Good morning from sunny Oslo. We are ready to present Nel's second quarter 2025 results. My name is Håkon Volldal. I am the CEO. With me today, I have our CFO, Kjell Christian Bjørnsen, and our Head of IR and Communication, Wilhelm Flinder. We have the following agenda. I'll skip the Nel in brief section today. We will focus on the second quarter 2025 highlights. We'll have a commercial update, a technology update, and as usual, at the end, a Q&A session. The quarterly highlights are as follows. We had revenue from contracts with customers of NOK 174 million. We had a negative EBITDA of NOK 86 million. Order intake NOK 71 million. Order backlog ended at NOK 1.25 billion and the cash balance at NOK 1.9 billion. Among the highlights in the second quarter, our partner, Samsung E&A, launched its CompassH2 hydrogen plant solution with Nel inside.
Statkraft cancelled, unfortunately, the 40 MW alkaline electrolyser contract they signed back in 2022. We also signed an MOU with HydePoint to co-develop modular hydrogen systems for offshore and nearshore environments. Looking at the group financials, we are more or less spot on. Analyst consensus for the quarter, deviations of 1% for most items. As I said, revenues from contracts with customers down from NOK 332 million last year to NOK 174 million. The quarterly decline of 48% is largely driven by lower project activity in the alkaline segment and previously announced contract cancellations. EBITDA came in in line with last year, mostly due to higher gross margin on products sold in the quarter and also reduced costs that we will get back to. EBIT ended at minus NOK 153 million.
Pre-tax income - NOK 132 million, net income - NOK 131 million, and cash flow from operating activities was - NOK 53 million. Solid cash balance at the end of the quarter. If we decompose the group financials into our two segments, looking at alkaline financials first, we see that both the first and second quarter had low revenues in comparison to our performance in 2024. In the second quarter, we had a few project milestones bringing total revenues in at NOK 65 million. Despite that, EBITDA was minus NOK 26 million, a decrease of NOK 23 million compared to last year, but an improvement of NOK 26 million over the previous quarter. We have started cost reduction activities and also adjusted our capacity, and we did that in the first quarter. This is now starting to take effect and will reduce costs into the second half of 2025.
For PEM, the story is a bit more positive. Revenue in line with the same quarter last year, mainly driven by sales and deliveries of containerized systems. Increase of NOK 23 million over the previous quarter. EBITDA improved NOK 5 million compared to last year due to better gross margins on products sold. Overall, PEM products and project margins are improving on the back of more favorable contractual terms and conditions and also better execution with less rework, less quality issues, and also fewer people involved in the delivery of our various projects. Order intake in the quarter was low at NOK 71 million compared to NOK 311 million in the first quarter. Limited order intake on the alkaline side, better intake on the PEM side. Order backlog is now at NOK 1.25 billion.
I would like to comment that a lot of the decline that you see here is due to the fact that we have taken out cancelled contracts and revenues at risk. The contracts where we previously included the contract values and listed them as values at risk, that amount has come down by more than NOK 400 million compared to the first time we presented that table. I think it was the fourth quarter of 2024. A lot of cleaning up in the backlog, which means that the backlog that we have now is of higher quality than what we had a year or a year ago. Cash burn rate is coming down. The cash burn rate, if we simplify it, it's basically the EBITDA plus CapEx investments. We can see that in the first and second quarter of 2025, we are around minus NOK 120 million in the quarter.
That compares to quarters historically where we have burned almost NOK 500 million. The reason for this is, of course, not that EBITDA has improved tremendously in 2025, but we no longer need to spend as much money as we did in the previous quarters on production line equipment and ramping up capacity. We have 1 gigawatt of production capacity at Herøya. We have half a gigawatt for PEM in the United States. Our need to invest further into additional production line equipment is limited. That means most of our investments today go into technology development. We expect the cash burn rate to continue to develop favorably compared to the previous years. We have already executed on a cost reduction program, and you now start to see it in the reported figures. We peaked at around 430 employees around the end of third quarter 2024.
