Welcome everyone to this 3rd quarter presentation. Very nice to see some faces physically here in corona safe meeting setting. Welcome also everyone following this at home or from the office over the web. We are going to go through our normal quarterly presentation. And you can also post your questions as we go along.
We will come back to that a bit later. Let's see. In terms of agenda, we will go through the highlights of the quarter. We will look at the financial review. We'll talk a bit about Nel in brief.
We'll go through the key developments that we've seen in the quarter and in particular after the quarter. And we will finish off with Q and A. In terms of the key highlights, as we talked about in the second quarter, this was a quarter that was going to be affected by the corona situation, relatively boring quarter from that point of view. However, we've seen a nice pickup after the quarter. That means that we've had time to also concentrate on how we are going to prepare for the market, which is coming because we have seen a lot of activities in the market.
Some of the key highlights of the quarter were obviously that we were able secure some R and D funding, both in Norway and in the U. S. For alkaline and PEM. After the quarter, we saw a lot more activity. We received 1 station order from Air Vufu.
We received 2 station orders from CPAC in Poland, an MC1.2 Megawatt electrolyzer order. We saw the successful listing of EverFuel. We received an LOI from Stuttgart. And we were also recently announced as the preferred supplier to EBITDAROLA. And we will talk about all of these events throughout the presentation.
In terms of the financial review, as we talked about, the Q2 was going to be pretty much no, Q3 was going to be pretty much like the Q2, basically affected by COVID. Copies are dragging their feet and did not place POs, but we have seen a nice pickup. That means that we've but we have underlying had a lot of request and we had a lot of tender activities. So the team has been busy and we also started to prepare for how to be ready for what we believe is going to come going forward. So projects are getting longer getting larger.
And we are continuing to recruit and build the organization for that across the entire group basically, but in particular related to project delivery activities. This will obviously affect EBITDA negatively also going forward. In addition to that, we will continue to see ramp up costs, in particular when we now start to recruit for the Harrier expansion. That is something to be aware of when you look into the financial numbers of Nel. Now the good thing is that we have a strong financial position.
We are prepared for this. This is basically why we raised the capital, to be able to build a robust company to really take on and grab some of these opportunities coming to the market. In terms of the order backlog, slightly more than €900,000,000 more than 60% up from the same quarter last year, which we are happy about. It's also worth noting that even though you didn't see a lot of announcements in the quarter, there are still orders flowing into the order book. And this quarter, it was about $46,000,000 of orders coming in, which did not qualify for a separate announcement.
That is smaller primarily smaller PEM units, 14, and also after sales, in particular related to alkaline. So those you will not see, but they are still there and they are still flowing into the order book. On top of that, as we talked about also before, when projects are getting larger, it typically takes longer for the parties to agree on all the technical and commercial details. So there will be fluctuations. Some quarters, you will see big projects coming in.
Other quarters, you will not see that. So there will be fluctuations in the timing of such orders. We do, however, expect to see a pickup. We have already started to see it in Q4 with the announcement that we've seen. And we also expect that we will see more activities in the quarters to come.
In terms of NEL in brief, for those of you that are new to the company, I'll run through this relatively quickly. What is different about Nel is that we are integrated. We have a solution where we have electrolyzers and fueling station, home developed and produced. We are also pure play hydrogen technology company, which means that we deliver the in house technology. This is what we do.
We don't have any backup. We're not a part of a big conglomerate. We basically need to be the best at what we do. We have facilities in Norway, Denmark and the U. S.
We have people and organizations in many other markets like California, Korea, Japan, China, etcetera. We are the world's largest producer of electrolyzers. We have delivered 3,500 systems in more than 80 countries. We are also one of the leading manufacturers of fueling stations, where we have delivered we're working on 80 plus stations in 9 countries. The beauty on the electrolyzer side is that we cover both PEM and alkaline, and you saw from the recent announcement that that is a beautiful position to have because you don't have to argue that one is better than the other.
You basically leave the customer to choose. And so that is something that we will keep working on. We keep working very hard on reducing the total cost of ownership for our customers. That means reducing CapEx, but at the same time also improving efficiency. We in terms of fueling stations, we have a portfolio of technologies that covers light duty vehicles.
