Welcome everyone to this first quarter presentation. Welcome everyone in the room and welcome also everyone following this on the web. As usual, you can ask your questions already now. Post them on the link attached, and then we will come back and answer the questions or as many as we can at the end of the presentation. In terms of agenda for today's presentation, as normal, we will go through Nel in brief. Remind new listeners about what Nel is doing and who we are. We will go through the first quarter highlights, and then we will move through the commercial developments that we've seen.
We also need to talk a bit about what is happening politically, especially in Europe, before we summarize with a summary and outlook and finish off with Q&As. First, let me briefly go through Nel in brief. Nel is a pure play hydrogen technology company that delivers leading in-house, and produced and developed equipment. We have manufacturing facilities in the U.S., in Europe, and we have people and organization in California, Korea, Japan, China, and also other relevant countries. We are the world's largest electrolyzer producer with more than 3,500 systems units deployed in more than 80 different countries, and we're also a leading manufacturer of fueling station, hydrogen fueling stations, where we have sold or have in the construction round about 120 stations in 14 different countries.
We are then placed smack in the middle of the energy transition, both with hydrogen production equipment and hydrogen fueling equipment, and we are therefore enabling industries and transport applications to transition to net zero. We're therefore bridging in many ways the gap between renewable power, wind and solar and these transport and industry applications, and we are giving the renewables access to new markets and new opportunities that would not be accessible in the past. Therefore, we are contributing to the energy transition and to the decarbonization of the globe. As I mentioned, we have three main production locations. We have our Wallingford facility in the United States, Connecticut, where we have approximately or slightly more than 50 MW production capacity, but we do have room to expand in that location.
We have our Herøya facility, where we recently had our inauguration of the fully automated 500-megawatt line, and we have space to expand that facility to at least 2 GW. We have our Herning facility in Denmark, where we produce fueling stations and where we have the production capacity to produce round about 300 stations per year. We are now also actively looking for new locations, both in the U.S. and in Europe for further expansion of our production capacity. We are unique. We have the longest history in the industry by far. We have more equipment deployed than anyone else. We have the broadest technology position, and we are prepared for the future with a strong financial position. That was the Nel in brief, and then let's move over to the first quarter highlights.
Revenues ended at NOK 213 million, which is close to 40% up from the same quarter last year, and we are therefore starting to see the contribution of the new Herøya line. The backlog ended again at all-time high level, which is good, close to NOK 1.3 billion, and we added almost NOK 300 million worth of orders during the first quarter of this year. In terms of highlights, I'll just run through the highlights very quickly before we will obviously talk more about these elements later in the presentation. We got a PO for multiple PEM electrolyzers from a leader within sustainable fuels. We got a PO for containerized electrolyzer and fueling station in the United States.
We got a PO for an electrolyzer from Solar Foods in Finland, PO for an electrolyzer in Europe. We sold several H2 stations in Paris for the largest taxi fleet in the world, running on hydrogen. We got a PO for a H2 station in HTEC, one from Poland from Biproraf, and also an order for two stations from a European client which remains undisclosed. Last but not least, yesterday we decided to push the button for ordering all the relevant production equipment, or securing long-lead items for all relevant production equipment, for a second 500 MW fully automated production line, and I'll also come back to that a bit later in the presentation. We have communicated many times that this is the year to prepare for the future and invest.
That means it will have a negative impact on EBITDA. As we now plan and build for the future and build our organization, it will have an effect, a negative effect on EBITDA. We previously called it ramp-up cost. Now it's just a part of the EBITDA, and we don't single it out as a special item. When it comes to the pre-tax profit, it's also impacted by our investments. This has fluctuated in the past, as you've seen, and will probably also continue to fluctuate. We raised cash in the last quarter. Thank you very much to all of our investors that continue to support us. That means that we have an even stronger financial muscle to execute on our plans, supporting our leading position and allowing us to accelerate investments into both technology and organization going forward.
We're currently holding close to NOK 4 billion worth of cash. In terms of some more flavor on the negative contribution on the EBITDA from our investments, as we talked about, we are preparing for the future, and that is contributing negatively as we are investing in the organization across the board. Also the fact that we carried all the costs for the Herøya facility. Obviously, as we went through tuning and ramp-up in the beginning of the quarter, we don't get full contribution on the revenue side, as you've seen. That will come later. We also have a negative impact from global supply chain disruptions. You probably heard many companies talk about this recently, a combination of post-COVID elements and Ukraine issues.
