Nel ASA
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Nel ASA
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So welcome, everyone, to this third quarter presentation. Very nice to see a few more people with us here in the roof -- room physically present. But obviously, also welcome to you that is following this via the web. And as normal, you can ask questions. Already now, our guys sitting are ready to receive them, and we will try to answer as many as possible at the end of the presentation today. So let's take a quick look at the agenda. We will quickly go through Nel in brief, as usual, and then move on to the third quarter highlights and financial review. We will go through some of the developments that we've seen in the quarter, company specific, but also discuss some other key developments that we've seen lately, which we really want to highlight and which I think could be interesting to share with you. And then obviously, we will give you an update on the Herøya expansion before we finish off with the outlook and some Q&A. But as usual, we have to start with Nel in brief, also for new listeners. Nel is a pure-play hydrogen technology company. We deliver leading in-house developed and produced hydrogen technologies. We have factories in the U.S. and Europe. And we also have people and organizations in California, Japan, Korea, China and many other relevant countries. We're also the world's largest electrolyzer producer. We've done delivery systems in more than 80 countries, more than 3,500 units. And we're also leading on fueling stations, both for light- and heavy-duty vehicles. And I just updated this number before today. And we are now working on or have around about 120 stations under construction. And with France, the number of countries are now 14. And as mentioned, we have 3 main production locations. We have our PEM activities in Wallingford, Connecticut. We have slightly more than 50-megawatt production capacity, but we have room to expand within the building, but also around the building. We have our new Herøya plant, which we just started, 500-megawatt alkaline, also room to expand quite significantly to more than 2 gigawatts. And then we have our Hanning facility in Denmark, where we produce fueling stations. And we have the production capacity to produce 3 other stations per year. And we have very long experience within each of our areas. So I think that's also something that distinguishes us from many of the others. Having a lot of experience actually gives you a fundamental advantage compared to someone which doesn't have a lot of experience. And I'll talk a bit more about that also. We also then have obviously a lot of equipment sitting out in the field, which becomes good references, happy customers using Nel equipment almost anywhere on the globe. So we are then placed right in the center of the energy transition. We -- with our technology to produce both green renewable hydrogen and fueling technologies. And we are basically then enabling industries and transportation to transition to net zero. In other words, we are kind of bridging renewables and transportation and industry applications, making renewables relevant in new areas where renewables was not so relevant or not -- couldn't access in the past. And by that, we are contributing to the energy transition, and we're contributing to the decarbonization. We do remain the largest electrolyzer producer in the world. And why is that important? Well, obviously, track record, as we talked about, is important. A customer likes to buy things that works and that they can trust. But having size also allows you to have additional muscle when it comes to developing new technologies, having more people to develop more competence to develop new technologies to build fully automated plant, which we showed you last quarter. It gives us more muscle to execute on a large project, and it also makes us an attractive partner to collaborate with. So that's why we are basically collaborating with a lot of the many leading players in different areas. So in other words, you can't, in our mind, just come off the street with a PowerPoint presentation and do what we are basically doing. So let me then move over to the third quarter highlights and financial review. Revenues ended at NOK 229 million, up 55% from the same quarter last year, and that's a revenue development that we're quite happy with. It's actually all-time high for any particular quarter. A record that we hope to beat obviously relatively soon. We still have a strong backlog of slightly more than NOK 1 billion. We added NOK 140 million worth of new orders in the quarter. And in terms of quickly running through some of the highlights, we joined the Poseidon Consortium. We'll talk more about that. We've got the PO for a PEM electrolyzer for the first nuclear hydrogen plant in the U.S. We got an order from Everfuel for a station for Texas in orders. We signed a joint development agreement with SFC Energy. We'll talk more