We were 361 employees at the end of the second quarter of 2025. That number still includes some people that are still employed by Nel due to mandatory notice periods. We expect this number to continue downward. That also means that our personnel expenses have started to decline. That, in combination with the halting production at Herøya, will lead to a lower cost base in the second half compared to the first half, in particular for the alkaline segment. Moving on to the commercial update, we will start with the short market perspective. Nel's pipeline of projects is large, and it is also increasing, but final investment decisions continue to be pushed out in time. We would like to say that the quality of the projects we are targeting and pursuing is higher than in the past due to stricter FID criteria.
Several of our target projects are in the 20 MW- 200 MW range, and they are expected to take final investment decisions in the next quarters. One important step towards reaching final investment decision is to conclude a FEED study. We are currently involved in 540 MW of paid FEED studies for large-scale electrolyser systems, and some of our EPC partners are involved in additional studies for hundreds of MW. That is a good signal that we are moving towards FIDs in the coming quarters. If we combine that with the improved clarity around U.S. regulations, that is expected to help demand and also improve market conditions going forward. On that note, when we say that there is increased visibility around U.S. political regulations, it is related to the extended visibility and clarity on the 45V hydrogen production tax credit.
This is a production tax credit, which is now secured through the end of 2027. It means that projects that meet the commenced construction requirement by this date will be eligible for up to $3 per kg of hydrogen produced. Qualifying projects can claim the credit for a 10-year period once they are placed in service. What we still need a bit more clarification on would be what it specifically means to commence construction. We know that the tax credit allows for foreign equipment. The credit now enjoys a high degree of political stability with no foreseeable efforts to roll it back before 2028. Overall, this is a very positive development compared to some of the worst-case scenarios that analysts and media expected just a few weeks or months ago. This was a key highlight of the quarter. Samsung E&A, our EPC partner, unveiled the CompassH2 concept.
It's a 100 MW full plant powered by Nel. As you can see on the picture, the Nel brick is the electrolyser building with our equipment inside. The rest has been designed by Samsung to optimize the efficiency overall for the system, to reduce and minimize footprint requirements, to offer system-level performance guarantees, comprehensive engineering support, and end-to-end solution offerings. This is a full-blown hydrogen plant consisting of 100 MW of electrolyser capacity. This concept is marketed by Samsung worldwide. We expect this to be highly attractive to customers that would like to have an end-to-end solution, that do not have in-house competence, or even if they have it, do not want to spend a lot of time and effort on building their own hydrogen plants, but rather buy something that is backed by performance guarantees.
Performance guarantees that are trustworthy and credible because they're backed by a big balance sheet. A very positive development for Nel and in line or in accordance with our strategy to focus on making the best electrolysers in the world and partner with companies that can put together a complete package. Samsung is one example. Saipem is another example of Nel's EPC strategic partners. The technology update. This is what excites us these days, and it's because of the progress we are making. If we're honest, first-generation technology is definitely proven. It has been around for decades, and Nel has sold more than 7,000 electrolysers globally to more than 80 markets around the world. The levelized cost of hydrogen is still high. These figures are from McKinsey.
There are numerous studies out there showing similar results. If you look at even a large-scale project in the U.S. Gulf Coast, the cost per kg of hydrogen is around $5. The key cost driver is electricity, followed by CapEx, not for the electrolyser only, but for the entire project, operation and maintenance, and financing cost. It amounts to $5. If you look specifically at the CapEx portion, the $1.7 per kg, you can see the details on the right-hand side. We are around $2,000 per kW for large-scale projects. We're probably closer to $3,000 today per kW for small projects. It's not due to the electrolyser system itself. From this analysis, you can see that the electrolyser system is $750 out of the $1,800-$ 2,200. The electrolyser system dictates how much time and money you need to spend on materials, construction, engineering, and other hardware equipment. That's why the electrolyser is key to solving this cost problem.
Nel's approach to lowering or reducing the levelized cost of hydrogen is the following. When you look at OpEx, you need to improve the energy efficiency. The less energy you need to spend per kg of hydrogen produced, of course, the less electricity you need and the less money you spend on electricity. You also need to extend the operating range, and you need to enable quick ramp-up and ramp-down because that allows customers to take advantage of periods when electricity prices are low. It means that you can produce most of your hydrogen during off-peak hours and maybe even turn the equipment off when electricity prices are high. To enable that, you, of course, also need low CapEx.