We try to mitigate those things by number one, cooperate very closely with our suppliers to really work with the supply chain. Number two, pass on as much as possible of potential price increases to our end customers, our clients, which obviously do understand that we cannot carry all of these raw material elements when that is relevant. As I mentioned on March 23rd, we raised money. We completed a private placement. We raised gross proceeds of NOK 1.5 billion, which is basically actually the largest transaction that we've done in the history of Nel in terms of equity raising. It was a fast accelerated book building process and the book was covered 4.5x , which is good.
The proceeds, as I mentioned, will go to investment in organization, in equipment, and for general corporate purposes. When it comes to the order backlog, we ended again at all-time high, close to NOK 1.3 billion, and we added approximately NOK 300 million worth of orders in the quarter, which is 20% up from the same quarter last year, which we're quite happy about. Last time we talked about the pipeline, and we won't keep reporting on that every quarter. We'll give you a snapshot from time to time, so I will not cover that this time. I can assure you that the pipeline continues to grow. Even though I don't show it to you now, it continues to grow.
On the other hand, I want to show you something else this time. I want to talk a bit about FEED studies, front-end engineering studies. Keep in mind, these are just a few examples. This is not a complete list. These are just a few examples of FEED studies, so don't misunderstand that. We are basically always rolling through FEED studies. We have studies behind us, we have studies ahead of us, and these are a few of the ones that we are in the middle of. I want to show you that because most large projects that are serious starts with a FEED study. This is paid by the customer.
They ask you, "Can you please help us to make a concept around a large molecule production facility?" Obviously we take our standardized building blocks and we put that into a solution for an end customer for a particular application. It can be steel, it can be ammonia, it can be many other technologies or end user applications. It's typically a pretty good indication that the customer likes to work with you, that they prefer your equipment. Otherwise, they wouldn't pay you, because this is paid work. I wanted to kind of show you a snapshot of things because we don't normally announce this. We don't wanna draw a lot of attention to these FEED studies that we are working on.
Given that one customer actually wanted to announce, and you saw that from a customer called EverWind Fuels, they wanted to announce. We said okay. I thought it would be a good opportunity to talk a bit about what this is, these FEED studies. We are working, as I said, through constantly rolling through various FEED studies. These are paid work that the customers want us to perform. It's normally it is this, it is a start of a hopefully a long commercial relationship. Obviously we are, we have a lot of activities in this category. We talked about the 90 people that we have engaged internally. Many of them are involved in various FEED studies across the board.
As you can see, many of them are in Europe, or at least the ones that we picked out on, I think this is representative for the total universe. Many of the FEED studies are actually in Europe. There's a lot of stuff happening there. We also see increasing activities in other parts of the world, which is good, and it's a good indication of business that is coming our way. That was a bit of a flavor on that. When it comes to our expansions, we decided yesterday to order long lead items for a second 500 MW fully automated production line. We intend to place it somewhere in Europe. We have not decided on Herøya.
We have room to expand it on Herøya, but we're also evaluating other locations, simply because we have to see what kind of support opportunities that are available in different parts of the world. We have initiated, therefore, site selection in both in Europe, obviously evaluating Herøya and other locations, but as we talked about over the last quarter in U.S., we are initiating a site selection project to find a site for a combined PEM and alkaline production facility in the U.S. Last but not least, we're also actively looking for partners in Asia. We're working on many fronts here to position ourselves for the future.
Future expansions will be built on the learnings that we have already made at Herøya, which gives us a great starting point for also doing the same, introducing automation, et cetera, on PEM. When you've done it on one platform, it's always easier to migrate it over to another platform. We have the skill set inside the company. We know how to do it. We've done it before. This is not a task that you should underestimate when someone is telling you, "Oh, we're going to automate." It is a tremendous task. When you've done it before, you know how to do it. In other words, we are well-positioned to expand both on PEM and alkaline. Let's now move on to the commercial developments that we've seen throughout the quarter.
We started off by signing a combined electrolyzer fueling station order, basically showcasing the combined product offering that we have, which is quite unique to now. It goes to show that it does generate business to have this combination of technologies. This is a customer in the U.S. It's a leading utility. We're not always allowed to tell the name of the customer, but it is a leading US utility, and it's a sizable order of around $5 million. We also got an order from a new promising industry, which is now moving into hydrogen, basically feeding the world through wind and solar by using hydrogen, by producing hydrogen. Here in this industry, you basically take the CO2 molecule.