about that decentralized energy generation. Quite exciting and an interesting big market for the future. We signed a PO for a PEM for a 5-megawatt alkaline electrolyzer with SGN in Scotland and a PO in France for a fueling station and also a PO for a station with MaserFrakt in Sweden. And we'll talk -- we'll cover these topics in more detail when we move through the presentation. So as mentioned, we are quite happy with the revenue development this quarter. We're starting to see the effect of some of the large orders that we signed earlier, like, for example, the Iberdrola contract. Next quarter, we should also start to see some contribution from the new Herøya plant. However, COVID still impacted the company negatively. I know that we've talked about this many times, and the topic is a bit tiring, but it did. But it looks better going forward, we must say. And we can now move around and we see people start to show up, and that is really quite encouraging. As usual, EBITDA was also negatively affected by ramp-up related to nonrecurring costs. The pretax was negatively affected this quarter by the valuation of Nikola and Everfuel. And we will probably continue to see fluctuations here as we've seen in the recent quarters, but we hold around about NOK 3 billion worth of cash, which gives us a good strong financial muscle to execute on our plans. We have, as usual, also trying to give some more flavor on what is contributing negatively to the EBITDA as we stopped reporting adjusted EBITDA. But the main topic is basically that we are basically building for the future. We are ramping up the entire organization, as we talked about, basically to prepare for what is coming. And if I give you one example, third quarter, we carried all the costs related to the Herøya expansion. All of the employees were there, but obviously, we didn't incur any -- recognize any revenue for it. That's just one example. We were also negatively affected by COVID, even though that's a tiring topic, but it is getting better. But during the third quarter, we still had to use additional resources on various restrictions and travel and transportation and logistics and stuff like that. But as I said, it looks better going forward, and we are now moving around. We are traveling again, and so that's very good. In terms of the backlog, we have a solid NOK 1 billion backlog, up round about 8% from last -- same quarter last year. And we added approximately NOK 140 million worth of orders in the quarter. Still, I think the most important element here is the pipeline, which continues to grow. And let me share a bit more information with you related to the pipeline. We actually took the time to update some of the slides that we also showed in our Capital Markets Day. And this is why I'm not so worried about the exact timing of when large orders will come. Because, as you can see here, the pipeline has more than doubled since the Capital Markets Day that we had back in January 2021. Currently, the pipeline sits at more than USD 6 billion. 800 projects we are working on or following up in various ways. It's a huge task. Top 20 project represents around about NOK 4 billion. So obviously, a lot of the capacity is concentrated around a few projects, but the total pipeline of 11 gigawatt, the largest project we're working on is 1.6 gigawatt. So orders will come when financing is in place and the details around various terms and conditions has been agreed. And the good thing is that we have the capacity to deliver because we already have invested ahead of the curve in production capacity. We have already invested ahead of the curve in a strong project execution team. We have the EPC partners in place, and we are working on paid FEED studies, front engineering studies, with various partners, which are already actually starting to think about reserving capacity. So that's where we are at the moment. So that's why I don't lose a lot of sleep on trying to guess exactly when orders are coming. We will obviously not win all of these 800, and some of them will never happen, but I can assure you that orders will come. So let's then go through some of the company-specific highlights of the quarter. We started the quarter by receiving a 2-megawatt PEM order from H2 Energy in Switzerland. And this order was a part of the 30-megawatt frame agreement that we signed back in 2019. And as most of you know or some of you may know, H2 Energy is cooperating with Hyundai trucks. They are rolling out 1,600 trucks in Switzerland. And this electrolyzer will produce then green renewable hydrogen for a growing number of these trucks. And the feedback from the operators driving these trucks and running them every day is extremely encouraging. They really like the product and want to have more trucks available. We then also received a 1.25-megawatt PEM order from a U.S. customer. Name remains undisclosed, even though most people have already guessed a long time ago who this is. It's the first-ever nuclear to clean hydrogen project