These technology are pre certified for EU, U. S. And Korea. And we are now developing a portfolio which can better cater for heavy duty applications where we are building developing technology components that we can use for these activities. So that means that we are preparing for the future and pushing forward in all of these categories.
We have 3 sites, production sites, Wallingford, Connecticut focusing on PEM, development and production of PEM. In Norway, we are at Nordtoden and Harria soon. Nordon will be the technology center and the engineering. And Harria is going to be the production facility that we're currently constructing. And then we have our facility in Harning, Denmark, where we can produce 300 stations per year at full capacity.
We have a long experience, which is also quite unique. We have 20, 30 years on PEM experience. We have more than 90 years on alkaline and we have around about 15 years on fueling stations. And last but not least, we have a very long large portfolio where equipment sitting out in the field, which makes for very nice references when we are talking to new customers. Okay.
Let's turn to the key developments of the quarter and after the quarter and start by something that happened in the quarter. That was the 2 separate development grants that we received, one in Norway amounting to NOK 60,000,000 for developing next generation alkaline. And you can ask yourself, why is it necessary to focus on next generation alkaline? You are now reducing massive amounts of cost on the current platform. And that's correct.
We are focusing very much on the current platform getting the cost down. But we also want to make sure that we focus on the potential next generation platform of what could become relevant. And this is a relatively unique setup. It's going to be tried and tested in the Yara facility. It's part of the agreement that we have with Yara.
So it will be put into real life ammonia production facility and the hydrogen will be used to produce green ammonia. We also received nice ground from the DOE related to the development of next generation PEM electrolyzers and we are pushing very hard to be relevant on both of these technologies. The target is clear for us is to have the most attractive technology offering on both platforms and simply allow the customer to choose which one do you want. There are different properties with these technologies or even combine them in certain sites, which could be also relevant. During recent quarters, Everfuel is gaining momentum.
We received a PO, a purchase order for a bus station in the Netherlands from Everfuel. This product that we here see is actually a product which is slightly different, slightly changed to be able to cater for the bus fueling applications in a better way. And it's installed in the depot exactly pretty much the same as we do in London for Transport for London, where this bus depot is running Solaris, hydrogen buses. It should be installed already next year. And we obviously expect more business coming out of Everfuel.
We also received a PO from Poland, CPAC, a double station solution that is supposed to fuel both cars and buses, €3,200,000 And also this system is supposed to be installed and operational next year. And this quarter, we obviously need to congratulate our friends and partners in Everfuel with the successful IPO and listing at Madkur. Everfuel have obviously worked for some time on putting together their strategy related to financing and that is important for Everfuel to secure financing. It's also important for us, for Nel that Everfuel has a strong financing position and that is exactly what they have been able to achieve at the moment. As you know, we have a frame agreement with Everfuel.
So that covers that has a value of up to EUR 100,000,000 So we really are happy that they were able to do this. And we also supported the equity raising with both to support the transaction, but also to defend our shareholding. And after the transaction, Nel has a shareholding of approximately 17% in Everfuel. In terms of the Haria expansion, we are moving forward. This here we are designing the largest electrolyzer plant in the world, basically something that has not been done before.
It's a fully automated chemical line supported by robot centers, and it's going to be run according to the latest and greatest lean manufacturing principles. We intend to reduce cost drastically here. The first line has the capacity to produce 500 megawatts. And the team is already identifying improvement opportunities where we can push this even more. It's a unique site because the building and the infrastructure fits us very well.
So that means that we don't have to make a lot of investment in the infrastructure. We can concentrate on the equipment and the line itself. And that also goes for the latest CapEx related numbers, which is equipment related, not own hours, which is NOK 250 1,000,000. And that basically, if you compare that to solar, it's actually a very CapEx efficient investment. Fully expanded, we expect that this facility can deliver around about 2 gigawatt of electrolysis per year.
Last week, we signed an LOI with the Stadkraft for delivery of up to 50 megawatt of alkaline electrolyzers. This is to support CO2 free recycling of steel and Selsa is a leader in this area and we are obviously very proud to have been chosen as a partner for this lighthouse project. 40% of the steel in the world is actually recycled steel. So this is a very important source of steel. And here, as I said, Celtsa is one of the leading players.