It's not carbon capture and storage, it's carbon capture and use, so CCU. Here you take the carbon molecule, you take the hydrogen molecule, you combine it, and you make a protein. This protein can be turned into a range of different foods, but also, and also foods for humans over time. Also a sizable order and an interesting new industry. We also got another order from the same type of industry but from a different company. This time, we were allowed to talk about who it is. It's a company called Solar Foods. They're located in Finland, and they are doing, applying the same principles on also producing protein from wind and solar.
Basically feeding the world through wind from wind and solar through renewable green renewable hydrogen. Great industry which are basically coming. Another example of something new that is utilizing hydrogen. We got a purchase order from Europe from a European customer from Kraftanlagen that is working for a company called Hy2B in Bavaria region in Germany. Kraftanlagen is a combined power producer and EPC, and it's really good for us to work with Kraftanlagen because they have a very strong position in that part of the world in that part of Europe. We do think that it is a great potential to do more business also with Kraftanlagen going forward in this market. Exciting project. We got several.
We sold several stations to a company called HysetCo in France, in Paris, basically fueling the largest fleet of hydrogen taxis in the world, which is in Paris. You can find it if you search it on Google. You'll be able to find it. Very often, battery electric is preferred to hydrogen electric when it comes to small cars, as you've seen, especially in Norway where we have good grid, but not always. I mean, for example, in this case, you need to fuel, you have a very high demand on utilization. The taxis needs to run all the time, and you need to be able to charge extremely fast or fuel very fast. Then basically, hydrogen electric is the platform that is unbeatable.
That's why these taxis are running on hydrogen, on hydrogen electric platform. We sold a station to HTEC in Canada, an order size of $1.5 million. HTEC is a market leader in Canada with fueling stations and other hydrogen applications. This is the third station that we are selling to this client, which means that we have a good partner then also in Canada. It could mean more opportunities. We sold a hydrogen fueling station to Poland, to an EPC company called Biproraf, which is a large EPC, and are now started to engage also in hydrogen. Again, an EPC that we could potentially also use for other projects. This first fueling station is going to combine fuel both light and heavy-duty vehicles as well as forklifts.
Basically this station will have multiple applications and fueling multiple fleets of vehicles, which is also interesting tendency that you can see on hydrogen equipment. It can be used across the board for multiple applications. We sold two stations to an undisclosed European customer, approximate value EUR 3 million. Unfortunately, we're not always, as I said, able to disclose the name. Sometimes the customers want to remain undisclosed for strategic reasons. Maybe they are competing for a bid or whatever. That's just the way it is. On April 20th, we had the formal inauguration of our brand new fully automated facility at Herøya, the largest and most automated electrolyzer plant in the world. We had close to 150 people present at this event to celebrate this great achievement.
All of them were partners to Nel, existing or future partners, potential clients. Many of them said afterwards that this was an eye-opener, this was something completely different, something unique that I haven't seen before. We're obviously following up a long list of interesting leads after this event. I'd like to share with you a small video to give you a flavor. Someone in this room were actually participating, so they don't need to see the video, but I'll give you. It will be kind of a reminder for you. For everyone else that was not there, this will hopefully give you a small flavor of what we went through and so let's go.
Welcome to this important event in the history of Nel, the opening of our brand new plant here at Herøya, a game changer. That's also what we call this project all the way from the beginning. We call it the game changer because we think that this really is a step change in history on how we can drive this forward. I have the honor and the pleasure to invite the minister up on the stage here. Terje Aasland, the stage is yours.
In a growing hydrogen market, even more electrolyzers are needed. A sign of a quality will be that the electrolyzers are marked Made in Norway, maybe made in Herøya. Today, we are celebrating that the world's largest producer of electrolyzers has become even bigger. It is a pleasure to declare Nel's new factory here at Herøya officially opened, and congratulations.