in the U.S. So great learning for us, massive potential for the future. And here, we're basically utilizing the dynamic response of the electrolyzer to capture intermittent power of a nuclear power plant. And maybe that's not a topic which we used to hear about, intermittent power from a nuclear power plant. But yes, even nuclear power plants have periods where they cannot add more to the grid and have intermittent power. The value of this was $2.6 million, and it's supported by the DOE in the United States. We received another very interesting and unique order from SGN in Scotland. It's a 5-megawatt alkaline system. It's the world's first whole hydrogen to home heating network. So here, the hydrogen goes in pipes to homes to heat homes. It's connected to wind power and grid, and it basically services 300 households. It can be expanded to 900 households. It's a fully redundant system. So here, there is full backup because this needs to run. And the contract includes installation, commissioning, service and maintenance. And it's really also a very good showcase of what can be achieved with green renewable hydrogen. We signed a joint development agreement with a German company called SFC Energy, which is a leading provider of hydrogen and methanol fuel cells for both stationary and mobile power solutions. They have already sold 50,000 fuel cells. So they have been in business and know what they're doing. And we are 2 leading companies. We do electrolyzers. They do fuel cells. We take our leading technology, put them together and package it into a new product offering. We will start with smaller system, but we will grow them over time to kind of a 500-kilowatt system. And here, we will be able to then sell a combined package solution that basically stores energy and releases energy on-demand or as backup power. And the market assessment is that this is around about EUR 15 billion market alone in Europe by 2030, basically competing with diesel generators, for example. PO. We received a PO from Everfuel for a station for a fleet of taxis in Aarhus, Denmark. We do see quite a lot of interest actually for taxi fleets because a station can fuel very fast a lot of cars. So the fueling efficiency and the grid efficiency of fuel share vehicles vis-à -vis battery vehicles makes this solution very attractive for operating fleets. And we should see more taxi-related projects going forward. And some of the same logic also applies for heavy duty. Because you have a truck and you want to be able to run it, so fast fueling is -- it becomes very important. And MaserFrakt gave us another PO in the quarter, Sweden. They have great ambitions for zero emission transportation and running trucks. So this is a heavy-duty fueling station capable of filling the tank in 15 minutes, which is pretty much the same as you do when you have a diesel truck. And then last but not least, we received the first PO for H2 station from France. And this is a station that is fueling both light- and heavy-duty vehicles for the region of tours. And with everything that is going on in France, we're quite happy to have a foot in the door and be there, be representatives. And we hope that we can do more business also in France going forward. So that's the quarterly related developments, and let me then move over to some other key developments that we believe is interesting and which may not have been communicated well enough. But let's start with some of the market developments. Last quarter, we talked about Europe. This quarter, we are going to focus on the U.S. because we see that there are some very interesting developments happening over there that can really accelerate the market. First one is the Infrastructure Investment and Job Act. This is a USD 1 trillion bill, not likely actually to change significantly, given that it's already passed the Senate and is likely to pass the House because there is a bipartisan agreement between the Democrats and the Republicans, and this is an important bill. It will authorize USD 1 billion worth of support for electrolyzers, compression storage solution between '22 and '26, but it will also authorize USD 8 billion to establish at least 4 U.S. hydrogen hubs between '22 and '26. So we think this is very promising and could represent a step-up and speed-up of the activities in the United States. And most analysts believe that this could happen, and this could be in place before the end of the year. Another interesting development which is worth pointing out in the U.S. is to Build Back Better Act. This is an even larger bill, USD 3.5 trillion. Here, there is still a lot of debate and discussions, and we think that this will be reduced, maybe down to the half, but it's still a significant number. And I think the most interesting part of this bill, which probably will not change so much, is the tax credit. It's the tax credit for producing green renewable hydrogen. So a $3 per kilo tax credit, which is -- which also, as you can see to this graph, dropped quite