Welcome everyone. Very nice to see a few familiar faces here in the room, and welcome everyone following this over the web. We have a lot to talk about this time. You will be able to pose your questions already now, and we'll try to deal with as many as possible of them at the end of the presentation. Moving over to the agenda, go through Nel in brief, and then we'll move over to Q4 highlights and other developments. This time around, it's a slightly different format than usual. We will then go through the commercial developments that we've seen throughout the quarter, and then we will talk about how we deal with the massive influx of projects, requests, and proposals.
This particular chapter is quite important, and it's kind of almost like a mini capital markets day. Then we'll finish off with a summary, and outlook towards the end. As usual, we start with Nel in brief. Nel is a pure-play technology company, delivering leading in-house developed and produced technologies. We have factories in the U.S. and in Europe, and we have people and organizations in California, Korea, Japan, China, as well as a range of other relevant countries. We are the world's largest electrolyzer producer. We have historically installed more than 3,500 systems in 80 different countries. We're also world-leading on fueling stations, and we are now working on station number 120-ish, and we have put up stations in 14 different countries.
That means that we are smack in the middle of the energy transition, with both hydrogen technologies and fueling station technologies. We are basically enabling industry application and industrial applications to transition to net zero. We are therefore allowing renewables to become relevant in these new areas, contributing then to the energy transition. As mentioned, we have three main locations. We have our Wallingford activities, where we have PEM technology. We have our Herøya factory, where we produce Alkaline, and we have our facilities in Denmark. We have now also started preparation for further expansions in a location outside where we are currently located. In other words, we are unique. We have the longest experience so far.
We are the largest with the most equipment deployed, and we have the broadest technology position, and we are also prepared for the future. Let's then move into Q4 highlights and other developments. Before we start there, we have to rewind a bit to the beginning of 2021. We saw the shift early. Projects were getting larger. We needed to be ready for that. We saw this all the way back in 2020. 2019, 2020, we saw the trend was coming. We went to the market, we raised capital, and in January 2021, we said that we need to do the following to be able to prepare. We need to add at least another 100 people. We need to deploy at least 25% of the capital raised, and it will have a negative impact on EBITDA.
It was absolutely necessary, and you now will also understand why. We were able to add more than 100 people. We added 114. We were almost able to deploy as much capital as we wanted, and it did have a negative effect on EBITDA, but that's what we had to do to be able to prepare for the future. We did not raise cash to sit on it. We raised it to prepare and to be ready for the market that is coming. In the second quarter, this ended at close to NOK 250 million, all-time high, which we are quite happy with. Obviously, the growth could have been better, but if you compare to our peers, it's pretty decent.
The backlog ended at an all-time high at more than NOK 1.2 billion, and we added actually more than NOK 400 million worth of orders in the fourth quarter alone. In terms of various announcements throughout the quarter and also beyond the quarter, just to go through it quickly, and we'll come back to this throughout the presentation. We received a purchase order for PEM equipment, various PEM equipment from a large stationary fuel cell OEM.
We received a PO for a 20 MW alkaline system for Ovako, a PO for an alkaline electrolyzer from a new European customer, multiple station orders from a new fossil fuel supplier in the U.S., POs for PEM electrolyzers to a sustainable food supplier in the U.S., a containerized system, electrolyzer and fueling station equipment in a combination for a power and gas utility also in the U.S. We also saw our associated company, Hyon, went public, successfully having a private placement. We also employed a new CEO who will start the first of June, sorry, first of July, Håkon Volldal.
We'll come back to all of these, various news throughout the presentation. As I stated earlier, as we stated earlier in 2021, we need to prepare and be ready for the market that is coming, and that will have a negative effect on EBITDA. Previously, we called it ramp-up cost, and now it is part of the overall reporting. We saw a number also of year-end effects, basically being ready with the necessary provisions in the various areas that we are active. That is the [audio distortion] cash NOK 2.7 billion, which means that we have a strong financial muscle to be able to tackle and execute on our plans.