That gave you hopefully a bit flavor of what happened down there at Herøya on the twentieth of April. We also had investors and analysts visiting us on the day after. It was duly covered. That means that we are on track to reach our ambition on reducing or producing green renewable hydrogen $1.5 per kilo, making green renewable competitive to fossil. That means that we're still on track to reduce the CapEx for production equipment of molecules for our end customers by 75%. Half of that is basically coming from what you saw, basically scaling up, introducing robotization, automation, and scaling up the production of electrolyzers. Higher volume, more efficient design, and less use of materials.
Last but not least, an increasingly important topic which you should keep in mind, which is at the bottom of this slide, no use of rare earth materials and exotic materials. That is basically becoming an increasing issue. It's unique to Nel. We've been working to engineer our way around all of these use of these materials. If you select freely from the periodic table, it's easier to make something efficient that lasts long. If you really want to select only the materials that are readily available and that doesn't give you any challenges in terms of growth, it is much more difficult. That's basically what we've done. Here at Herøya, we are not relying on any exotic or rare earth materials, which allows us to expand freely. It's something we don't need to worry about.
I think we need to be better at basically marketing this element because it is truly unique. Most of our competitors are actually struggling, being stuck on using particular materials that will potentially limit the ability to grow. What we are working on now is to add another piece of equipment to the line, which is a fully automated stacking line, which means that we take the cells and we stack them, pre-stack them, so that we are able to push the whole stack into a container and transport it to site. It allows us to execute quicker for end customers when we build molecule factories for our end customers.
It allows for faster construction, less cost, and obviously we then have a high quality, robust, proven, and a design which can carry performance guarantees. We've obviously then also talked, which we talked about last quarter, thought about the way we transport these skids, whether it's a skid for a stack or it's a skid for holding a pipe rack or gas separation tanks. It can be quickly loaded and unloaded, and it can be bolted together, so that we can reduce the time of construction but also produce these elements in-house. Either we produce it ourselves or we use contract manufacturing partners in other parts of the world. This is basically how you are able to then maintain or become a leader in this industry.
You have to think about many elements. With that, let's talk a bit about some important political elements that we've seen in recent history, recent weeks actually. Six days after the tragic Russian invasion of Ukraine, EU made an important announcement and they call it REPowerEU. The target for REPowerEU is to make Europe independent from Russian energy as soon as absolutely possible and in parallel with that accelerate the green transition, the decarbonization. This includes obviously massive ambitions on hydrogen. We wouldn't be able to do this without hydrogen. Europe is accelerating their ambitions within hydrogen. REPowerEU targets to produce 10 million tons of green renewable hydrogen domestically within Europe and 10 million tons of green renewable hydrogen outside Europe imported into Europe, in total 20 million, by 2030.
Maybe that number doesn't say you a lot, but it means we need to install close to 300 GW of electrolyzers between now and 2030. 300 GW. On Herøya we have 0.5 GW production capacity. Now we can go to 2 GW. It is massive ambitions that Europe has expressed. On May 5, just a few weeks ago, we together with the European Commission, the European electrolyzer industry signed a joint declaration that basically should improve the framework conditions for electrolyzer producers. Not only end users should get CapEx and OpEx support, but Europe should also support CapEx and OpEx to expanding electrolyzer capacity. Number two, the technology needs to be scalable and cost-effective. It needs to be something that can scale, so the money should go to that.
It should be European manufacturers. Here, Europe does not want to make the same mistake again as they did with solar. They only want to support European technology providers, European producers of electrolyzers, and obviously that, all of those elements fit Nel pretty well. The European Commission expects to present a detailed plan on this REPowerEU, including the so-called Hydrogen Accelerator on the eighteenth of May. In around about one week we will know more. Something to look out for in the weeks to come. I think with that, we will move to the summary and outlook. Nel, a global leader within hydrogen technologies. We have a proven track record, and we are established a market leader. We are pure play independent technology company.
We have decades of experience within both PEM and alkaline, and we have technology leadership and large scale concepts that are ready to go. We have the ability to scale. We do believe that we have a cost leadership, and we were also the first one to announce the ambitious target to reduce the cost of green renewable hydrogen down to $1.5 per kilo. We have initiated site selections both in the U.S. and in Europe to find new locations for large scale manufacturing of both PEM and alkaline. We have a strong pipeline that continues to grow, and we expect to break order records within this year.