significantly. So if you produce 100% green, you get $3. If you produce with a slight carbon content with blue or any other methods, then the credit drops quite significantly. So it's really encouraging to see that they're focusing very much on the green. And given it's a tax credit, it's not an expense, so it's easier to pass. And then for those of you that have followed the renewable space in the United States, we know that tax credit is actually a known instrument for both wind and solar rollout. So this is something that the Americans are familiar with, and it has worked quite effectively in the past. It's a proven instrument. And then there is a smaller appropriation bill, which includes a USD 50 million R&D fund for hydrogen and fuel cell technology. So all in all, very encouraging developments we see in the United States. They are stepping up. They are closing the gap to the ambitions to the Europeans and really interesting to see how this translates into more activity in the markets. Then another topic which I think is worth highlighting and which maybe we have not been good enough in communicating, it's the offshore wind and the positioning that Nel has in the offshore wind because that's actually quite, quite unique. Even though this market may be a bit out in time, it is -- it has a great potential, 20 gigawatt by 2030. And why is hydrogen such a hot topic with offshore wind? I mean, why does this go together? so well? Well, pipeline, a pipeline that transports hydrogen costs half the price of a cable, copper cable going to shore, so it is a significant transportation benefit if you can do it in molecules rather than doing -- transporting in electrons the power. It also decouples the offshore wind from the grid. So the offshore wind can then operate when the wind is blowing and doesn't have to wait for the grid to be available to receive more power. It also allows the wind farm to be placed further out or in locations where the wind is blowing. So you don't have to really kind of be so cautious about being close to a grid or being close to a part of the grid where you're actually able to connect. And last but not least, you can use the existing gas infrastructure because there is a lot of pipes already crisscrossing the seabed, and you can now tap into that infrastructure. So offshore wind is really a hot topic together with hydrogen. And we are participating in 3 key projects. So we put them here together to highlight that, and it gives us a lot of experience and a foot in the door into this very important market. And I don't think anyone else has a similar position as Nel into this. Three projects, all of them have a unique angle, unique valuable learning to it. We have the Dolphin project, green hydrogen production from floating offshore wind installations. We have the Deep Purple project, which is also green hydro production offshore wind, but is combined with subsea storage. And then we had the Poseidon, where it's green hydrogen production from offshore wind mixed with natural gas, where we transport this to shore in existing pipelines. So it covers relevant angles of the topic around hydrogen, green renewable hydrogen and offshore wind. And we think that this has a great potential going forward. Finally, we would also like to talk a bit about the steel market, which I think is running showing up now as one of the fastest movers actually, taking over as the hottest topic from green ammonia. Every ton of steel produced generates approximately 2 tons of CO2, so it is really important to address this to be able to decarbonize. There is also a significant interest to pay for green steel, which is quite interesting. So we see companies like a number of industrial players, including automotive companies like Volvo and Daimler really are pushing this topic. And then there are 3 important markets in steel. So you kind of -- when you want to drill down and understand the fundamentals, there are 3 important markets. And we are participating in all 3 of them. First of all, it's the raw steel market where we do work together with HYBRIT. Here, you use hydrogen, you burn hydrogen to reduce the oxygen and generate heat. You burn hydrogen instead of coal. So that we do together with HYBRIT. It's recycling of steel, where you melt existing steel into a new product. There we support Celsa and Statkraft on this topic. And here, we basically replace natural gas. Typically, you burn natural gas, and you change that to green renewable hydrogen. And then it's hot forming of steel. You heat steel before you roll it or form it, where we do together with Ovako. And here, you replace propane typically or natural gas with green renewable hydrogen. The interesting part with the last market is that it's typically done in more locations in slightly smaller sites, so it also allows for sector coupling. When you do produce green renewable hydrogen in various locations, you can also tap into the automotive market. It doesn't only have to support the steel, but you