We normally give a bit more flavor on the EBITDA development and are also doing that this time. It basically relates to getting ready [audio distortion] which we'll talk a lot more about. It also relates to Herøya that we were in very slow tuning and ramp-up during Q4. Obviously, we carried all the cost. Last but not least, we're entering new markets with new product in new regions, and that is also more costly than doing continuous business in existing markets. Those are the main effects contributing to the negative EBITDA. [audio distortion] log, which we are very happy about, ended the quarter with NOK 1.2 billion or more. We added more than NOK 400 million worth of new orders in the quarter, up 25% from same quarter last year.
As we talked about in the last quarter, pipeline is also interesting to monitor. We have added a bit more information on the pipeline. This was the pipeline as it looked when we reported the third quarter results. Then it had taken three quarters for the pipeline to double from January to September. We saw a doubling, and at the end of September, we had $6 billion worth of pipeline, roughly 11 GW worth of projects, accumulated number at roughly 800 projects, and the largest was 1.6 GW. However, during the fourth quarter, in one quarter alone, the pipeline has doubled. That kind of tells you about the activity level that we are seeing now. Now the pipeline is more than $12 billion, accumulated 22 GW.
The largest project is 2 GW, and we have now more than 1,000 projects locked in our sales system. So the question then becomes, how can now deal with this massive influx of request and proposals? To be able to answer that, we've dedicated [audio distortion] and we back had a bit of technical issue. So the question then becomes, how do we deal with this massive influx of requests and proposals? To be able to answer that, we've dedicated a separate chapter in this presentation, which we'll talk about later. To summarize, I'm very happy that we were able to employ 114 people. We need every single one of them to be able to deal with these. Orders are coming and larger orders will come.
We also see somewhat of the same trend on fueling. We see also here that projects are getting larger. Previously we could see single stations here and there. Now we see more and more requests from professional builders, professional users wanting to deploy a network, an entire network or a fleet of stations, not only smaller demonstrators. This means that sometimes we receive requests for, you know, 50-100 stations in one order. Also on the fueling side, we see that projects or requests are getting larger. A quick update on Herøya, which is important, our industrial game changer. At Herøya plant is running very nicely at the moment. We are currently running at three shifts operation.
We did quite a lot of tuning of the line during the fourth quarter, which is quite normal. We need to make sure that all of the equipment is working nicely together. Now we do see production records from Herøya every week, which is pretty much what you would expect from a new plant under ramp-up, and we will continue to gradually ramp up the Herøya facility to make sure that we do it in a robust way. One of the move that we've done is that we have tweaked our organization. As you can see, it relates to the electrolyzer part. This is to be able to deal with all the activities that we see in the market.
As you can see, we now have three dedicated focused areas within the electrolyzer division. Philip, he will be fully focused on the commercial side, dedicated and responsible for global sales and marketing, building a world-class organization supporting that. Hans is strengthening his project team and is moving over to the division, basically being responsible for projects from A to Z. Then we will add a new COO for the electrolyzer division, and the role would be to industrialize also the PEM side and expand capacities in different parts of the world, and obviously also achieve operational excellence.
We think that this will be a really good winning team going forward, and obviously also making sure that we have everything ready when Håkon Volldal is starting in the beginning of July and that we have a robust transition over to him. Let's talk about some of the commercial development that we've seen throughout the quarter. We see a tendency unfortunately that more and more of our customers want to remain undisclosed. That's because, you know, there is more of a competitive landscape now and more activities in the market. Many wants to fly under the radar, and you will see that tendency when we talk about our orders that very often we are not allowed to talk about who it is, we can talk about what it is, and that's good.
In October we signed an order for a cluster of PEM equipment. The order was from a fuel cell company, leading OEM, but for stationary fuel cell applications and not mobility applications. We received a purchase order from Ovako, 20 MW alkaline electrolyzer. Ovako is located in Sweden. It's a leading steel producer and is a part of the Nippon Steel Corporation. Here the green renewable hydrogen, which is produced at from this facility, will replace the fossil propane, which is currently used in the hot forming process in the steel production. The interesting part is that in addition to the hydrogen that comes out of the electrolyzer, Ovako will also use the oxygen. They're basically using both value streams coming out of the electrolyzer.