This particular facility, this industrial park here is in the middle of Norway, just more or less exactly at the Arctic Circle is in Moirama. And here, the current production is 700,000 tons of steel per year. That's equals to approximately 2 Eiffel Towers per week. So it's a big operation. And here, by exchanging the natural gas to green renewable hydrogen, you should be able to cut the CO2 emissions by more than 60%.
The parties have sent an application to the EU to get support for this project. The reason why the parties needed to go to the EU is because there is no funding schemes available in Norway at the moment, unfortunately, but that's the case. And in addition to this, we think that this project may be eligible for what is called the IPPSI funding, which stands for important projects for common European interest, where this was used for funding as part of the battery industry in Europe last year or the year before. The only condition here is that Norway needs to raise their hand and say that they would like to participate and qualify for this type of funding. So we really hope that this is going to be an eye opener for the Norwegian politicians about what can basically be done in Norway.
This is just one example and many other very nice projects around. We still have to acknowledge that Norway is behind here. Europe has a target of 40 gigawatt of green hydrogen production by 2,030. 40 gigawatts is equivalent to more than 400 times last year's market, 20 nineteen's market. And in terms of countries, Portugal has announced 1 gigawatt Germany, 5 gigawatt France, 6.5 gigawatt Netherlands, 3.5 gigawatt and Spain, 4 gigawatt.
Quite ambitious targets, country specific, money on the table and targets for how much is going to be extended. In comparison, Norway, 0 gigawatt in ambition and €200,000,000 So that puts this into contrast. And it also becomes even more strange when you compare the willingness to support, for example, CCS, where the government already has put NOK 2,000,000,000 on the table, which is the first part of the first of the top NOK 25,000,000,000. And we're also supporting the battery electric vehicles every year by NOK 20,000,000,000 per year or more. And then the support for green hydrogen development is relatively small.
You cannot, as we have said many times, decarbonize the steel industry with batteries. You need green renewable hydrogen. That's the way to go. Are we seeing a light in the end of the tunnel? Or is it an approaching train?
At least we've seen some positive signs from in a speech that he she held. She talked about not supporting the hydrogen strategy, national hydrogen strategy with a national roadmap to support that. In addition, I think we saw a very nice piece of news this last weekend on the 31st October. The Norwegian government announced that the next ferry tender is going to be on hydrogen. This is the so called Westfjorn ferries.
It basically goes from border to Lofoten and in the triangle. And this is one of the longest and toughest ferry routes in Norway, at least in Norway, but maybe even in the world. And it cannot be done with batteries. You have to have hydrogen. It can be and we really hope so, going to be an important kick start for the Norwegian hydrogen industry.
And we hope that this is going to be the start of something new. And for those of you that has been following Nel for quite some time, you may remember that we have a company up in Glomfjord, called Glomfjord Hidrugen. Glomfjord, again, is owned together with the local with Greenstad and Miele Energy. We also have an LOI between Glomfjord, again, and Elikid to liquefy. So basically, we want to make this structure available to support the Westfjorn ferries and basically this tender which is coming up.
Finally, we see that the market is gearing up and this is a great example, I think, of some of the tender activities that we've been working on. And the team has been working very tough on many of these. Iberdrola is basically showing the way in Europe, and they are eager to be the 1st company in Europe to put in place a 20 megawatt hydrogen production. That has never been done before in Europe. It sounds small because everyone is talking about 100, but there are still no 20 megawatt hydrogen production in operation in Europe.
The biggest one is in Ruka, which is 9, which is our technology, and that's the biggest. So this, we have been selected as a preferred supplier for this project. We hope to get it start producing already before the end of 2021. It's a lighthouse project where Iberola, which is one of the biggest electricity utilities in the world, is working together with Fertibria, which is an ammonia fertilizer producer. They are including here 100 megawatt solar, 20 megawatt hours of battery and 20 megawatt of electrolyzers.