We are building also strong partnerships to cover the globe and to build a strong execution muscle on around in different parts of the world on large projects. We do always target to be the preferred partner to offer attractive solutions to our end customers. With that, I think we close this part of the presentation. We move on to questions and answers, and I would like to invite my colleagues up here to join me at the stage. Kjell Christian Bjørnsen, CFO, and Wilhelm Flinder, the IR. We just need to get the logistics in place. We can take questions both from here in the room and from the web. I'm sure we have received a few questions already.
Sure. First off, my name is Wilhelm Flinder. I'm the head of investor relations here at Nel. We'll facilitate this Q&A session. Before we get going, just notice that we won't answer questions on Outlook and guidance, and also we won't kind of comment on framework condition on specific projects that we're working on. Also, some of the questions that are coming through the chat has already been answered in this presentation, so we won't go through that, and also try to aggregate the questions on the same topic, so we don't stand here repeating ourselves. First, start with taking questions from the room.
Thank you. Gard Aarvik, Pareto. First question on the fueling side. Of course, a bit softer now this quarter, and as you state, also due to the focus of going more towards multi-stations rather than only delivering on individual stations. Can you comment a bit on the reason for doing that now and also the possibility of both focusing on individual stations, keeping the revenue momentum up while still looking for multi-station opportunities?
Yeah. I think we have, as you pointed out, and rightfully so, we are trying to target and basically selling fleets of stations to larger strategic customers. That means sometimes that you need to sell a few single ones, but hopefully to a customer that has a potential to take a fleet. I think we do experience that deploying single stations in far away from each other, and often having a slight twist on either the software or design or some custom element to it, is driving additional cost and for the organization. So it's a combination of basically what the market asks for because now those opportunities are there. I mean, they were not there in the past.
Now we have customers actually asking for fleet stations. For three, four, five years ago, that wasn't the case. There was a demo after demo after demo. Also, the fact that we are trying to home in on those customers because we can then basically position our whole concept around that. We can make certain adjustments to the hardware, to the software, but we can also set up an organization to support a whole fleet of stations. I think it's a win-win. It's a win for us, but it's also a win for the customer because the total experience for them is gonna be better, and it's also gonna be easier for us to handle.
Okay, thank you. The last one from me. The development in the electrolyzer segment was very strong, congratulations with that. Given that Q1 is seasonally a bit softer than Q4, is it possible to say anything on the revenue completion on some of the larger contracts you have, for example, Everfuel and Nikola, in this quarter, or how much of that is completed in your revenue booking?
Yeah. If I may comment on that. First of all, we would have liked the first quarter to be even stronger. When we talk about supply chain disruptions, it is a real thing, especially on the small and medium projects, what we call the industrial series out of the U.S. We are struggling with lead times. There is a backlog there, and we could have delivered more if we had all the components. On the individual projects, we normally don't, you know, comment on them. What we have said earlier about Nikola is that the electrolyzer part that we manufacture in-house will be spread roughly evenly throughout this year. The balance of plant, which is more pass-through cost, will be decided when Nikola decides where they actually want the equipment. That remains the case.
There's no change to that. You could think about the electrolyzer part relatively as over this year. I think Everfuel has themselves commented about roughly mid-year for completion of their plant and revenue recognition is linked to how the customer project progresses.
Thank you.
While we're moving the microphone back, let me just add also that means that for the many smaller that Kjell Christian Bjørnsen talked about, you know, we still keep building this unit, but there may be, you know, one piece missing, and then it's sitting there until you slot that in, and then you can ship it to customer. That's just the way it is this time.
Thank you. Anders, SEB. Has the ramp of the Herøya plant gone according to schedule in retrospect? Because already in Q3 last year, you said you were producing, and now you're still talking about ramp activity. I have a follow-up.
Well, we talked about in Q3, we basically completed the construction of the plant, and we started test production, and we did that in the fourth quarter. We started industrial ramp up this year, which means in the beginning of this year. It is going according to plan. The plan was to run on three shifts at least through the first half of this year and then move to five shifts in the second half. That's still the case. The reason why we do it like that is because after all, this is a completely new concept.
When you are running three shifts, you're running 24/5, 24 hours a day, but five days a week, which means that you will have more presence of engineers and support functions. When you run through the weekend, you won't have that. That means that it's a kind of an extra allows for some extra robustness when you go through a ramp up. I think it doesn't necessarily mean that every ramp up needs to be this way, but I think it's a very good way to do it when you ramp up a completely new concept for the first time. Then you make sure that you don't end up in a situation where suddenly you lose control over the production process, or you end up producing products that are not of the quality that they need to be in.