Obviously this is the first step, so there are multiple other steps, and there are also a large number of similar facilities throughout Europe that this particular solution could be relevant for. We got an order for multiple hydrogen fueling stations in the U.S. This was a relatively large order, more than $6 million. The customer is a U.S. fossil fuel supplier, so they are now transitioning into hydrogen and are entering this space. As I mentioned earlier, we will tend to see also larger orders in the fueling area. That also means that sometimes it will take a bit longer time.
We are becoming somewhat of a specialized supplier for the European steel industry, and here is another example, another order from a steel player, remaining also undisclosed at the moment, but is not HYBRIT, and is not Ovako. It's very nice to see that the steel companies tend to come to Nel, and we will obviously keep pushing to continue that trend. Then in the first quarter we got a relatively large order from a new promising industry moving into hydrogen, and this is interesting. Here, feeding the world with solar power and wind power through using hydrogen. This industry or this player is basically taking a CO2 molecule and hydrogen, green renewable hydrogen molecule, and combining it and making a protein. The protein can then be turned into food, edible food for human beings.
This is, I think, a very interesting application, interesting new industry coming up where you actually see that hydrogen is opening opportunities, a sizable order of around $5 million. Finally, we got the contract for a combination of electrolyzers and fueling stations. Here again, the unique position that we have in Nel allows us to address these combined markets. This was also a leading U.S. utility that gave us this order, a sizable order of more than $5 million. Before we leave this section, I also have to mention Hyon. Hyon was successful in doing a private placement and successful in their IPO.
I think they had the first day of trading on Monday, and they are basically specializing in bunkering of ships and fast ferries. Nel, Saga Pure and the Norwegian Hydrogen are three of the main shareholders behind the company. You should go and take a look at their web pages and get to know Hyon. Quite an exciting company. The next chapter is an important chapter, and it will tell you what's going on in the market.
It will tell you how we systematically respond to the developments in the market, and it will tell you also, give you an increasing understanding why potentially it takes a bit of time. In other words, how do we deal with the massive pipeline of projects, all the requests for large projects which are coming from 2-200-800 MW and even beyond, that. In addition, how do we deal with the broader market segmentations where customers are now found in more and more regions and in more and more geographical areas? That means that we have a lot of work to do, but we need to do it in a systematic way. We start with the market. This is our view of the total market between now and including 2025. From now including 2025.
We see that in that timeframe, the market is in the range of 25-40 GW. 25-40 GW of orders will reach final investment decision, FID, in that timeframe. That means that they will turn into orders in that timeframe. It doesn't mean that everything will be supplied in that period, but they will turn into orders. Nel wants to capture a significant portion of that market, targeting 20%-25% of that market. Then the question becomes how do we work to achieve that? Let me remind you of the current pipeline that we have, more than $12 billion, 22 GW, 1,000 projects, the largest 2 GW. That's when we need to talk about our execution strategy. Basically showing you how we systematically work to respond to that.
Number one, we have now around 90 people constantly on our own payroll, constantly working to develop leads, and all the way through to execution on these large projects. In addition to that, in addition to our own people, we have access to at least 50 people in various EPC companies, including our partners Wood and Aibel. That's important because there is a lot of work to be done, and this is quite a busy slide, but I think it is important to be able to understand the process of winning a large project. After lead qualification, you need to develop a proposal for the customer on how you solve the issue. I mean, here we're talking about building a large renewable hydrogen production facility with our technology.
You need to solve that for the customer, and you need to respond to the size and the demand that they will need for that facility. We need to do that together with the suppliers that bring material and components into this project. Most of the time, this includes some sort of front-end engineering work, and very often that is paid work that we are doing on behalf of the customers. The customers will then in parallel work on their financing, whether it's IPCEI funding or European Innovation Fund or any other sort of financing. While that happens, we need to firm up the design, discuss the solutions, tweak it, and make it even more tailored for the customer together with the sub-suppliers again, to make sure that the offer is robust.
You enter into contract negotiations, and we talk about all the terms and conditions, and the entire process normally takes significantly more than one year and sometimes up to three years. That's the process for winning large orders. While we do all of this work and work on the pipeline, all of these different projects, we have to, on our own account, also develop large-scale concepts. That means that we don't only invest capital into factories producing technology, we also invest a lot of capital and effort into developing and engineering out these different building blocks. You know, from the 20 MW, which we've shown you before, to the 50 MW, 100 MW, and now even larger. We have now completed a concept for an 800 MW greenfield renewable production facility for one particular customer, and I'll show you that a bit later.