They will use the hydrogen to produce fertilizer, which we've seen in the past and they hope to get this started, as I said, before the end of 2021. We have not agreed on the final terms and conditions. So it's important for me to also point that out. We still have some work to do, but we are very honored and encouraged by being chosen and announced as the preferred supplier. And it also goes to show how important it is to have a presence in both platforms, in both in PEM and alkaline.
This is a PEM solution. A few days before, we are focusing on alkaline in Stuttgart. So there is we believe there are going to be parallel markets where customers prefer one technology or the other. So we really want to push both and really want to be a leader in both areas. And we think that this is a really good example of how that how important that is.
If we do a good job here and if we get this piece of equipment going much, much bigger ambitions. So we obviously hope that we can make ourselves relevant also for future expansions. So with that, I'll try to sum up before we move into questions. Our fundamental strategy and what we focus on has not changed, even though we are in the middle of a pandemic and it doesn't seem to go away. It is still frustrating.
We still want to or still pushing to be world class on safety. We are working very hard to maintain our cost leadership. We are pushing to be a technology front runner both on OpEx and CapEx. We want to be the preferred partner. We want to be trustworthy and reliable in our products and services.
We want to have a strong financing, so we can push and deliver on the strategy that we have talked about. And we are developing a global presence not everywhere because they're not every market which is relevant, but at least in the relevant markets, we want to have a presence. Safety is number 1. Safety for employees, for their families and for all the stakeholders. And since February, we have implemented strict regulations to ensure the safety of our employees.
We've been largely able to avoid being directly hit in the company by COVID. However, early in October, we did experience an outbreak, small outbreak in Nootoden Harria. There was a number of people infected. And we had to work together with the local authorities. We had to quarantine our people and to get that under control.
Now everyone is back and that is behind us. But it goes to show how sensitive you need to or how careful you need to be to basically be able to maintain some kind of normality in your operations. So we keep focusing on these things. That means that even though you see this very positive underlying activity level in the market with tenders coming and the projects are getting larger, you will most likely continue to see some negative effects out of COVID-nineteen. That's just the way it is.
It will most likely negatively impact the general business environment. People may, in some cases, drag their feet in terms of placing orders. We may also be negatively impacted on installations, which needs to typically happen in other parts of the world where you need to travel. And the same goes for commissioning. And that may also affect revenues negatively because revenue recognition is very often tied to installation and commissioning.
As you know, Nel is geared for growth. We are basically preparing, developing organization, hiring and gearing for growth. That means that we will also carry higher indirect cost as we move forward. But we are confident, more confident than ever that the underlying market is growing, is positive. And we obviously reiterate our long term strategy in response to this.
And that means that we will continue to accelerate our investments into technology and organizations. We are going to push to maintain a leadership position both on alkaline and PEM. We really want to be ahead of the curve and not fall behind. We're also going to push hard to develop a new portfolio or extend our portfolio of technology components for heavy duty application fueling. And obviously, we are ready to do that.
With our strong financing, we should also be able to deliver on our strategy. Last but not least, earlier today, we announced our Capital Markets Day. It's going to be on the 21st January. We have been struggling a bit with both the venue and the concept because of this COVID-nineteen situation. So we've been kind of going back and forth how are we going to put it together.
But now we have basically decided we don't want to wait anymore. We really want to get out there and talk to all of you about what's going on. We will take a deep dive into our business, our business areas. We will look deep into the Harjo expansion and give you some nice views of that. We will also take a sneak peek into some exciting technology developments that we're working on.
And we hope to give you some good guidance on our targets long term. So we really hope to see you there. And that's going to be exciting. 21st January, we will come back to exact venue, but we have some good plans ahead. And with that, before we move into questions and answer, I would like to thank Bjorn, who is now participating in his last quarterly presentation.
He has been IRCC and has been great support in this. It's been excellent to have you on board. We are going to miss you Bjorn. So but so ask me some difficult questions because now you have the last chance to really nail him. So but thank you very much.
And we will open up for questions, if there are any.
All right. Thanks, Jan, for kind words and encouragement of difficult questions. Do we have any questions here among the audience? Or should we start off with some from the web? All right.
