Norwegian electrolyser manufacturer Nel is temporarily halting production at its flagship plant in Herøya, Norway, to adjust capacity to market demand, Kallanish reports.

The company said Monday the number of orders received both in 2023 and 2024 was “short of expectations.” It also pointed out that several customer projects are “significantly delayed or at risk of being cancelled.”

With a limited need to produce new alkaline electrolyser equipment in the near term, the company and its subsidiaries are adjusting production capacity. As such, a 20% workforce reduction is in place, primarily in Norway and in the alkaline business segment.

Nel also produces proton exchange membrane (PEM) electrolysis equipment.  

“While the long-term outlook for clean hydrogen remains strong, we must make some tough decisions today based on lower order intake in 2024 than expected,” explains ceo Håkon Volldal. “This is an unfortunate situation, and I’m sorry that we now have to let go of many qualified people.”

Around half of the layoffs were executed in the fourth quarter of 2024 through voluntary resignations and termination of consultants, the firm says.

Despite the temporary manufacturing pause, Nel’s chief executive officer Kjell Christian Bjørnsen emphasises the company “remains well financed.” He adds: “With these actions we will preserve cash while still being able to aggressively pursue sales opportunities and invest in technology development.”

On Sunday, the company announced it was awarded up to $29 million in additional investment tax credits for its planned manufacturing expansion in Michigan, US. The funding comes from the 48C program managed by the US energy and treasury departments, and the Internal Revenue Service.

The award, for which receipt is subject to conditions including wage and apprenticeship requirements, is also subject to a final investment decision for the Michigan project. Nel has reiterated its construction “depends on demand.” To date, the company and its subsidiaries have secured close to $200 million in US support.

A spokesperson says Nel continues to see a strong pipeline of clean hydrogen projects globally and is working on “several concrete bids,” including projects where its currently undertaking paid front-end engineering design (FEED) studies. Containerised PEM systems also offer good near-term sales opportunities, and the company will further develop its technology platforms.

The Michigan gigafactory plan targets up to 4 GW of capacity to produce both alkaline and PEM electrolysers through a partnership with GM’s HYDROTEC. Yet, the US expansion would primarily focus on the PEM segment.