can also then use it for other purposes, which is called sector coupling. That's also why hydrogen is interesting in this topic. And I thought it was interesting, quite cool, the announcement that came if that -- if you miss that, where Volvo officially launched their first fossil-free steel vehicle based on steel coming out of HYBRIT. And the steel coming out of HYBRIT is based on renewable hydrogen coming out of Nel electrolyzer, so we wanted to show you that. And HYBRIT has great ambitions to expand, obviously, like many others, and we would like to support them as long -- as well as all the other great companies that I mentioned earlier on this topic. Good. So let's then talk briefly about the expansion at Herøya. Last quarter, we gave you quite a lot of information on it. We even had a tour, which you can still find on our web pages, if you want to see a virtual tour of the facilities. We are planning a formal opening with a lot of guests in the first quarter. But some of the customers have already arrived. They are inpatient, so we've had a number of customers visiting the facility already. And they are quite impressed, I must say, with what they've seen. This is first of its kind in the industry, pushing the material into the line, untouched by human hands, all the way till it comes out at the other end. So that's quite unique. And as you know, Herøya will contribute to large cost reductions. It's based on -- so based on our own cost-reduction plant and, obviously, the support from the development of the cost of renewables, we believe that, by 2025, we should be able to produce green renewable hydrogen at $1.5 per kilo as a Nel customer. And that's on par with fossil hydrogen. So in other words, what we like to see fossil parity. You will start to see fossil parity. And it will obviously not happen everywhere at the same time, but it will start to happen where the power price is the lower -- or the cost of power, maybe I should say that, the cost of power is the lowest. So that's very promising for the fundamentals of hydrogen. And we are then cutting costs through scaling up and introducing automation, fully automated chemical line supported by robot cells. This facility is run according to the latest and greatest lean manufacturing principles. So we have basically recruited the best people we can find that can really run this. So when you start a plant, that's just a start. And that's when you start to see the improvements because these guys are working very systematically on this topic. The first line, 500 megawatt, but room to expand to 2 gigawatt will be aligned with customer demands, project delivered on time, on budget. And I can tell you that we are in production. Here are some of the first product that came off the line and that are going -- that are being packed into the crates. And as I mentioned, it was completed on time, on budget. The operational teams have now taken over the facility from the project and assuming it and running it as we speak. And that means that we are ready to start production for Nikola and Everfuel in the fourth quarter. So with that, I think I'll move on to the summary and outlook. We keep showing this slide. It's actually completely unchanged since our Capital Markets Day back in January. It basically underlines that we believe the fundamentals for hydrogen is looking better than ever. We are preparing for it. We are building an organization. We are entering into a new partnership, and we are expanding our capacity to be able to deliver on this outlook. That means that in the near term, we are carrying additional costs, and that will also happen going forward. But we are a pure play, a leading independent hydrogen technology company. We have decades of experience within both PEM and alkaline. We have constructed, owned and operated some of the largest green renewable factories plants in the world. And through scalability and cost leadership, we will continue to cut cost of equipment, basically contributing to green renewable hydrogen outcompeting the fossil hydrogen. We continue to show that we are an attractive partner to work with by working with leading EPC companies, strengthening the global project execution muscle, but also improving our product offering, both upstream towards renewable, working with companies like First Solar and downstream working with [indiscernible] SFC Energy and others. So I think that's also some of the unique elements of Nel. And with that summary, I think we will end the formal part of the presentation and then move over to the Q&A. Kjell Christian will join me. We may take some questions from the room, but also from the web.
All right. Are there any questions from the room before we get started on the questions that come in through the chat? Right? Right. So you talked a little bit about the expansion at Herøya. There are questions coming in about future expansion both on the PEM side and on the Herøya itself. So could you give some flavor on how we're thinking around that?
