Norwegian Nel ASA vs. California: Infrastructure Failure

Background

As the world races toward carbon neutrality, hydrogen infrastructure has emerged as a critical component in the clean energy mix. Nel ASA, a leading Norwegian hydrogen company, embarked on an ambitious expansion into California, one of the most promising markets for hydrogen fuel deployment. At the same time, California’s hydrogen infrastructure—bolstered by strong climate policy—faced mounting challenges. This collision of promise and execution offers a powerful case study for students, professionals, and researchers exploring clean energy deployment, technological risk, and infrastructure failure.

Hydrogen Infrastructure: Global Context

The Rise of Hydrogen as a Clean Energy Solution

Hydrogen fuel cell vehicles (FCVs) offer a compelling alternative to fossil fuels and traditional electrification. With rapid fill times and high range, hydrogen appeals especially to sectors like heavy transport and industry. This evolving narrative captures long-tail interest such as “how hydrogen fuel cells compare to BEVs” and “benefits of hydrogen infrastructure for heavy-duty transport.”

Key Challenges in Hydrogen Deployment

Despite the promise, hydrogen deployment confronts significant bottlenecks:

• Storage & transport limitations: Delivering hydrogen often involves high-pressure tube trailers or liquid hydrogen transport—both costly and logistically complex.
• Low utilization and high cost: Many stations underperform, failing to reach the ~200 kg/day throughput needed for profitability, leading to expensive fuel prices—ranging between $13 and $36/kg in California.
• Infrastructure reliability issues: Frequent downtime, supply chain constraints, and technical failures disrupt service continuity.

Nel ASA: Norway’s Hydrogen Infrastructure Pioneer

Company Overview and Mission

Nel ASA, headquartered in Oslo, Norway, was founded with the vision of accelerating the global transition toward a hydrogen-based economy. The company positions itself as a world leader in hydrogen solutions, with a strong focus on two critical areas: electrolyzers for renewable hydrogen production and hydrogen fueling stations for mobility. Nel’s mission is not only to supply equipment but also to establish the foundational infrastructure necessary for a hydrogen economy, bridging the gap between renewable energy generation and end-user applications.

Over the years, it has developed a reputation as one of the most prominent players in the hydrogen value chain, contributing to both small-scale distributed hydrogen production and large-scale industrial projects.

Nel ASA’s Global Footprint

From its beginnings in Scandinavia, Nel ASA has expanded aggressively into international markets. Its electrolyzer technology and H₂Station™ fueling solutions have been deployed across Europe, Asia, and North America. The company has secured high-profile collaborations with governments, research institutions, and automotive giants, including Toyota, Hyundai, and Nikola, to advance hydrogen-powered mobility.

In California—the world’s largest testbed for hydrogen fuel cell adoption—Nel entered partnerships with Toyota, Shell, Chevron, and Iwatani Corporation to help build a comprehensive fueling network. The company’s involvement positioned it as a central contributor to California’s “Hydrogen Highway” initiative, which aimed to create a reliable network of stations to support zero-emission fuel cell vehicles (FCVs). Nel’s global strategy reflects not only technology deployment but also market influence, as it seeks to align with countries and states pushing ambitious decarbonization targets.

Technology and Innovation

At the core of Nel’s offerings lies its electrolyzer technology, which comes in two main forms: alkaline electrolyzers, known for durability and cost-effectiveness, and proton exchange membrane (PEM) electrolyzers, valued for their efficiency and ability to integrate with intermittent renewable energy sources like wind and solar. This dual portfolio allows Nel to serve both industrial hydrogen production and mobility infrastructure markets.

On the fueling side, Nel’s H₂Station™ units were promoted as cutting-edge solutions capable of dispensing hydrogen quickly and safely, with the goal of replicating the refueling experience of conventional gasoline vehicles. These stations were designed to handle high pressures required for 350-bar (heavy-duty vehicles) and 700-bar (light-duty vehicles) fueling, making them attractive for automakers and fleet operators.

However, reports in recent years have suggested that some of these hydrogen stations were deployed without sufficient real-world validation and stress testing. While the designs promised scalability and high performance, operational challenges such as reliability issues, high maintenance costs, and occasional safety incidents—including well-publicized station outages—undermined consumer confidence. These shortcomings highlighted the gap between laboratory innovation and field performance, raising questions about whether the technology was truly ready for large-scale, real-world deployment.