If you intend to operate your system, let's say 30%, 40%, 50% of the time, CapEx is even more critical when it comes to the levelized cost of hydrogen than what we saw on the previous page. CapEx is actually more important than energy consumption. The way to reduce CapEx is, of course, to reduce the cost of the different modules. We also believe that we need to enable outdoor operation with no building. The building itself can be extremely expensive, the building that will house all the electrolysers and other equipment. If we can make that compliant with outdoor operation, we will save a lot of money. We need to standardize the equipment. We need to take out thousands and thousands of engineering hours needed to put together a hydrogen plant today.
We need to reduce the footprint, and we need to modularize to reduce the site work, the construction work, the thousands of hours going into putting the different bits and pieces together, testing it, and commissioning it. That's our approach. We have looked in detail at the OpEx drivers and CapEx drivers for our future systems. The one concept which is first in line is our next-generation pressurized alkaline system. I have presented this before, but just to do a quick recap, this is a 25-MW building block or a 10-ton per day building block. You can fit this into an area below 230 sq m. Everything is packaged inside 20 ft containers. It enables outdoor operation. It reduces shipping and logistics costs. It also forces you to standardize the setup, meaning there's limited engineering involved. There's a limiting site work. You just connect these modules together.
In the center of this setup, you have the process kit. This is where the gas is separated. You have oxygen, and you have hydrogen gas inside the process kit. You do various treatment of the gases. Feeding this process kit, you have four stack skids. Each stack skid, each 20 ft container, has a capacity of 6.25 MW. On the outside, you have the power electronics. You have the transformers, and you have the rectifiers. The beauty about this concept is that it reduces footprint by 80% compared to today's atmospheric solutions. Not only does that mean that your cost of land goes down, but the groundworks that you need to do, the site preparation, the civil work, the cabling, the piping, the concrete slabs, all of that work, all of that cost comes down.
System CapEx comes down by 40%- 60% compared to today's atmospheric alkaline solution, cost-reduced, I should say, atmospheric alkaline solutions. The standardization of the system and the 15-bar pressure enables the removal of several modules. It reduces the size of the modules. Due to our smart setup, we can reduce engineering and site work, as I said. The total impact is a 40%- 60% reduction, taking us very close to less than $1,000 per kW, which is the holy grail because below $1,000 per kW, you are extremely cost-competitive with green hydrogen. Finally, system energy consumption below 50 kW-hours per kg. That's at least a 10%, sometimes 20%- 30% improvement compared to existing systems on the market. That, of course, will reduce your electricity bill, your OpEx. This setup helps you address both the CapEx portion of the equation and the OpEx portion.
On the right-hand side, you see a real picture because in Nel, we sell real products, not just PowerPoint concepts. This is the gas processing unit skid being installed at Herøya Industripark. We will validate this setup. We will put next to this our pressurized electrolyser stacks. We will put in the already procured and secured transformer rectifiers and validate the entire prototype during the third quarter. We will take FID on a gigawatt production setup in Q3. Remember that this production line equipment is way cheaper per MW than what we have at Herøya today. It's mostly robotic assembly, and it's also, to a large extent, paid for by the E.U. grant that Nel received last year. We will validate a full 25-MW pilot in 2026 together with a customer. We have an agreement with Norwegian Hydrogen to test this at Rjukan for the project they are planning there.
We will launch this as a commercial product and start to sell it and deliver the first units next year. We will deliver at scale. What does that mean? It means hundreds of MW in 2027. It's not only that platform we are progressing. You could argue that today's solutions are high CapEx, high OpEx solutions with the atmospheric alkaline system being one example, or today's PEM platforms. With the pressurized alkaline system, we develop a low OpEx, medium to low CapEx solution. Ultimately, what we want to have is a super low CapEx, super low OpEx solution. One such solution could be our next-generation PEM stack. This is, as we have commented on earlier, a product we are developing in collaboration with General Motors, leaning on their vast experience in fuel cell technology.
It excites me to see that we are now really making big steps forward on the technology. We have 140% higher capacity on the same footprint. The factor is 2.4MW On the left-hand side, you see a 1.25 MW stack. On the right-hand side, you see a 3+ MW stack. They have the same footprint. Stack CapEx reduction is 70% compared to today's PEM stacks. That's a big, big saving for the component that is the key cost driver for any PEM system. Whereas an alkaline system consists of different parts and modules, and the stack is just one out of many, many modules, and not always the key cost driver for a PEM system, the stack is indeed the most important cost driver. To achieve a 70% reduction on that module is a gigantic step forward.