There is one here from the web, which I think I can answer myself. It's one from Anders Rosenen. He's asking what is the total CapEx spent on Harareya this far? And how much is the how much CapEx was outstanding end Q3 to reach completion of the 500 megawatt phase. As Jon mentioned in his presentation, the CapEx for Haraya is about NOK 250,000,000 excluding internal hours.
So that's the total CapEx. Some of that has already been spent. So the total price, if we look at both the CapEx for Harare plus internal hours, is between SEK 250,000,000 and SEK 300,000,000. So up until Q3, round about NOK 60,000,000 has been spent. Then there is another question on Harria.
It's an easy one, so I'll give it to you. It's Jens Wekler. He is asking and we've talked about Harel so many times, so we don't always mention everything about it. He's asking when will we be at 500 megawatts capacity coming out of Harareya? And how does the expansion plan look beyond that?
We are talking about 2 gigawatts. Do we have a time line on that? So
we start our intention is to start test production in the Q2 of next year. It will probably be late in the Q2 and not early in Q2. And we intend to start commercial production and commercial ramp up in the Q3 of next year. Now how quickly we'll ramp up depends on the customers and the customer orders. So we still do not exactly know that, but obviously, we will try to fill that.
We have a base load already in our order books. And then we need to add more to support the full ramp up. That's also why we are a bit careful with talking about next and next and next step. We are preparing to be able to go to install the next line. The first line takes us a bit longer because we have to do a lot of kind of fundamental understanding and optimization and design the robot cells and the chemical lines and all of that.
The next line could be much quicker, which means that we see the market picking up and we kind of want to be ahead of the curve, we can maybe install the next line in 12 months or maybe in less than 12 months. And then we will see, we have room for 4 lines in total. We start with the first. The building is empty, the rest of it, so we can install more. But I think we need to also kind of take one step at a time here.
We are I mean, keep in mind, 500 megawatt, the first line is 5 times the last year's market. So we are still here really taking a big, big step. And we want to be able to bring customers and partners and even investors and journalists like yourself into this facility and show you what's going on. And we really think that that's going to be very convincing also for people to understand that this is really coming. This is something that we can rely on.
And we can start planning our expansion and our projects accordingly.
Okay. And then there is a question from Lars Andresen. Has now received any signals on when to expect the roadmap to hydrogen that were promised by the government earlier this year?
No. We haven't received anything else than you guys know, unfortunately. We think that the road map was very soft. It basically was a summary of what's already going on. It's not really a road map or sorry, not a road map, a strategy.
So we really look forward to hearing something more concrete. When should it come? How many hydrogen buses? How many hydrogen ferries, trucks? How much green hydrogen production capacity in which locations.
And that's a concrete strategy. That's what we need to really get this rolling in Norway. There are some positive signals, but we are not there yet.
Then there is a question from Leif Odenho again. He's asking about the recent GFO round in California. And the question is, increasing activities regarding fueling stations in other North American states?
I think the first part, you need to direct the question to someone else, not to us. But in terms of other North American states, no, the biggest activity is in California by far. There are some movements in other parts of the U. S, but not to that same extent.
Do we have any questions among the audience? Okay. We'll move on. There is also a question here on Nikola, Beric Schraetzalt. He's asking, is the last Nikola order still secured?
The order is an order, and Nicolas has started paying for the order, and we expect to deliver on the order. So that's as far as we can go on that. I can't see really why it should not but
Then there is a question here.
Is it a difficult one for you or?
Yeah, I can take that.
Okay.
And there's a question from Edward Maravanyuka. I'm sorry if I pronounce your name wrong, Edward. He's from Citigroup. And he mentioned that we are talking about both PEM and alkaline. And where do you see PEM being the preferred?
And where do you see alkaline being the preferred solution?
So Yes, go ahead. You can start like an add on.
Well, customers and customer needs are different. Some customers need small electrolyzers, other ones are looking for a large electrolyzer. Some customers are deploying the electrolyzer facility out in the countryside. Others are deploying it downtown, a city area on a fueling station, for example. So some customers, they place a very high importance on the footprint of the electrolyzer systems.