We also have been able to maintain the quality. I mean, we see that the output of the factory has never been better. I mean, in the history of Nel, it's never been more consistent, the output of the factory. That is because we are basically doing it this way. We've done it before, huh? This is, I think, the way to do it.
I think to add to that also on the commercial side, of course, we do not have a big enough backlog to run 24/7 for the next two years yet. At the same time, we are ordering long lead time items. This is the binary situation of this industry. We are not sold out, but we are talking to customers about capacity reservation fees at the same point in time.
Okay, I understand that everything according to plan. Okay, my second question. You say that you are the world's largest electrolyzer plant, but there are some competitors saying the same. Why can't you as an industry agree on who has the largest plant?
There will be claims made. I mean, there are many claims in this industry, unfortunately. It is. I understand that it's a bit difficult to filter through. I mean, you have companies claiming that they are electrolyzer producer running around with PowerPoints. Sometimes they have to announce that they were not able to do what they were able to do. You have a lot of announcement of orders which are not orders. They are intentions, they are frameworks, they are not fixed firm POs. It is unfortunately a bit like that. You have to kind of spend a bit of time filtering through what is real and what is not.
I think it's no doubt that we are the largest when you talk about water electrolyzers. We have by far the longest history. We have deployed more equipment than anyone. We are by far the largest. We have the largest turnover. thyssenkrupp is also doing chloralkali electrolyzers. If you add chloralkali, which is a completely different platform, but they're also electrolyzers, maybe they are bigger than us. But water electrolyzers, there is no one. I know that companies have announced expansions. These are very often empty buildings, and that was why it was really good to have many partners and analysts all in the plant that has actually been in all the plants.
They see what we are doing is completely different than what they've seen in other locations. It is difficult sometimes to filter all of this news flow, but it actually needs to be filtered sometimes and to be able to understand exactly what's behind.
Okay, thanks.
Thank you. We can jump over to the chat if there's no more questions from the room. We have gotten a couple of questions on increasing raw material cost and how this is affecting gross margins as well as our cost reduction targets. Can you comment a bit on that?
First of all, on some of the existing contracts, we have not secured fully back to back, so it is impacting margin negatively. This is typically things like steel and nickel prices, where on the PEM side, on the iridium, platinum group metals, et cetera, et cetera, we would normally secure when we enter into on the customer side, we would back the other way around. There is some impact on the ongoing contracts. On new contracts, this has led to some, you know, interesting prolongations of final negotiations, especially when nickel prices surged, because we need to see that we can back the cost position we have with what we promise on the customer side.
It is making, at this point in time, some customer negotiations a bit harder to close.
Thank you. Zoe Clarke from Goldman Sachs is asking, in light of the announcement for securing of long lead items for the new 500 MW production line, what is the guided timeline for this to come on stream? In other words, what is the typical lead time for such an expansion?
I think if we didn't order it now, we would have seen even longer delays. We wanna make sure that we get the equipment. It will allow us to hopefully expand sometime during next year. I think that's as far as I would like to go. Now we also need to figure out exactly where to place it, whether it will be at Herøya or somewhere else. We do see now that if we had delayed this one month or two months, we would have seen even longer lead times on equipment. That is something that we want to avoid.
Following up on that, Arthur Sitbon from Morgan Stanley, could we give a rough idea of the timeline to get to 10 GW of annual manufacturing capacity that you are targeting? Where should we expect to see you in 2025? Will you need to raise further capital to fulfill this vision?
I mean, we haven't completed all the financing for 10 GW, but I think we talked about also last quarter that there are opportunities, funding opportunities. I mean, we see the U.S. is launching big ambitions, and we're also trying to figure out find a location that can also combine with funding opportunities. Not everything needs to be equity, obviously. How we package the financing, what is funding contributions from regions compared to debt, compared to equity, we will come back to. Our target is to. We calculate it backwards.
If we believe the market is developing the way it is and we want to have a meaningful market share, 20%-25%, then we need to have in 2025 timeframe, we need to have good visibility on 10 GW production capacity. That's basically what we are looking at at the moment. We need to take one step at a time. I think we should be able to accelerate faster also when we see the market is developing. Anything to add to that?