The stack energy consumption will be below 48 kW-hours per kg and paralleled in the market. All this will make a new PEM system from Nel a low CapEx, a low OpEx concept. It's not only a concept anymore because we have passed a key design review that has allowed us to verify the initial cost estimate that we have. We have now a stack based on real quotes for real components from suppliers. We have started to put together a real stack with real components. We have initiated procurement of full-scale prototype components. We will continue to invest in test infrastructure and full-scale test stands to simulate varying duty cycles because we don't want to release this product unless we know for sure that it will also have the durability that we need it to have. We have started, as I said, to build small stacks, put them together.
Timing-wise, this product is probably one year behind the pressurized alkaline concept, but with a fantastic potential when we launch it and industrialize it. As I said, it could be the low CapEx, low OpEx solution that is needed to unlock the potential in Europe and several other regions to develop green hydrogen projects profitably. That's what I had prepared or we have prepared for today. As I said, the numbers are in line with the analyst consensus, of course, impacted by previously announced order cancellations and postponements. We continue to make great progress with our new technology and will be ready to offer solutions that are unparalleled and I would say unique in the market when it comes back. I will be joined by our CFO, Kjell Christian Bjørnsen, shortly to answer your questions.
Before tha t, Wilhelm, maybe you want to repeat the rules of engagement for the Q&A session.
Thank you, Håkon. Some general info before we kick off. The ones that want to ask questions, please use the raise hand function, and we will call up the name and activate the microphone to the one next in line. Please make sure to activate the microphone on your end as well, as this will likely be muted also. Please also keep a maximum of one question per person due to time constraints. If more time, you can always go back in line. If we have time, we will also take written questions submitted through the Q&A function. If there are questions we don't have time to answer, please reach out to us on ir@nelhydrogen.com.
As a reminder from previous quarterly presentations, we will not comment on outlook-specific targets, detailed terms and conditions on specific contracts, as well as questions on specific markets. Modeling questions we would also appreciate are taken offline. With that, we're going to kick off with Elliott Geoffrey Peter Jones, Mikkelbust. Please go ahead.
Hey, morning guys. Thanks for saying the full name there. I appreciate that. Just a quick one on the order intake. Obviously, that was a bit lower this quarter. Given the clarity that you've seen from the U.S. now, what are you hearing from customers? Are they already getting excited about it and moving forward, or are you expecting this to kind of be more, you know, order intake to pick up maybe at the end of the year, beginning of 2026? On that note, with these orders, with the lead times, are you still expecting these lead times to be kind of, you know, nine months to a year with regards to getting the order and then seeing that come into the revenue item, the revenue line item, or is it longer than that now or shorter? Just any kind of color on those two things would be great.
Yeah. I think the clarity that we see around the 45V regulations will not lead to short-term order intake, but it will help some of the projects that have already been matured for a long time and maybe, you know, been put aside to get back on track and, you know, potentially over the coming quarters lead to new orders from North America. I would say the projects that will drive order intake in the coming quarters would predominantly be in Europe and to some extent in the Middle East, projects that have been active for a long, long period of time that we have worked with clients on to mature for, you know, one year, two years, and that we have, you know, completed feed studies on.
The 45V regulations help in terms of future order intake from North America, but it won't impact order intake in the coming, let's say, one to two quarters.
Got it. Sorry, one follow-up on that side of things. Are you still seeing PEM as the kind of technology of choice with these customers, or these orders that you're talking about, or these projects that you're talking about, are they alkaline?
Anything up to 20 MW, I think, would fit PEM. Anything above 20 MW would typically, at least from Nel's side, be alkaline technology. The large-scale orders we talk about for feed studies, etc., are alkaline projects, and some of the small to mid-size projects are PEM projects.
Sorry. When we were talking about in Europe now, you're seeing potential in Europe. Is that more, are you seeing customers more looking at the PEM side of things or the alkaline side of things?
If they want, if they're looking for 10 MW, 20 MW, 30 MW, they're typically looking for PEM. If they want anything larger than that, they will look at alkaline.
Got it. Thanks a lot.
Thank you, Elliott. Next in line, Daniel Haugland. I see you also have some written questions, but I assume you take out those questions as well.