It's based on our two platforms, our PEM and Alkaline platform, where we have a leading position in both areas. Here, the Alkaline platform, as you know, is already industrialized, is already automated in Herøya, and we are now applying the same principles on the PEM platform, introducing also industrialization and automation on the PEM platform. Still, if you look at the two platforms, most of the time when we talk about very large projects, the customers tend to go for the Alkaline, given that it is lower on OpEx and has a higher efficiency. Here I also want to emphasize one other thing which has become a recurring topic. On the Alkaline platform, we've been able to engineer our way around the use of any sort of exotic materials.
We don't use scarce limited resources like iridium and platinum. We have been able to engineer our way around that, and we are applying also those principles on the PEM platform, reducing the consumption and hopefully eliminating consumption over time of some of these exotic materials. This is the 800 MW concept that we have developed. This is now a virtual factory sitting in our system. It is for a specific customer. As you can see, it's four times 200 MW. Each building has a 200 MW building block. Four times two is eight, 8 GW , 800 MW in total. That means that we have a concept where we can add more or subtract. It's also quite scalable. If you need to go bigger, you can add a building.
If you want to need to go smaller, you can have a smaller site with all the way down to the smallest, which is a 200 MW building block. It's quite a flexible concept that we have been able to develop. Here, we can also consolidate the balance of plant elements. That means that everything around it, the compressors, the rectifiers, transformers, everything, all the piping, we can reduce the amount and basically center it around the building block, the 200 MW building block, which is clever, and which basically reduces the overall CapEx of that design. Keep in mind, we are the only electrolyzer company in the world that has this experience in our backbone.
This is our history, building these kind of large facilities with bankable, proven, and technology and even having performance guarantees. Even that is not enough. You have to keep doing additional things, and one of the elements is to develop a design and a concept where you can put together these large factories in the best possible way. We have basically developed prefabricated skids, skid solutions that can come to site in an efficient way, where basically everything is put together within the factory from a pre-qualified supplier or contract manufacturing partner, basically put together and is coming to site. That means that we have also thought about how do we move these skids? How do you load them? How do you unload them?
How do you bolt them together in the best possible way to be able to, again, reduce CapEx, make sure that the installation and commissioning reaches an end as quickly as possible, and obviously also improve quality, because here the skids are produced, as I said, in the factory. This is what we need to do to maintain and become a world leader in this field, and we're obviously enjoying our independence. Sometimes there is a concern around our independence, but we enjoy it very much because we're able to build partnerships with different players. We are able to build delivery par tners with Enable, energy partners with First Solar, technology partners with Topsoe, and we will obviously also add more partners, whether it's a delivery partner, energy partner, or technology partner where and when that is relevant.
Through that independence and that partnership structure, we have a flexibility to deliver these building blocks from the 2 to the 20, 50, 100, 200 MW and all the way up to 800 and beyond. We're also able to address a broader spectrum of customers. We're able to reach further into new markets and that I think is very good. That was a lot of information in a small chapter. To be able to just summarize that before we round off, I would like to then state again that we have these two leading technology platforms on both CapEx and OpEx. We are now introducing world-class manufacturing through industrialization and automation, scaling up not only Alkaline, but also the PEM platform.
We are developing these gigawatt building blocks, where, when the customer wants a large green renewable hydrogen production plant, we have the ability to deliver that. We have a concept that, where we have consolidated the balance of plant elements to be able to capture synergies. We have our pre-assembled skids coming from contract manufacturing partners being loaded and unloaded for quick assembly. We have a supply chain with different partners, different EPC partners supporting that. All in all, this is what it takes, and this is not something that everyone can do, huh? You know, sometimes we see new small players coming to the market, but you can't do this with a handful of people, huh?
This requires a lot of systematic work, and it's not for everyone. That's important to keep in mind. Even with what we have been through now, that's not enough. We need to continue to expand. We need to continue to build very large-scale production to drive down cost in new geographies, and we need to continue to develop our PEM and Alkaline platforms, and I'll give you some insight into that. We believe it makes sense to have the same operational concept for both our platforms, and I'm now talking about production of technology. I'm not talking about production of molecules, which our customers are doing. We are delivering technology. This is production of equipment that we are doing at Herøya, and we are now applying the same principles that we have already running at Herøya on Alkaline.