No, I think that covers it up. You know, we move with the market. Specifically for the long lead time items, now that is also driven by the supply chain disruptions. We have earlier said about 12 months to add another line at Herøya or a similar place. We fear that that might take longer if we hadn't put the order in now, just because of availability of equipment.
Also, a bit further on that, stated in a slide there that we're looking for partners in Asia. What kind of partners? Is JV an alternative?
What we have said earlier as well is that we are very comfortable expanding in Europe, in the U.S., in Australia, and in lots of other markets around the world. There are some markets, especially in Asia, where it is difficult for still a relatively small organization to grow from zero to the kind of levels you need. We will be looking at partners, including structural corporations. The exact scope of such cooperation and how we legally organize it still needs to be decided. What is driving for us is the solid industrial rationale. We need to see that we have a good reason for cooperating, that it solves our participation in the relevant markets, and that we get a solid revenue and/or profit stream coming back.
Hopefully also visibility on orders.
Yes.
If we can find a partner that can give us a lot of visibility on orders, on offtake from a facility that we place in that particular region, it would be a big benefit. That's basically what we are. Examples of companies that we are talking to are partners that can help us into a new region, but also offer visibility on volumes.
Good. Then let's jump over to a bit more on the technology side. Got a question from Shang Shi Li. Apologize if that's pronounced incorrectly. How is your outlook on PEM versus alkaline? Are you seeing a trend in quicker adoption of PEM? Do you plan to increase PEM capacity anytime soon?
We are now working to industrialize our PEM platform and finding a production location for that in the U.S. The disadvantage with PEM across the board is that it's more expensive and less efficient. That's the fundamental position where we are now. Many of the large projects, you typically get requests for alkaline when you talk about multi-hundred megawatt projects, because then, you know, even 1% more power consumption makes a big difference over the 20-year lifetime of the plant. A huge difference, actually. This is a snapshot of where we are today. All of these, we are obviously driving developments on all platforms. We are, you know, running forward with the technology on alkaline, introducing the automation and many other tweaks to the technology.
We are running forward with PEM. PEM versus alkaline are obviously pushing each other also, setting the bar, so to speak. We're also working with the other technologies on this pressurized platform from the technology environment. The beauty of having these positions where we think we have the best of these platforms, we can offer it to the customer, but it also gives us a technology hedge. I don't need to kind of argue one technology up or one down. Whatever the customer wants, we think that we have the relevant or the best available platform. Who becomes the long-term winner, we don't know. We've seen from other industries that parallel platforms can actually coexist for many years.
Like in solar, you had monocrystalline, multicrystalline, and thin film, which were coexisting and which were positioned slightly different from market to market. We think that this is, it's a strong technology hedge, very good for us to be in that position, and we can also see synergies across. A lot of the balance of plant elements are the same. The rectifier, transformers, gas liquid separator systems, a lot of that is the same. The logic of the way you produce the technology is the same. We think that it's really one of the key strength of Nel is to be able to have this position.
Thanks. You talked a bit about usage of rare earth materials. Deepa Venkateswaran from Bernstein is asking if this could be a constraint usage of exotic materials. I presume you mean platinum group metals for PEM. Could this be a bottleneck for Nel's future PEM expansion?
It is a challenge for anyone that is stuck on when you use something which is very rare or very expensive. It can represent a bottleneck to growth. You know, we are working to reduce the amount of platinum and iridium on our PEM platform. We are trying to do the same we already have done on alkaline, which is basically engineer our way around the use of these exotic materials. We're trying to now do the same on the PEM side, which means that you don't go from using a lot of it to nothing, but you do gradually reduce, and eventually you'll be free. It is a fundamental challenge.
It is something which you basically need to address in a systematic way if you rely on something exotic. As I said, in the beginning, if you're free to choose whatever material in the periodic table, it's not so hard to develop something that lasts for a very long time and that is very efficient. If you need to kind of remove everything that is hard to find or very expensive, then it becomes incredibly hard because you need to have a technology platform where the whole production setup may be different. That's what we have done on alkaline, which we're now working systematically also on PEM. Hopefully over time, it will be less of a limitation.
Today, it is a disadvantage of PEM versus alkaline.
Chris Leonard from Credit Suisse, two questions there. Order intake was up 8% in Q1. Will disclose how many megawatts of electrolysis were contracted, and when will we see the first 100 MW order achieved now that Herøya has been opened?