Yeah, I'm going to start that with one question, and then I can get back in the queue. I see the other OpEx has been running at quite significantly lower levels in both Q1 and Q2 versus last year. I think in Q2, it's down 25% year over year. I was wondering, can you comment on whether this is kind of the new running OpEx now with shutdown , or is there any kind of other effects at play which we should also think about here? Thank you.
Let me first start by advertising for the notes to the annual report, which may sound like a boring document, but it's actually quite interesting. If you look at the breakdown there, you will get really good insight into what really goes in there. As you said, there are multiple effects at play. For the first one, we have been relatively brutal when it comes to consulting cost, external spend on hired-in employees, etc. There has been a definite effect where we have taken down cost. We still need to do some for the legal part. On some of the other buckets as well, like utilities, of course, there's a shutdown effect of Hæja. Part of it is ongoing cost basis lower. The things that could come a bit back up again are the things related to R&D and to work done at subsuppliers.
For example, if we deliver a containerized PEM system, we do have a subsupplier doing the containerization, and then the cost in that bucket will be matched with the revenue. The same when we typically do grant-based research. The grant-based research will have external components, and then we get the grant funding at approximately the same time. Yes, lower run rate, but it could be bumped up in certain quarters based on activity on either R&D or on specific projects.
Okay. Just a quick follow-up on you mentioned the PEM containerization, subsuppliers, etc. That's booked under other OpEx and not kind of under raw materials or?
Yeah, it depends on the project-by-project definition, yes.
Okay. Thank you. I'll get back in then.
Thank you, Daniel. Next question comes from Arthur Sitbon. Please go ahead.
Yes. Thank you for taking my question. It's mainly on what happened on the U.S. clean energy policy. You were flagging the development on the clean hydrogen production tax credit. I was wondering, in particular, what do you expect to be the—you made a short comment on it in the presentation, but maybe you can provide a bit more color on what you expect the conditions to be around the safe Harborr ing. I think you mentioned that it would be a financial criteria. Maybe if you can provide a bit more color on that and how it would—how the administration thinks about it in the context as well of the executive order that they put for wind and solar, that would be quite helpful. Thank you.
Yeah. We don't know too much about the specifics. By that, I mean, what does it take to say that you have completed construction or that you have started construction? We assume that even if the interpretation would be that you need to purchase all the electrolysers, in terms of a total system CapEx, you might then commit to, let's say, you're using electrolysers to build a fertilizer plant or you plan to export green ammonia because, let's face it, domestic demand in North America is not going to be huge. It's going to be mostly for export markets and specifically Asia. You don't export green hydrogen in compressed form. You typically convert it to ammonia or methanol, or you can even sell e-methane, some kind of synthetic compound.
For that, you need not just the hydrogen part, but you also need the downstream plant, the methanol plant or the ammonia plant. The electrolyser itself might be 10% of your total CapEx. Customers we have spoken to are not that afraid about, you know, the capital commitment going into electrolysers if the interpretation is that you need to have purchased all of your electrolysers to, you know, still qualify for the $3 per kg. That's one thing. We're waiting on that. There are numerous law firms in the U.S. digging into what exactly is meant by this. Another thing is, of course, the requirements around additionality. We need to see more details on what kind of additionality and, you know, from when, from today, or from a project started back in 2022, 2023. There are numerous things that are not 100% clear.
What is clear is that the financial commitment to $3 per kg for 10 years, that stands. I think it's fair to say that with the current administration passing this piece of legislation, we don't see a big risk in, you know, this being watered out or diluted or in any way changed. To be fair, there are bigger fish to fry and not that many people that care about the 45V regulation for hydrogen specifically.
I would also like to say that the reason we got this extended from the initial proposal to say that everything had to be done by the end of this year, otherwise you would lose any funding opportunity, the reason we got that extended till end of 2027 was because of the effort of, of course, the industry as a whole, but it was also shepherded through by Republican senators that see green hydrogen as vital to creating jobs and opportunities in their respective states. It wasn't just, you know, lobbying from the industry. It was actually carried forward by Republican senators from key states.
Thank you very much.
Thank you, Arthur. Next in line is Skye Landon. Please go ahead.