We are applying the same principles on PEM. That means introducing industrialization, automation, and scaling that facility up. More importantly, we think that it makes sense to have the same operational principles on both platforms. That means that we can see large production facilities running Alkaline and PEM side by side with the same operational team in the same building, basically. If we look forward, we do believe that we need a large production facility in the U.S. and having 4 GW both PEM and Alkaline running in parallel in a large production facility in the U.S. We see a similar setup in Europe, 4 GW production capacity side by side, PEM and Alkaline in Europe.
We also see that we would need maybe around 2 GW in another location, maybe in the Middle East or in India or in some other locations in in Asia. A total of 10 GW. Not everything of this needs to be done entirely on our own. We can also do it together with partners, but that's our vision, and that's what we're working for. We have started a site selection project already, which are going to look for the first location in in the United States. In parallel with that, we obviously need to continue to advance the base technology. I wanted here to give you an example, and this is just an example 'cause it happens across the board. It happens on PEM, alkaline, even fueling stations. There are advancements on technology.
This is a sneak peek on what happens with alkaline and just an example of what the effects will be. Here we go from an eight-stack solution to a four-stack solution. This will happen over the next few years. The footprint of the four-stack solution exists, is exactly the same as the eight-stack solution. Look what happens if you put that technology into the 800 MW concept, huh? You use the same large scale concept that we already have developed, and you put the new technology into that concept. You obviously double the output of that facility from 800 MW to 1.6 GW output of green renewable hydrogen. That's why it's important to fundamentally also drive the base technology forward and advance that, continue to advance that as fast as we absolutely can.
That was a lot of details. I hope it was useful. I hope it will help you to understand what it takes, and why Nel will be successful. And I also hope that it shows you that it's not so easy being a newcomer in this industry, having a handful of people and a PowerPoint presentation. That may not be enough. Let me then finish off with a summary and outlook. In terms of having a proven track record, we are a pure play technology company, independent technology company. We have decades of experience in both PEM and alkaline, and also accumulating a lot of experience in the fueling area.
We have technology leaderships and are now ready to scale up our concepts, not only what we have done with Alkaline, but also moving, doing the same on PEM. We were the first to announce the green renewable hydrogen production target of $1.5 per kilo, basically reaching fossil parity. We have initiated now a site selection project in order to find a location in the United States where we can construct a large production facility. We expect to break order size records in 2022. In terms of strong partnership and our strategy there, we enjoy our independence. We are building a global execution muscle for large scale projects together with our partners. We are also able to build end-to-end applications, integrating towards energy source and in the downstream application with these preferred partners.
We'll continue to develop that partnership strategy also going forward. That was a summary of today's presentation. With that, we will move into the next part of the session, and that is a Q&A part. I'll invite Kjell Christian to join me here. Lars will hopefully also come to help and organize our questions.
Yes. Good morning, everyone. My name is Lars Neumann. I'm the head of communication of Nel, and I will facilitate this Q&A session together with Jon André Løkke and Kjell Christian Bjørnsen, our CFO. It's really nice to see that we have already received a lot of questions in the chat. We will try to answer as many as we can before we need to wrap up at 9:00 A.M. In case we don't have time for all questions, we will try to write back to you afterwards. Let me just start asking if there's someone physically present in the room that has a question. Please raise your hand if that is the case. Yes. Hege, would you hand out the and p lease, if you could introduce yourself, that would be good.
Lila Danielsen. I just wanted to check where Nel feels we are on reaching the $150 by 2025 target.
I think we're on track for that. The significant contribution was obviously the Herøya expansion, the scale-up. I think we put it in three main buckets. The larger contribution is basically scaling up and getting the cost down through automation and industrialization. The second part was basically designing these building blocks that we talked about today, where we have the 200 MW turning into an 800 MW and being able to consolidate the balance of plant elements. That's extremely important to drive the cost down for the entire facility. The last piece of the puzzle is working dedicated with key suppliers to be able to also drive the cost down. That's suppliers that are happy to enjoy this journey.