So when it comes to the Herøya, we can execute relatively quickly if we want to add more capacity. And I think we can add another line in 12 months-ish. So here, it's about getting a bit more visibility and getting traction. It also makes some sense to run the line a bit. Because if you have good creative people, they will always find improvements. So you want to do copy-paste, you want to -- but you want to do a copy-paste with the slight improvements or getting more -- even more out of it. So it makes sense. So I really hope that they're able to run the line, the first line for some time so that they can accumulate some experience and then they can integrate all of that into the next line. And then obviously, we also have to monitor where the demand is because you may not want to have all your production capacity in Norway. You actually want to copy-paste the production concept in other locations around the world. When it comes to the PEM capacity, we are more working to set up the concept for expanding, and maybe the logical place would be also to look at Europe to see if we can have a PEM facility in Europe. So Kjell Christian and I will go over to the U.S. now for the first time in 2 years plus in November. We will spend the 2 weeks in the U.S., and we will also obviously spend a few days at Wallingford. And I can assure you that's one of the topics that we will talk about when we are in Wallingford.
I think just to add a small little comment to that. We noticed a lot of big capacity targets for 2025 across the sector. We have chosen to go the other way around. We say we add capacity when it's needed and where it's needed. So that doesn't mean that we plan on falling behind what competitors are announcing, but we will be announcing when we are ready to push the button on the expansion.
A somewhat related question. Some of our competitors have raised capital in the last few weeks. Is there something that -- what's the strategy around future capital raised from now?
So we have raised capital several times and raised capital when we need it and also to have some strategic feasibility. Of course, we have no current plans to immediately raise capital, but we'll continue to look at the market and make sure we have the capital we need for growth.
There's quite a few questions on the pipeline. We talk about doubling the pipeline since the Capital Markets Day in January. Can you give some details about what's included in the pipeline? What's the definition? And how much do we see of that actually materializing into actual orders?
Well, that -- I think we have kind of a fundamental principle that we do report orders received, and an order received is a fleet purchase order and agreement when terms and conditions have been agreed, and delivery time has been agreed, everything has been agreed. And that's maybe a difference between what we are doing and what someone else is doing is that they speculate quite a lot on the pipeline. So we gave a snapshot of that in January, given another snapshot now. The pipeline consists of projects which we believe are real and we believe that we can -- we didn't have these or we have some chance of being relevant and being able to win. But it doesn't mean that all of the projects are -- will happen. And obviously, we spent quite a lot of time prioritizing our resources because you can't run after everything. So we really have to prioritize our resources. So when we go all in with our EPC partners and our project team to support some of these, we try to filter also in terms of timing, what comes later and what comes sooner and who are the likely partners to kick off these projects sooner rather than later. So I think that's all that we would like to say. If you don't have anything in addition to Kjell Christian on this topic? But we don't -- so we will continue to kind of give a snapshot on it, but we don't intend to report on a regular basis on the pipeline. And we certainly don't intend to speculate on how much we would win and not. The orders will come. But I think it was important as a backdrop to put people's mind a bit at ease because we are not concerned. We think that things will happen, but it will take the time. And in the meantime, we use that to prepare.
There's good news in the quarter about the Herøya capacity project has started up. Can you highlight when we expect the first revenue recognition from the Everfuel and Nikola order and how the revenue will be spread over time?
So we commented about this last quarter, and that's the Herøya will start to produce now for Nikola and for Everfuel in quarter 4. And specifically, I think Everfuel has given some guidance on their own when they expect the relevant project to be up and running, and we will have revenue recognition over time until the plant is up and running. On the Nikola order, we did say that we will have deliveries or production of that all through next year. So that will be over a longer time period than normal, and that's also why we commented specifically on that order in the last quarterly report.
And on the topic of Nikola and Everfuel, the fair value adjustment in the quarter, can you say something about the actual invested amount and the course developments?
So this is in Note 6 in the report. But in Nikola, we invested about NOK 43 million. And in Everfuel, we invested about NOK 15 million, both NOK. So still, it's quite a good upside compared to the original investment.
Thank you. There's been a few questions around MOUs and partnerships that's been entered in the past, namely Iberdrola, H2Bus, Statkraft, et cetera. Can you give an update on some of the partnerships we're working with?