For the first one, we have a pretty low threshold for giving stock exchange notices, and in those, we typically give the megawatts out. We haven't yet gotten around to summarizing that in a quarterly report, but that's something we, you know, look at doing. You can get roughly there by just looking at what we have announced to the market. On the first 100 MW, that is the million-dollar question as always. We would have loved to be precise on that, but that is a decision that's in the hands of our customers and grant agencies or funding agencies very often. It is outside our control. We are driving as fast as we can in that direction.
Of course we need to move with the market.
Another question from Chris: Are you seeing more competition in alkaline electrolysis with peers committing to higher manufacturing capacity out to 2025 than we've seen during 2021?
Not on the basis of production capacity. That's I think the partners that we are working on are very convinced that we will have the capacity and we will be able to add more. I don't see a big concern there. I do think that there are other things that are important, obviously, but comes back to the total solution and the cost of the total solution and the efficiency of the total solution. That's something where I think we have a good position.
Question here from Loris Walmer: What are the expectations for the next years in the hydrogen sector, and how are the government helping to renewable sector to reduce the cost of producing this energy?
Producing electrolyzers?
Mm.
Well, I mean, here you have. We kind of have to go through and do region by region. We talked about Europe today, and we see a lot of underlying positive momentum in Europe. It will be very interesting to see how this Hydrogen Accelerator will be deployed. Obviously we have the position of the president in Hydrogen Europe, so we try to obviously have one hand on the wheel there. When it comes to the U.S., the underlying momentum with the Build Back Better Act and those things which we had talked about earlier are also fundamentally very positive. I think the U.S. is slightly behind Europe, but the way that we see that is developing with the hydrogen hubs.
Part of the reason for why we have initiated this site selection search and combining with funding opportunities is exactly because of that. I think we could see some interesting developments there. You know, it's a combination of scale of cost down and new technology development. Every time I have the chance to talk to politicians, I keep reminding them that, you know, this is not about, you know, developing something new and exciting, which is far out into the future. Many ways we have the technology today. It's about just deploying what we have and scaling that up, and it will be competitive. There will always be technology developments that you refer to, but it's not fundamental.
We don't have to sit and wait for some magic technology appearing in years out in time.
Thank you. From Garrett Young, when the EU talks about supporting only European companies, do you think a Norwegian company like Nel will benefit? Norway is not an EU member.
No, we are a European company and we are supporting. We are a member of the EU through our agreements with the EU indirectly, and we are definitely seen as European. Keep in mind we also have a lot of employees in Denmark. We have more employees in Denmark than we have inside the EU than outside the EU. We are definitely seen as a European player and a European company.
I think we can do one more last question. Lately, a lot of companies are developing pressurized alkaline electrolyzers, and we have also been talking about that. What is the advantage from the normal alkaline electrolyzer over pressurized alkaline electrolyzer?
Basically two things. You have some output pressure, and very often you need some pressure. Not very high pressure for industrial application, but you need some pressure. You know, 10, 15 bar at least. If that comes out of the electrolyzer, you don't need to have compressors, which can be a benefit. And then it's footprint. You have smaller footprint. However, it very often carries a disadvantage, and that's why we spend a lot of time developing, because you need to have something which is more efficient and cheaper, but not carry the disadvantages, which very often is also following its safety issues, its efficiency issues, it's stuff like that that are associated with that type of technology.
It is not trivial to kinda come with something which is, you know, better than what is already available, which is already covered by PEM and alkaline atmospheric. You need to have something which is basically on a different level, and that's why we are investing a lot and taking time to do that. We do think that we are on track to have something really exciting, which we will talk more about later. It's not trivial.
Lastly, there are some comments here. This is your last quarterly presentation. Comments that you will definitely be missed going forward. Questions that we haven't had time to answer, I will try to get back to you on those. Or else you can also send me an email at ir@nelhydrogen.com.
Yeah.
Do you have any final remarks?
No. I mean, I just want to thank everyone. This was my last quarterly presentation, so thank you very much also for showing up here today. That was really nice to see you. I will still be around. I'm also very well coordinated with Håkon Volldal, which will take over on the first of July. We are well coordinated, so it will be a handover, a running relay handover. I wouldn't worry about that. Obviously I will follow from the board, and hopefully I will see you guys again in some other events. Thank you very much for joining and welcome back in August, I believe now, huh. Thank you.