Nel ASA has announced a temporary halt in production at its Alkaline electrolyzer facility in Herøya, Norway, and a workforce reduction of approximately 20%. This decision comes in response to a slower-than-anticipated growth in the renewable hydrogen market, with order intakes in 2023 and 2024 falling short of expectations.
Market Challenges
The renewable hydrogen sector has encountered significant hurdles, including project delays and cancellations. Nel has also initiated a process to reclaim delivered equipment as compensation for overdue receivables exceeding one year from an undisclosed customer. These challenges have led to a decreased immediate need for new alkaline electrolyzer production, prompting the company to adjust its operations accordingly.
Strategic Adjustments
The production halt at Herøya predominantly affects Nel’s Norwegian workforce within the Alkaline business segment. Approximately half of the workforce reductions were executed in the fourth quarter of 2024 through voluntary resignations and the termination of consultant contracts. Despite these cutbacks, Nel remains financially robust and intends to preserve cash while pursuing sales opportunities and investing in technology development.
Industry Outlook
While the long-term prospects for clean hydrogen remain promising, the current market slowdown has impacted several industry players. Companies like Plug Power and Green Hydrogen Systems have experienced significant stock declines and project delays due to lower demand and regulatory uncertainties.