Hi, good morning. Question on alkaline order outlook. I'm just wondering how should we think about new orders in the alkaline business between now and when the new pressurized solution comes to market? Are you seeing continued interest in the existing product, or are your customers perhaps less time concerned and therefore happy to wait for the newer product in order to take advantage of smaller footprints, lower CapEx, and improved energy consumption? A follow-up to your discussion on the pressurized alkaline. You mentioned the overall system CapEx would be down 40- 60% with the new technology, but could you give any direction as to what the electrolyser cost change could be within that? Thank you.
Yeah. For projects that have been developed for, let's say, two to three years, I mean, they don't want to wait another two to three years for new technology. They know that new technology will come out all the time, but they need to get started. They might have off-take commitments. They might have commitments related to timelines based on grants that they receive from the European Union or national governments. There are a number of projects that we are working on where customers know that new and better technology will come out, but they can still realize their projects and have a profitable business case based on what we offer today. I would say there are at least 20 projects we're working on where PEM and atmospheric alkaline, based on today's platforms, will be the preferred technology because of timing constraints.
If you have project developers that are more opportunistic, or you have clients that might use the hydrogen for their own purposes, i.e., they will be their own off-taker, they have, of course, the opportunity to wait a bit longer and take advantage of the new technology that comes out. I don't see that the new technology would cannibalize our existing offering. It just meets a different time window. That's why we talk about it. Otherwise, it would be a bit stupid to stand here and talk about the next great things if we would then take away the opportunities in the next quarters. I think it's also important to say that a lot of projects will not be developed as gigawatt projects from day one. They will be developed in stages.
Customers might start with something a bit smaller and then evolve capacity over time and then work with a partner like Nel that has something you can start with today, but also, you know, gives you the opportunity to take advantage of new and better technology as time moves on. It's important because that means we can be a good partner for you during the duration of the entire project and not just an opportunistic seller of alkaline and PEM projects or technology today. Your second question was about.
The development of the electrolyser cost itself.
Yes. In fact, the pressurized alkaline stack will be more expensive on a U.S. dollar per kW basis than the current atmospheric stack. Nothing can beat an atmospheric alkaline stack. The problem with the atmospheric alkaline stack or the challenge is that because of the low pressure, you need extra modules around the stack that you don't necessarily need when the stack itself generates gas at 15 bar pressure. Also, the system layout and the fact that everything is put into 20 ft containers reduces all the other cost components. It's not the cost reduction on the stack itself. It's the reduction of all the other cost elements. I would say if you take a project today in Europe where the total project cost is between $2,000- $3,000 per kW, half of that is hours.
Half of that is engineering hours, construction hours, test hours to get the system up and running. That's the whole philosophy behind this, that you know it starts with the electrolyser system. If you can design that in a smarter way, you can remove all these other, I would say, non-value-adding components. That's why we, as Nel, had to take a key learning. It's not about delivering the cheapest stack because that we already do. It's about securing the lowest possible CapEx, total CapEx for the customer. That's what matters, not just what arrives in a box from Nel. That's a different philosophy, different approach, which we have taken for the next generation solutions to try to optimize the customer business case, the customer use case, and not just what we send out of our factory.
That's great, color. Thanks.
Thank you, Skye. We see that we need to wrap up somewhat early. We have two more questions in the line. If we can have two swift questions and two swift answers, that would be great.
Sorry.
Daniel Haugland, please go ahead.
Yeah. Quick question on kind of the backlog and planned delivery for 2025. Is it possible to say anything about kind of the split in Q3 versus Q4? Will kind of most of it be in Q4? I see, for example, that the alkaline backlog planned for delivery in 2025 has increased versus the last quarter.
Yeah. To that question, and it's a good pickup. We do look at each individual project before every quarterly release and then make our best assessment as to delivery. What has happened is that a few of the deliveries that we thought might slip into next year have now come in towards the end of quarter four. There is a substantial volume that we hope to get out during the third quarter as well. The release is something that we hope to get in quarter four, but it could slip into quarter one. Here, you know, we will not be optimizing our financials just to get something out. This is an estimate, not a firm guidance on what it is. I would say there's meaningful volumes in quarter three and quarter four as we currently see the world.
Okay, thank you.
Arthur Sitbon, please go ahead.