Others place the top criteria on efficiency, on things like that. So basically, depending on what customer needs there are, that will also define which electrolyzer solution they will go for. So smaller scale electrolyzers, high importance on footprint and flexibility than they typically will for a PEM electrolyzer today. And larger space available, higher importance on efficiency than it's typically an alkaline electrolyzer. And in general, also large plants tend to go towards alkaline.
I think that's important distinction. We are working on a long pipeline on projects. We talked about that many times. The biggest project is more than 400 megawatt, and there are many in the category of 50 to 100 megawatt. Those typically are alkali projects because they're so big.
And a few percentage points difference on the efficiency has a big swing effect on the cost of the facility when you talk about running it for 20 years. When you for the time being, when you talk about PEM, we typically see 1, 2, 3, 5, up to 10. In some cases, the biggest one is the 20 megawatt. This is not a static picture. It will move.
So you have to keep in mind, that's why we're pushing both technologies because efficiency and CapEx are moving. And the teams in NEL are competing. So the alkaline and the PEM teams are competing constantly to push their technologies forward. And when we if we stand here in 5 years, maybe the most likely the picture will be slightly different. But that's where we are today.
Then there is a question here from Daniel Bjork. He is wondering how the future looks like for Nel. Will Nel still be a standalone company or is there any ambition to get a partner like Siemens Energy to face the huge market? Greetings and thank you for a great job.
We don't have a searching for we don't have an ad in the paper to search for a partner. We don't. But we are a list of companies, so you never know what happens. What we do know is that we, in the meantime, need to prepare for being independent. I think there are certain benefits of being independent also.
So we have secured financing on our own with support of all of our great shareholders to be able to do what we have said we're going to do without relying on someone coming in as a big anchor. And I must say, I mean, there are some of these partnerships which basically also are a bit challenging. I mean, if you jump into bed with one gas company, it's difficult to work with the other. The same if you work very closely with the grid operator, it's maybe difficult to work with another grid operator, gas grid that being. So I think there are certain benefits of being also independent.
We are pure play technology. That's all we do. We need to have the best technology available, and we are completely free to work with whoever wants to work with us. And that, I think, is a nice angle that well, Nel is the only one left now. We are the only truly independent player left.
So we want to kind of turn that into our advantage.
Good. There's not any other questions. We'll finish off with one here from Mikkel Neholt. It's 2 questions. Question number 1, what kind of long term price per megawatt should we expect for the PEM technology?
And the question number 2 is, what price level do you expect refueling stations to be at in the next 5 years?
Wow. I don't think we are prepared to explicitly talk about that. But cost and price are going down. That's for sure. And then on fueling station, maybe it's also worth noting that at least historically, cost hasn't gone down that much, but the capabilities have gone up.
So I don't know, maybe you can mention the difference between what we had 10 years ago and what we have now in terms of
Yes. I think there's an important distinction to make when it comes to fueling stations because the fueling station is all fueling stations aren't alike. And a fueling station for cars might be completely different compared to a fueling station for trucks, for example. So if you look at the announcements we've had, a typical fueling station for a car runs at about €1,000,000 And that station has a capacity of around 500 kilograms per day at 700 bar. And as Jon mentioned, we've had quite a development of that technology over the years.
So 10 years ago, the same CapEx, the same cost per station would get you a station which served you 50 kilograms per day. So over the last 10 years, we have reduced the price per capacity for one of those stations by 90%. Over the coming 5 years, we expect that station capacity to double one more time, and we can keep the price the same way. But of course, if you're looking at the station markets and stations for trucks and stations for buses and stations for other things, I would rather look at the capacity that we state in the announcement. That will tell you more about what the price of such stations are.
And in terms of the PEM technology and long term prices there? Well, to be honest, we don't know because these are both in development. The PEM technology is behind the alkaline technology on price. And that's of course another important thing for the customers also when they are choosing between the technologies. But we see that the 2 technologies are converging going towards 2,030.
So we don't expect the PAM electrolyzers to go across below alkaline before 2025. But as we get closer to 2,030, at least we see a convergence of the 2. And there are many reports out there also talking about that.
Good. I think we are
I think that's good for now. We're running out
of time. Thank you very much for coming. It was nice to see some faces. Now we have to call back to our office. Thank you very much, and welcome back 21st January.
Thank you. Thanks.