© Nel

Nel ASA has secured an additional $29 million in investment tax credits for its planned electrolyser gigafactory in Michigan. This funding comes under the Qualifying Advanced Energy Project Tax Credit (48C) program, part of the Inflation Reduction Act (IRA).

Total Subsidies Reach $200 Million

With the latest tax credits, total subsidies for the facility have reached approximately $200 million. This figure accounts for about half of the projected $400 million cost for the 4GW plant, which is expected to be one of the world’s largest manufacturing facilities for alkaline and proton exchange membrane (PEM) electrolysers.

Final Investment Decision Pending

Despite securing significant funding, Nel has yet to make a final investment decision (FID) on the Michigan facility. The company has stated that the build-out of the site will depend on market demand.

Impact of Policy Uncertainty

The future of the IRA and its climate provisions remains uncertain under the Trump administration. While President Trump has expressed intentions to rescind the IRA, analysts are divided on the likelihood of such action due to the program’s popularity among key stakeholders, including oil and gas firms.

Manufacturing Expansion and Workforce Requirements

The additional tax credits are contingent on meeting specific conditions, such as wage and apprenticeship requirements. Nel’s commitment to scaling up its manufacturing capability is backed by a history of federal support and investment in research and development.

Continued Expansion

In addition to the Michigan project, Nel recently expanded its PEM electrolyser manufacturing capacity at its Connecticut facility, increasing output from 50MW to 500MW. This expansion underscores Nel’s leadership in advancing electrolyser technology in the U.S.

Challenges Ahead

In contrast to the positive developments in the US, Nel announced a temporary halt in production at its Herøya, Norway, facility due to a slower-than-expected green hydrogen market. The pause will result in a 20% reduction in the workforce, including layoffs and voluntary redundancies.

CEO Håkon Volldal highlighted the difficult but necessary adjustments in response to the lower order intake. Despite these challenges, Nel maintains a strong pipeline of clean hydrogen projects and continues to develop new sales opportunities, including containerized PEM systems from its Connecticut facility.