California’s Hydrogen Infrastructure Ambitions

Why California Invested in Hydrogen Fueling

California has long been at the forefront of clean energy policy, positioning itself as a global leader in climate action and sustainable transportation. Under its Zero-Emission Vehicle (ZEV) mandate, the state sought to diversify clean mobility options beyond battery-electric vehicles (BEVs) by investing heavily in hydrogen fuel cell vehicles (FCVs). Policymakers viewed hydrogen as a critical complement to electrification—particularly for long-range driving, heavy-duty trucks, and fleets where batteries were considered less practical.

To accelerate adoption, the state offered a mix of financial incentives, regulatory support, and public–private partnerships. Grants from agencies such as the California Energy Commission (CEC) and programs under the California Air Resources Board (CARB) helped subsidize hydrogen station construction and offset early infrastructure costs. This policy framework sent a strong signal to automakers and energy companies that California was serious about building a hydrogen ecosystem.

The Hydrogen Highway Initiative

One of California’s boldest undertakings was the Hydrogen Highway Initiative, a long-term program designed to ensure that consumers would have reliable access to fueling infrastructure across key urban and regional corridors. Anchored by Executive Order B-48-18 and legislative support under Assembly Bill (AB) 8, the initiative set a target of 200 hydrogen fueling stations by 2025.

The vision was clear: create a dense, interconnected network of hydrogen refueling points to eliminate “range anxiety” and provide drivers with the same convenience as gasoline refueling. Early partnerships with Toyota, Honda, Hyundai, Shell, and Nel ASA reinforced the initiative’s credibility. For a time, California was hailed as the global leader in hydrogen fueling infrastructure, attracting international attention and investment.

Yet, execution lagged behind ambition. By mid-2024, fewer than 70 stations were operational, many plagued by supply interruptions, technical breakdowns, and maintenance delays. This shortfall eroded public trust and highlighted the risks of betting heavily on a technology still struggling with scalability and reliability.

California’s Fuel Cell Vehicle Adoption

While policy momentum was strong, consumer adoption told a different story. Automakers like Toyota, Honda, and Hyundai invested heavily in fuel cell vehicles, introducing models such as the Toyota Mirai and Hyundai Nexo. However, enthusiasm was short-lived.

Between 2022 and 2024, hydrogen vehicle sales in California collapsed by nearly 85%, according to state registration data. The decline was not due to lack of interest in clean mobility but rather the unreliable fueling infrastructure that left many drivers stranded or dependent on a handful of functioning stations.

The frustration reached a breaking point when Toyota Mirai owners filed a class-action lawsuit, claiming they were misled by assurances of a functional fueling network. Plaintiffs argued that constant outages, closed stations, and long wait times made the vehicles “practically unusable,” undermining consumer confidence and damaging the state’s broader hydrogen mobility goals.

This consumer backlash revealed a fundamental truth: without dependable infrastructure, even the most advanced clean vehicles cannot succeed in the marketplace. California’s experience became a cautionary tale about over-promising and under-delivering in the race to build a hydrogen economy.

Infrastructure Failures: Nel ASA vs. California

Nel ASA’s Infrastructure Setbacks

Nel has become embroiled in a civil fraud lawsuit brought by Iwatani Corporation of America. The allegations claim Nel sold faulty hydrogen stations—called H₂Stations—that were untested and never built to operational standards. A judge has allowed the core fraud claims to proceed, with trial scheduled for October 2026.

Iwatani alleges Nel concealed the lack of operational testing and shifted maintenance burdens to Iwatani by requiring an exclusive contract. Technicians reportedly discovered parts like valves unsuitable for hydrogen and even shrapnel inside station equipment.

California’s Hydrogen Network Struggles

California has fallen far short of its station build targets—only 87 hydrogen stations by the end of 2025, missing the 200-station goal by about 60%. Many active stations were offline for more than 30 days, and operating capacity hovered around 62% on average. Shell exited the hydrogen market, shutting down its stations and canceling plans for dozens more.

Comparative Analysis

Root Causes of Infrastructure Failure

Technical Challenges

• Nel’s H₂Stations lacked real-world validation, and components failed under pressure. Technicians reported mis-insulated pipes causing ice buildup and dangerous equipment failures.
• Station throughput fell drastically short of profitable levels (50 kg/day vs ~200 kg/day), hurting economic viability.

Economic and Policy Barriers

• Low vehicle demand meant infrastructure investments couldn’t be justified. Station capacity far outstripped projected FCV numbers—129 stations vs. roughly 14,400 vehicles in 2024.
• Cost of hydrogen (up to $36/kg) dwarfed alternatives: around 13× the cost per mile of BEVs, and 2.7× higher than gasoline.

Public Perception and Market Acceptance

• Frequent station failures and inflated prices eroded consumer trust. Drivers report stations “down or out of fuel” and being stranded—forming the basis of a class-action lawsuit.
• As hydrogen struggled, electric vehicle adoption accelerated, overshadowing hydrogen’s potential.