So Iberdrola, we are -- we actually also have a contractor with Iberdrola. So we are working very hard on getting the first molecules out of that facility by the end of the year. That's a tough one is -- it's in Spain, producing green renewable hydrogen for fertilizer production with [indiscernible], 20-megawatt PEM facility, the largest PEM facility in Europe actually. That will be up and running, hopefully, or start to produce by the end of the year. So that's a lot more than just an MOU. When it comes to Statkraft and Celsa, it was an MOU where we have -- but we are uniquely -- the 3 parties are actually exclusively working on this project together. The reason why we haven't gone further is simply because the visibility on funding in Norway is still -- I mean, as you know, in Norway, Norway is not as aggressive as many other locations around the world. Maybe that will change now with the new government, but this particular project, strangely enough, but because it's a great project, it cuts CO2 dramatically and is relatively mature, we could have done it already. They are still working on funding on this project. So when that is available and when these things will come in place, that project will move forward. But I'm not going to try to speculate exactly when that happens. And then I think we have to -- some of these -- I mean, when we now work together with SFC, for example. We see that there is diesel generators everywhere, sitting idling, they're not to utilize to be backup power for a hospital also for telecommunication network, et cetera, et cetera. And all of these has to be exchanged. So SFC is a market that is actually coming, but it doesn't mean that we can sell thousands of them today, but we need to start to build these -- the product offering together and really test it out and work together. So when we sign agreements like that, it doesn't necessarily yield revenue day 1, but it is very important because it basically addresses some of these unique elements. I think that's something which is good with Nel because we are independent in the way that we can -- we can -- we do attract some very, very impressive partners, I must say, on different topics for these kind of collaborations.
A bit of a bigger-picture question. A hot topic lately is the European power prices and gas prices. How do you see that affecting the case for blue versus green hydrogen?
Well, I typically answer this question in a way that the fundamental cost of renewables is the most important. What is the cost of renewable to produce wind or solar? There are imperfections in the market. So some of the margins that someone is making is maybe a bit bigger than they deserve, but the fundamental cost of renewables is important for green renewable hydrogen. And that is going down, is going in the right direction. It has gone down in the last 10 years and will continue to go down. I think, short term, there are still opportunities, plenty of opportunities. And we are not talking about the projects in Europe for the next few years are not multi-gigawatt projects. So it becomes -- but it will become more of a topic in the second half of this decade after 2025. And then you need to add more renewables for the hydrogen projects. But then the cost is important, not necessarily the price because you will add your own production capacity.
I think that's the -- on the green side, if you look to the blue side, we have a target to be competitive with gray. So based on fossil fuel sources. If you need to do blue hydrogen, you need to add cost for carbon capture. If we had redone our cost target now based on current gas prices, we wouldn't have a need to go to $1.5 a kilo, but we are not letting that short-term fluctuation in gas prices impact where we set our target and our benchmark and where we need to be. We believe the $1.5 per kilo is the right target for 2025.
Question for you, Kjell Christian. We've said that we will add about 100 new employees in 2021. There was a comment in the report that the growth rate will be impacted by more subject to changes in the market. Could you give some flavor to that?
Yes. So this year, we're investing a lot. This is a year of massive investment both in Herøya expansion, but also in really building the organization. It's very hard to bid on a 100-megawatt-plus project if you don't have contract people that know what they're doing or engineers. And we have needed to take a massive step-up on that this year. When we look into next year, we're still finalizing plans. But if nothing big happens, the growth in employees is going to be significantly less. And then we take a caveat for the market because if one very big project comes, we must add more people to fill it, but then it will be driven by the concrete orders rather than a broad-scale addition of people.
Another question relating to guidance. Will we give absolute revenue and EBITDA guidance for 2022 at our full year results?
No, we will not be doing that because we see that quarter-to-quarter and even year-to-year is still so dependent on the individual large projects. So it's very hard to do that before you get to more of a stable base of similar-sized projects that are repetitive.
