Alkaline electrolysers will drive Nel Hydrogen’s revenue growth over the next few years, the company’s CEO Jon Andre Lokke ­tells Hydrogen Economist. These devices will eclipse Nel’s two other main business lines—polymer electrolyte membrane (PEM) electrolysers and hydrogen refuelling stations.

Nel is in the process of finalising its new, fully automated production line for alkaline electrolysers, which will be the first of its kind globally. It took three years to perfect the automation of the previously manual production process. The production line will start a test run in mid-2021 before ramping up commercial production in the third quarter.

“The industry does not yet understand the implications of this breakthrough” Lokke, Nel

“The beauty of this production line is that we can replicate it anywhere. It is a standardised design,” says Lokke, who estimates it will cut costs approximately in half initially. “The industry does not yet understand the implications of this breakthrough. There is the potential to cut the costs in half again by optimising and increasing production capacity further. Production will be faster and cheaper and use less energy, materials and labour.”

Nel, which traces its history back to 1927, will steadily enhance its alkaline stack, increasing capacity from 2.2MW to around 10MW while slightly reducing the stack size so that it still fits into a 40ft shipping container.

PEM developments

The company recently also launched a 1.25MW PEM electrolyser stack, which is five times the size of its 250kW predecessor. The output of each new stack will be about 500kg/d.

“This larger size makes it feasible for us to deliver a 20MW PEM electrolyser plant to customers such as [Spain’s] Iberdrola. If we were to attempt that with the previous generation, it would require some 80 stacks—that obviously would not work due to all the connecting parts required and would be extremely expensive,” says Lokke. “Now we can do the same with 16 stacks—you get a manageable level of complexity.”

Doubling the capacity to a 2.5MW stack should be easier, because Nel could simply add more cells and increase the stack height. It will start looking at automating PEM electrolyser production too, says Lokke.

Nel’s PEM electrolyser plant is in Wallingford, Connecticut. “The US is an important market for PEM, but orders are quite small—you typically do not see as large projects on PEM as on alkaline because the cost is still higher and the efficiency a bit lower in comparison,” says Lokke.

As the two electrolyser technologies vie for supremacy, he believes alkaline is ahead, but PEM may possess greater potential. “This is a long-term technology hedge for us,” he says. “In the meantime, we will do a lot of business on both platforms. After 2030, we could potentially see more focus on one versus the other.”

Business pipeline

Denmark’s Everfuel, which produces and distributes green hydrogen, is a spin-off from Nel. Lokke says his firm remains open to investing in other companies and could also make further acquisitions. “We want to have the flexibility if an opportunity arises—an investment would have to support the development of a new market or product, or ideally both,” says Lokke.

Nel’s fourth-quarter revenue rose by 30pc year-on-year, to NOK229.1mn ($26.73mn), as its order backlog nearly doubled to NOK981.1mn. Its notable orders last year included a $30mn deal with hydrogen fuel truck manufacturer Nikola for 40 electrolysers, amounting to around 85MW, in what was the world’s largest sale of its kind.

Meanwhile, Japan’s Iwatani Corporation ordered 14 Nel hydrogen refuelling stations (HRS) for installation in California. Nel has delivered around 110 of these stations to 13 countries. They cater primarily for light vehicles such as passenger cars, but the company will switch its focus to building facilities to serve buses and heavy-duty trucks. “The key is to develop fast refuelling for these big vehicles,” says Lokke.

90pc – Annual increase in Nel’s Q4 2020 order book

This would entail delivering 50-100kg of hydrogen in ten minutes, which would give the same range and speed as diesel refuelling. “We do fuel heavy-duty vehicles already, but this is a slow fill and uses a tweaked light-duty vehicle station—this new product will be developed specifically for buses and trucks,” says Lokke.

“The technology that we are developing does not exist in the market. Some technology building blocks need to be further developed, such as the compressor and cooling system. So, this is what we are doing—we are upscaling the various technology components.”

Nel believes it can lower green hydrogen costs to $1.5/kg by 2025. Prices are around 3-5 times that currently, but the company expects the costs of both renewable power and electrolysers to continue to fall, enabling green hydrogen costs to drop drastically.

California and South Korea are the biggest markets for light-duty HRS, with demand usually dictated by where automakers have launched such vehicles. “For our customers, it could be a bit of a gamble in terms of when you do the investment when you target normal passenger cars. 

“However, when it comes to heavy duty, it is much more predictable because you know exactly the truck routes,” adds Lokke. “We see there are many routes in the US that are under consideration, while in Europe, there are truck routes planned all the way from Italy up to Norway and crossing into Spain and Portugal. China is the big unknown—there will be a lot of stuff happening there, but we do not know exactly when and how fast.”

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Author: Matt Smith