Yes, thank you. No, my last question was just on the recent results of the second hydrogen bank auction in the European Union. I was wondering if you are potentially involved in any project, and also if you have some thoughts on the awarded premium, which I think was not too different from the first auction. I was wondering if that's good enough to incentivize projects and make them economically viable. Thank you.
To the second part of that question, I don't think a half, you know, €0.50 per kg is sufficient to make a project attractive. It's more icing on the cake, I would say. It plays to the advantage of projects that are already good projects. It doesn't help take projects that are borderline profitable and then make them profitable. That's sort of my perspective or take on it. I don't think the auction mechanism that we have today is what really will unleash production capacity for green hydrogen at lower cost. It is a helpful tool. It creates more clarity and speed for projects that seem to be good projects. As I said, they have to be good projects from the start. We are, of course, actively following up all of these projects. None of the projects needed to basically have a firm written agreement with any electrolyser OEM.
They needed to have an LOI. LOIs are always, you know, agreements that you can walk away from. They don't give you any certainty. We are definitely out there hunting for new opportunities. We also are working with customers for a long time that did get money through the second hydrogen bank auction. I would say this helps our pipeline in terms of creating more clarity and better business cases for some of our target projects.
Thank you.
Okay. We're going to squeeze in one last one from Skye Landon. Following that question, I'll let management end the call with any final remarks.
Thanks, Wilhelm. Yeah, just a quick one. We've seen a number of electrolyser OEMs go into administration recently, and we've seen several of your competitors kind of taking up some of their assets. Just wondering if you looked at the assets and if you had any thoughts on the technologies and how they could have complemented your own stuff, or if it just was not something that was required. Thanks.
This is something we've been expecting for some time. Some of the companies that are currently going out of the competitive landscape have been offered to us and others on multiple occasions. We would have a bid in if there was something that really added something to the portfolio. Of course, we do keep our eyes and ears open. We've picked up some smaller pieces of equipment here and there, but so far, not been interested in any of the technology portfolios that have been offered.
Thank you. Can you comment if you've been offered other parts of equipment or parts of businesses on the market outside of the two that have gone into administration?
Those are the public ones. My comment relates to the full space. There's lots of smaller companies out there. I think we've previously shown some slides of more than 100 logos. There are lots of those that are currently ramping down or quietly exiting the business or deprioritizing this. Also, in adjacent industries like fuel cells, there's been a number of companies that have gone out of business. If you want lab equipment or production equipment, now is a very good time to pick up some pieces that you might have had on your wish list.
Brilliant. Thanks, guys. Good color, as always.
Okay. Summing up, I think we wrote in our press release that it hasn't been a quiet quarter despite lower revenues. I mean, activity level is high. We have to be honest and say that 2025 will not be what we thought it would be back in 2022, 2023. Order intake is slower. The market develops more slowly than expected some time ago. We remain confident that what we are working on will indeed unlock a lot of potential in the coming years. That's what our main priority is, or our two main priorities are linked together. One is we need to reduce the cost and preserve cash. We are adamant about protecting our cash base. As opposed to the companies that go bankrupt these days, we have NOK 2 billion in cash reserves.
The reason we went out and raised that money was to ensure that we had flexibility even in a period of downturn to invest into the things that we feel is right. What we feel is right is not building more capacity. What we feel is right is developing new technologies with a significantly lower levelized cost of hydrogen for our customers. As I've shown today, we believe that both the pressurized alkaline concept and the new PEM concept will substantially improve business cases around the world for hydrogen and unlock opportunities to develop hydrogen at $3- $4 per kg short term with the energy prices that we see now. That's competitive with gray hydrogen or, you know, at the premium that is acceptable to a lot of developers and customers. We remain bullish about the long-term outlook.
We are a bit more careful with the short-term outlook because we see that FIDs slip. We're not confident that there will be big orders coming in necessarily the third quarter or the fourth quarter. We're not able to pinpoint exactly which orders will come when. What we can see is that our pipeline continues to mature. We are working with high-quality customers on business cases that are much more bankable than they were a couple of years ago. We are confident those opportunities over time will turn into new orders and higher activity. When we come out with the new technologies, we believe that we would be in a unique position to capture a higher market share and also unlock growth in the overall hydrogen market.
That's why we're still here, Kjell Christian, to unlock those opportunities, even though the numbers in the quarter were a bit on the low side. Thank you.