Also some questions around developments in Europe. Can you give any more flavor to the upside process and how we see that going forward and how that might materialize into future orders for Nel?
So we gave an update on that on the second quarter presentation, and I don't think -- this was at the end of August, so it's not actually that many weeks ago. And I don't think there is a big difference between now and a few weeks ago. And -- but the highlight is that there was about 140 projects which is passed on in the process, which been prequalified to go into the next round. We see that our technology and offering is relevant for approximately 80 of these projects. And we are addressing that in a systematic fashion. That doesn't mean that we will end up with 80 projects, but there will be a gradual scale-off until you get to the final number of projects. And many of these projects are quite large. They are involved in several countries, providing different technology solutions to address a larger project or a larger issue. So we do think that we will start to see more visibility on this in the first quarter next year, and we will probably see the conclusion before midyear next year. For the first round of [indiscernible], there will be multiple rounds of [indiscernible], but that's the first round.
There's a specific question on nuclear, both in the U.S. and elsewhere in the world. Is this a potential market that we see opportunities in?
So nuclear is quite interesting because we have actually sold equipment electrolyzers to the nuclear industry using hydrogen to cool the generators. So that's been an industrial niche application for many, many years. But what we saw in the U.S. now is the first time you take the power and turn into clean hydrogen. And obviously, nuclear can contribute as renewable, at least as a zero carbon hydrogen. And some countries have more nuclear than others. And where there is nuclear, there is also a lot of intermittent nuclear, strangely enough, because the nuclear power plant doesn't fluctuate up and down. You cannot turn it on and off. So you do run it at pretty much the same base load even though the grid may need more or less energy. So in those periods, you were able to capture that energy. And rather than just burn it off, you can actually turn into hydrogen and capture that value. So that's basically what we're trying to do now in a relatively small scale in the U.S., but certainly relevant in many, many other locations in different parts of the world.
Another question back to financials. Could we expect to see a growth in absolute operating expenses in 2022 at the same rate as we've seen this year?
In absolute terms, we will of course, with increasing revenue, expect to see increase in cost, but we will hope that revenue growth will start to grow faster than the cost growth, especially given the earlier comment about Herøya starting up.
Perhaps also on the financials. When it comes to pricing -- commodity prices and price of steel, iridium, et cetera. Can you say something about how that's impacted the quarterly results or what share it has impacted the quarterly results?
We don't have an exact figure for that, that we share, but we do see that, especially on some contracts, iridium has impacted negatively. We normally try to match the time of signing customer commitments with sourcing commitment to lock the prices in. We're getting better and better at it. But if you're at the end of a long negotiation, and certainly, there's a spike in iridium or steel prices, it may be hard to drive that up at last minute even if you would want to do so. So it has had some impact this year, and we're managing it.
Maybe worth pointing out that iridium as a topic is still relatively small, but only relates to the U.S. operation. It doesn't impact fueling. It doesn't impact Herøya and what we do in Norway.
Great. And then a question to the COP26 Summit coming up next month. What are your expectations to this? And what would it mean for the hydrogen industry as a whole?
I think it will cement and the topic around hydrogen and it will basically create more know-how around the topic of hydrogen, what really hydrogen can contribute. I don't think we will see specific -- well, you may see some countries announcing ambitions in connection with the COP. But I don't think the COP program as such has specific targets. They leave that to the EU, to the U.S. and specific countries to address that topic. But certainly, hydrogen is becoming a topic that is key for the energy transition and for the decarbonization. And that you will see, for sure, also under the next COP assembly.
Then I think we got the last question here. That's for you, Kjell Christian. What's the driver behind the all-time high revenue figures that we've seen in the quarter?
It's, again, back to specific contracts. And in this quarter, we have started to see quite some revenue on the Iberdrola contract, which is a big swing factor.
Very good. Thank you very much for showing up. I hope to see you again next time around. And thank you very much for following. Thank you.