Lessons Learned and Path Forward

What Nel ASA is Doing to Recover

In its 2024 Annual Report, Nel acknowledges low order intake and delays in projects during 2023–24. Still, the company reports improved financials: revenue nearly doubled, EBITDA losses cut by 60%, with a solid cash position of around NOK 2 billion. They continue to advance their PEM and alkaline electrolyzer technology platforms.

California’s Revised Hydrogen Roadmap

California has shifted its focus to heavy-duty hydrogen applications—trucks and buses—as a way to build economies of scale. The ARCHEs hub has secured $1.2 billion in conditional DOE funding to support 50–60 truck-oriented stations by 2030 that could serve light-duty vehicles too.

Policy remains in play: the California Energy Commission and Air Resources Board are evaluating station reliability, community access, and aligning funding to support robust infrastructure.

Global Implications

Other regions eyeing hydrogen deployment can learn from California’s challenges:

• Rigorous pilot testing before widespread roll-out.
• Focusing on sectors where hydrogen has unique advantages (e.g., long-haul trucking, shipping).
• Ensuring infrastructure utilization matches supply curve economics.

Future Outlook: Hydrogen Infrastructure Beyond Failure

Will Hydrogen Compete with Batteries?

Battery electric vehicles continue to dominate light-duty transport. Hydrogen may play a niche role where battery limitations persist—long-range heavy transport and energy density needs.

Hydrogen for Heavy Transport and Industry

Sectors like trucking, shipping, and aviation are turning toward hydrogen due to faster refueling and lower carbon intensity at scale. Innovations like liquid hydrogen fueling for trucks are under evaluation.

Scaling Hydrogen Infrastructure Globally

With lessons from missteps in California, future growth hinges on:

• Industry-government partnerships.
• Aligning infrastructure supply with demand.
• Investing in green hydrogen and integration with renewables.

FAQs: Nel ASA, California, and Hydrogen Infrastructure Failure

What is Nel ASA and why is it important in hydrogen infrastructure?

Nel ASA is a Norwegian company specializing in hydrogen electrolyzers and H₂Stations. It played a central role in California’s hydrogen rollout, supplying fueling stations to partners like Toyota, Shell, and Iwatani—stations that later failed and became the subject of fraud litigation.

Why did California’s hydrogen fueling stations fail to meet expectations?

The failures stemmed from immature technology, poor station utilization, high costs, and unreliable performance, resulting in closed stations, unmet targets, and frustrated vehicle owners.

What caused the Nel ASA hydrogen station explosions?

There were no direct explosions, but technicians found evidence of shrapnel and component failure within stations. Reports noted structural flaws like uninsulated pipes and components not meant for hydrogen service—signs of poor design or installation.

Is hydrogen infrastructure safe today compared to early failures?

Global hydrogen safety standards have advanced, but California’s case highlights the risks of deploying unproven systems. Infrastructure safety now depends on rigorous testing, robust design, and clear regulation.

How does hydrogen infrastructure compare to battery-electric charging?

Hydrogen offers fast refueling and long range, but it’s currently far costlier and less reliable than battery EVs, especially for light-duty applications.

Will California continue investing in hydrogen after repeated setbacks?

Yes—but strategically. The state is now targeting heavy-duty sectors via ARCHEs funding and aligning public-private efforts to stabilize the market.

What lessons can other countries learn from Norway and California’s failures?

Other regions should: validate technologies before large-scale deployment, align infrastructure with realistic demand, prioritize sectors where hydrogen has competitive advantage, and avoid overcommitment to immature systems.

Is hydrogen still a viable option for the future of clean energy?

Yes—particularly in niches like heavy transport, maritime, and industrial uses. Innovations and targeted investments suggest hydrogen can still play a key role in decarbonization.

Conclusion: Navigating Failures Toward a Hydrogen Future

The Nel ASA–California hydrogen debacle underscores how technological optimism can falter without rigorous testing, policy alignment, and economic feasibility. But failure isn’t fatal. Nel’s financial turnaround and California’s pivot to heavy-duty applications signal an adaptive path forward.

If you’re a student, professional, or researcher, consider how this case highlights the interplay between technology, policy, and public trust. The hydrogen future is still viable—when grounded in practicality.

Call to action:

Dive deeper—explore technical reports, monitor legal developments (like Nel’s October 2026 trial), and track how heavy-duty hydrogen infrastructure evolves. Your insights could shape tomorrow’s energy solutions.

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Norwegian Nel ASA vs. California