Not everyone is that, you know, because someone wants to kind of participate in the journey of turning green renewable hydrogen competitive to fossil and some are comfortable in the space they are. We have selected suppliers that would like to join that journey. Those three buckets of contributions contribute. I think we are on track.
Okay, please.
Thanks. Fredrik Hedemark from Citi. Thanks for the very extensive presentation. Just on the 200 MW,
Building block
Building blocks. Exactly. How far out do you think those are realistic production orders from? Yeah.
I think we will see, as I mentioned also, record size orders in 2022. We very often are asked when orders are coming, and it is quite. It's not. I mean, you see orders are coming all the time, and we had NOK 400 million worth of orders in the fourth quarter. When you'll see the first 200 MW, I don't want to speculate in it, but I don't think it necessarily is so far away.
Thank you. One other question. What did you see in the last quarter that doubled the pipeline? Was there any large development or was it more internal?
It's certainly not internal. It's basically about new companies in new areas having ambitions within hydrogen. It's basically requests from companies all over the place. I would say the noticeable big difference maybe in this particular in the fourth quarter compared to the other quarters was also India, which is now setting targets and really ramping up their activity level. India wants to. They are importing a lot of fertilizer. They don't want to do that. They're importing quite a lot of energy. They don't want to do that. They are now really targeting to produce their own energy from wind and solar, turning it into a molecule and using that in all of these different applications. That is something at least which was a bit different in the fourth quarter.
I would say there are a general acceleration of activities in the market.
Thank you.
Is there any more questions from the room? Yeah. No? Okay, then we'll move on to some other questions that we have received in the chat. I'll start with one from Pierre Lau, and this one is for you, Jon André. Can you give any more color around your outlook statement that you expect to break order size record in 2022, in particular around timing?
Exactly. That was also the question we got here, and I think I don't want to make that mistake of speculating in the timing and then being wrong. I would rather leave that open. You know, the fundamental momentum is increasing. I'm not so worried. As I said also last time, I'm not so worried. The orders will come.
Orders will come.
Okay. Kjell Christian, we received some questions related to future financial performance. Could you please comment on that?
We do not give guidance, and we did give some high-level guidance last year. We have not done this at this point in time. It's something we consider on an ongoing basis. It's again linked to the order intake situation. So far, our results are very much dependent on a few large orders, and until we have more stability around that, we will not be providing more detailed guidance.
Okay. I have another one for you, Kjell Christian. This one is also from Pierre Lau. Order intake of NOK 418 million is higher than what I can get from adding up the PEM electrolyzer, Ovako, the alkaline electrolysis and fueling module contracts announced in the quarter. Is there anything else in the order intake number, and can you better help us understand what makes it up?
Just for everyone, we have a relatively low threshold for coming out with announcement. Anything about $2 million, EUR 2 million and above we go out with.
It's correct that in this quarter, as in also in second quarter last year, there was a lot of small and many orders. This quarter it was mainly related to the PEM business in the U.S. where we do see under COVID, we talked a lot at the start of COVID about the small orders not coming. Now they are coming, and our main problem is supply chain cost and getting the raw materials in. We see an increased interest around the small pieces of equipment because that allows our customers to test out on-site hydrogen production. Also, since people talk about hydrogen, you open up new usage areas.
This is a very interesting development. It will not be the massive volumes that shifts the whole business, but it's a core, nice part of our ongoing business.
It's a good base business that keeps rolling and flies under the radar.
Well, this one is from Anders Rosenlund to you, Jon André. You've been vital for the development of Nel as a leader in this industry. Why have you decided to leave the company just when things are about to become interesting? And are you confident that the company is in good hands?
Yes, I'm confident that the company is in good hands and the team which we are setting up now is going to really be able to take it on. I will have six and a half years behind, and I think it's someone else can come in and do the next six and a half years, and we will make sure that the transition is done in a very good way. Obviously, I will not leave the company because I will continue in the Board. I'll just move from being and have a slightly different perspective and hopefully be able to contribute from a Board position. This, yeah, that's probably what I can add at this point.
