from contracts with customers of NOK 153 million, a 12 percent year-over-year decline. This contraction is a direct result of legacy atmospheric alkaline orders rolling off the books while prospective buyers delay final investment decisions in anticipation of Nel's newly launched pressurized systems. Despite the top-line pressure, the business model is designed for immense operating leverage once production volumes cross the threshold required to absorb the fixed costs of its automated manufacturing facilities.
Key Customers, Competitors, and the Value Chain
Nel's end customers are primarily concentrated in heavy, hard-to-abate sectors. These include multinational industrial gas companies, steel manufacturers transitioning to direct reduced iron processes, ammonia and fertilizer producers, and large-scale energy utilities. Because industrial-scale green hydrogen plants require massive infrastructure beyond the electrolyser itself, Nel rarely sells directly to the end-user in isolation. Instead, the company partners with global Engineering, Procurement, and Construction firms. A prime example is Nel's ongoing partnership with Saipem, which integrates Nel's core stack technology into modular, turnkey 100-megawatt solutions, effectively de-risking the installation process for the end customer.
The competitive landscape is bifurcated into a Western oligopoly and an aggressive wave of Eastern entrants. In the Western hemisphere, Nel competes fiercely with Thyssenkrupp Nucera and John Cockerill in the alkaline segment, while battling Plug Power, ITM Power, and Siemens Energy in the Proton Exchange Membrane market. Nel holds a top-tier position among Western Original Equipment Manufacturers, historically capturing a mid-teens percentage of the ex-China installed base. However, the supplier ecosystem is relatively concentrated, with Nel relying on specialized vendors for raw materials like iridium and titanium for its membrane systems, exposing the supply chain to distinct commodity pricing risks.
Competitive Advantages
Nel's primary competitive moat is rooted in its manufacturing scale and automation. The company was the first in the world to operationalize a fully automated alkaline electrolyser production line at its Heroya facility in Norway, and it has replicated this blueprint with a 500-megawatt automated Proton Exchange Membrane line in Wallingford, Connecticut. Combined, Nel boasts 1.5 gigawatts of state-of-the-art nameplate capacity. This automation is a structural advantage, cutting unit production costs by approximately 25 percent compared to the manual assembly methods still utilized by several Western peers. It allows Nel to bid competitively on price while maintaining strict quality control over stack efficiency and degradation rates.
Furthermore, Nel benefits from a dual-technology portfolio. Proton Exchange Membrane systems are highly agile and can rapidly ramp up or down, making them the optimal pairing for variable renewable energy sources like wind and solar. Conversely, alkaline systems are highly durable, boast longer lifespans, and are significantly cheaper to deploy for steady, baseload industrial power. By offering both, Nel avoids technological cornering and can serve the entire spectrum of industrial demand. This versatility is underpinned by a century of empirical operating data, as Nel's corporate lineage traces back to 1927. In an industry plagued by startup execution risk, Nel's extensive track record earns a premium of trust from conservative industrial partners and project financiers.
Industry Dynamics: Opportunities and Threats
The macroeconomic backdrop for green hydrogen presents a paradox of massive long-term opportunity stifled by near-term friction. The global electrolyser market is projected to grow from roughly $2.75 billion in 2026 to over $10 billion by 2032, driven by decarbonization mandates, the European Union's Hydrogen Bank, and Section 45V tax credits under the United States Inflation Reduction Act. The opportunity for Nel lies in the sheer scale of the project pipeline; the company is currently tracking over 6 gigawatts of qualified leads. If the cost of renewable electricity continues to decline, green hydrogen will eventually reach cost parity with fossil-derived grey hydrogen, unlocking exponential demand in the ammonia and refining sectors.
However, the immediate threats are severe. The industry is currently bottlenecked by high capital costs, elevated interest rates, and a lack of downstream infrastructure, causing developers to delay final investment decisions. More existentially, Nel faces a brutal price war orchestrated by Chinese manufacturers. Companies like PERIC Hydrogen, Sungrow, and LONGi Clean Energy have scaled domestic manufacturing rapidly and are now aggressively expanding into Europe and the Middle East. These Chinese entrants are undercutting Western electrolyzer prices by 30 to 50 percent, pushing capital costs toward $300 per kilowatt. Western manufacturers cannot compete on raw upfront cost; Nel is forced to defend its market share by proving superior lifecycle economics, higher stack efficiency, and bankable reliability.