Okay. We have another one also from Anders Rosenlund. Margins seems to be under pressure in the SME segment Nel Hydrogen Fueling. Is this more a reflection of price pressure, input cost increases, or adding employees scaling up the operations?
Well, I think it is a combination. We had some challenges related to getting access to materials and with the COVID, everything is more expensive, even moving people around. One of the issues with the fueling was that we were not able to travel to a site, and sometimes we had to compensate for that by hiring a third party and sub-suppliers to be able to do commissioning work, installation work, all of those things on our behalf. We had a kind of a double team, one local team that we had to hire, and then our own team which was not able to travel. We added the costs related to that.
I think it is also here you see the tendency that orders are getting larger and that, you know, suddenly you get a large order and then you get some smaller and you need to sit and wait. In the meantime, we have built a team which is ready to go.
I guess those are the two main effects.
If I may add a third one. One thing we have talked about in the report, also for a few quarters, is that the fueling technology is less mature than the electrolyzer. This is an industry-wide issue, and we see now that as the stations are used more, there is more repair and ongoing maintenance in the time period where we are responsible for keeping the stations up and running. There's also some maturing of the product that goes into it and that has given a hit of margins and is of course something we are trying to rectify in future contracts.
Okay, we have one from James Huftalen regarding the pipeline. How many projects in the 22 GW pipeline are larger than 100 MW?
I think we said that in the previous, and I think the tendency is the same, the top 20 projects make up. Was it 60% of the pipeline?
Something like that.
Top 20 projects makes up 60% of the pipeline. Obviously, there are quite a lot of large projects in there. The largest is 2 GW, but there are a lot in the range of, you know, a few hundred, 200, 300, 400, 500 MW in that range.
I have a couple of questions from Beric Schwartzkopf. Are you having enough orders to start the second production line?
I think we will. We would like. I mean, when you talk, this is the Herøya question, and we have now done the industrialization automation on line number one. You would always like to run that a bit before you close the design, lock the design on the second line because you will always find improvements.
We would like to capture as many of these improvements as possible. We will run the line for still some time, hopefully be able to take any kind of improvements that we can see before we lock the design on the second line and start investing in that. The time is not exactly right yet, but in the meantime, we have now more than enough work to start to do the same on the PEM side. Basically introducing automation in a industrialization principles, automatic assembly on the PEM side. I think that's basically where we do have the most kind of sense of urgency at the moment.
Yeah. I have a couple more from Beric. Why did you lose the Yara contract, and how is the Nikola order proceeding?
Nikola is proceeding well. They are paying and we will start producing, I believe, any minute or maybe have even already started producing for Nikola, the first PO. Why we lost the Yara, I think you need to ask Yara. I think they obviously went with a very large gas company. I think you will need to ask Yara for the details.
Okay, I have one more from Beric, that's the final one. When will the official opening of the factory at Herøya take place?
We wanted to have it in March, but during COVID we had to push it, so it will be either in April or May. We will lock that in relatively soon. We hope to try to combine it with, you know, having the first day with partners and trying also the second day to open up for journalists and analysts.
Hopefully we can have a nice combination where we cover both categories.
Yeah. We have a question here from Nils Petter Søn, related to the technology development. Do you think of developing your Alkaline electrolyzer into pressurized Alkaline electrolyzer, or is this a technology that you're not interested in?
We are doing that. We talked about it earlier in the Capital Markets Day. If you go back to the presentation material in the Capital Markets Day, you'll find quite a lot of information on the pressurized alkaline. The technology that you develop always needs to compete with what you have.
Okay.
If you launch a new product, it has to be better, faster, cheaper than what you have. That is not easy when Alkaline atmospheric is going down rapidly with industrialization. You know, the R&D team is competing with the operational team and the operational team is setting the bar, you know, at a tougher and tougher level.
We do have a very exciting technology on pressurized, and it's a quite unique design. We're doing something different than everyone else. Hopefully, the target is to test that in large scale in the beginning of next year, towards the end of this year, beginning of next year. Hopefully we will be able to verify the improvements and we can then prepare and launch a product. So far this is R&D work.
Yes.
R&D work, development work.
Yeah.
Not, say, research, but development work.
Yes. This one is from Nikolai Jepsen. You said in your presentation that sometimes you get paid for front-end engineering. Does that mean that you sometimes do front-end engineering for free, and if yes, why?
Well, sometimes there is quite a bit of an overlap, huh, between the work that we do anyway with developing these large-scale concepts and front-end engineering work that we want to do with the customers. As long as they are using the standard building blocks that we are developing ourselves, you know, you can pretty much take from the shelf. If you need a lot of tailored stuff, it's obviously paid work. That's the normal way to do it.
Yes. Okay. This one is from Eivind Garvik. Do you consider setting up production capacity in China?
Not at the moment, but we have had and continue to have interesting discussions with partners. If we were to do something in China, I think it would be with a partner, and we would have to consider very carefully what to produce in China and what not to produce in China. I think the normal setup would be that you keep the core of the core outside, and then you set up all the supporting production of the supporting elements locally, and then you combine the two, so you can keep the IP.
This one is from Bjørn Toftevaag. Is Nel's next generation alkaline electrolyzer market ready this year?
That's not scheduled to be ready this year. It's scheduled to be tested in large scale towards the end of the year, beginning of next year.
As soon as we have that, we can package it and sell it. Again, it needs to be better, faster, cheaper than what we already have.
We need to verify that that's the case.
I have one more technology related from Zoe Clarke. It's fascinating to see the 800 MW plant design. Does Nel disclose which are likely to be its key EPC partners for this design should any project of that size materialize in the future? Would it still be Wood?
We have two partners, Wood and Aibel, that cover slightly different parts of the world. You know, we do work a lot together with these two partners. In some areas, they may not have that strong position, or the customer already have a preferred partner. We obviously cannot push a particular EPC partner down the throat of a customer. Sometimes they have a preferred partner, they want to work with this one.
We have to obviously comply with that. Work with someone else. I think we have two very strong key partners in this space. We will continue to do work together and develop these concepts together.
Yeah. We have another one from Zoe. What is Nel's expected lead time from decision on the site for a new factory to the start of its operations?
It's always easier to expand in your backyard and inside the same building, so that is pretty fast. When you do a greenfield in a completely new location, it takes a bit more time. I think the most important element now is that we have a set of people that are basically developing the production line concept and introducing the automation relevant for the PEM line.
While they do that, we look for a site, we see if there is possibility to get some funding. We can push the button for an expansion. I think this needs to be done in the right way, otherwise you end up with a suboptimal design in the wrong location, maybe even not being able to get all the funding.
I'm not at this point going to speculate in how much time that's going to take.
We receive a lot of questions related to the 10 GW in 2025. Maybe you could expand a little bit on this and also covering if we already have the capital we need. If you could say a little bit more about that would be good.
Yeah, this is if we see the market development that we indicated, that means between now and 2025, we will see 25-40 GW orders hitting the market, and we want to take a significant chunk of that. We obviously need to expand our production capacity, and we can't expand our production capacity everywhere. It can't happen in our backyard in Europe, in Norway, obviously. I mean, Norway is not the biggest market. It needs to happen where the action is happening. We need to have significantly more production capacity in Europe, and we see there is a lot of action going forward in the U.S.
We do think that we need the production capacity also in the U.S., covering the local demand, but also the locally produced material. Our vision would be to have these two technology platforms running side by side out of the same building.
We could envision then having 4 GW in the U.S., 4 GW in Europe, and a couple of GW somewhere else. Obviously that doesn't mean that everything is up and running 2025 and everything is complete. That's what we need to prepare for and be ready to do. It's an ambition. It's a vision. If the market develops the way we are seeing or the way we think that's what we need to have to be able to deliver on it. Obviously between now and that is a lot of work that needs to be done.
Yeah.
Also potentially a lot of funding.
Yeah
That needs to be done, but it doesn't mean that everything has to be equity, huh? There are opportunities, as you have seen from other industries. There is opportunities also to get funding for building capacity locally.
There are also other sources of funding which will be available eventually.
Yes. I think it's time to wrap up now fairly soon. Is there anything that you would like to add before we close this, session?
I think we're okay.
Yeah. Well, we will see you back either at the official opening or at quarter one results, whichever comes first, huh?
Thank you very much.
Okay.
See you next time. Thank you.
Thank you.