New Technologies: The Pressurized Alkaline Lifeline
To counter the commoditization of basic electrolyser hardware, Nel launched its next-generation pressurized alkaline platform, the PA-Series, in May 2026. This represents the company's most critical product cycle in a decade and serves as the primary engine for future margin expansion. Legacy atmospheric alkaline systems produce hydrogen at low pressure, requiring the customer to install massive, energy-intensive downstream mechanical compressors to make the gas usable for industrial applications. The PA-Series fundamentally alters this equation by delivering hydrogen directly at 30 bar pressure, effectively eliminating a significant portion of the balance-of-plant costs.
The economic implications of this technology are profound. Nel estimates that the PA-Series reduces the turnkey, full-scope cost of a 25-megawatt plant to below $1,450 per kilowatt. This is a structural 60 percent reduction compared to recent industrial projects that suffered from severe cost inflation and touched $3,000 per kilowatt. By simplifying the plant architecture and improving overall system efficiency, the pressurized platform directly addresses the capital expenditure hesitancy that has paralyzed the hydrogen market over the last two years. If Nel can successfully industrialize and deliver this platform at scale, it will re-establish a distinct technological moat against lower-tier, low-cost competitors.
Management Track Record
The tenure of CEO Hakon Volldal, who took the helm in July 2022, has been defined by clinical restructuring and strategic focus. Volldal successfully executed the complex spin-off of the Cavendish fueling division, effectively stopping a major source of cash bleed. He oversaw the completion of the automated manufacturing facilities in Norway and the United States, forged a critical Proton Exchange Membrane development pact with General Motors, and cleared a major legal overhang by settling a protracted US lawsuit with Iwatani Corporation for $7.5 million in June 2026. Under his leadership, the company transitioned from a sprawling, speculative hydrogen ecosystem play into a disciplined, pure-play manufacturing business.
However, the management narrative took a sharp turn in mid-June 2026 when Volldal abruptly resigned to take the CEO role at Elopak. While he remains on a six-month notice period to ensure a transition, this departure creates a dangerous leadership vacuum at the exact moment Nel is commercializing its make-or-break PA-Series platform and fighting off Chinese margin pressure. The Board of Directors has reiterated that the strategic direction remains entirely unchanged, but institutional investors abhor uncertainty. The incoming chief executive will inherit a technologically sound company with a solid NOK 1.3 billion cash runway, but they will face immediate pressure to convert the bloated project pipeline into firm, margin-accretive orders before the fixed costs of the automated factories erode the balance sheet.
The Scorecard
Nel ASA represents a high-risk, high-reward turnaround equity within the volatile clean energy transition. On the bullish side of the ledger, the company has successfully shed its cash-burning fueling division and operationalized 1.5 gigawatts of highly automated, dual-chemistry manufacturing capacity. The May 2026 launch of the pressurized alkaline platform is a legitimate technological leap that addresses the industry's most pressing pain point: exorbitant turnkey capital costs. Furthermore, the second quarter of 2026 demonstrated that the Proton Exchange Membrane division remains highly competitive, securing NOK 230 million in new orders—a 224 percent year-over-year increase—proving that Nel can still win mandates in a tough macro environment.
Conversely, the bearish reality is anchored by severe near-term cash burn, a leadership vacuum, and an intensifying Chinese price war. The company reported a negative EBITDA of NOK 155 million in the second quarter of 2026, and while half of that was a one-off legal settlement, the core operations remain unprofitable due to underutilized factory capacity. The sudden resignation of the CEO introduces acute execution risk during the most critical product rollout in the company's history. Nel has the engineering pedigree and the balance sheet to survive the current hydrogen shakeout, but it must rapidly translate its technological advantages into firm, high-margin backlog to outrun the aggressive pricing strategies of its Eastern competitors.