Charles EstherNorlys Energy Trading is confronting a serious financial risk due to its investment in Green Hydrogen Systems (GHS).
The Danish electrolyser manufacturer has recently been hit by major operational and financial problems.
This situation could potentially cost Norlys millions if GHS fails to recover.
Green Hydrogen Systems Issues Profit Warning
In January 2025, Green Hydrogen Systems issued a troubling profit warning.
The company revised its 2024 EBITDA forecast to a loss between DKK -485 million and -500 million.
This was a sharp increase from its earlier projection of DKK -300 million to -400 million.
GHS blamed the worsening forecast on increased research and development costs and significant impairment losses.
Restructuring Efforts and Soaring Costs
To address the growing crisis, GHS announced a major restructuring plan.
Initially, restructuring costs were estimated between DKK 100 million and DKK 150 million.
However, this figure has now ballooned to between DKK 215 million and DKK 230 million.
This escalation reflects the serious internal challenges the company is facing.
Capital Concerns and Breach of Loan Covenants
Adding to its woes, GHS is currently in breach of its loan covenants.
The company also warned that its capital reserves might run dry by early 2025 unless new funds are secured.
To prevent collapse, GHS is seeking to raise up to DKK 300 million by the end of 2024.
Negotiations are underway with major shareholders and lenders in hopes of securing emergency funding.
Impact on Norlys Energy Trading
Norlys Energy Trading had already seen a dramatic fall in its operating profits, dropping from DKK 3.5 billion in 2022 to just DKK 77 million in 2023.
Despite this, Norlys chose to continue investing in growth opportunities, including in GHS.
Now, with GHS’s financial troubles deepening, Norlys faces a real risk of losing a significant part of its investment.
If GHS cannot stabilise its operations, Norlys could end up absorbing heavy losses.
Broader Implications for Green Technology Investments
The situation highlights the high risks associated with investing in emerging green technologies.
While sectors like hydrogen energy are vital for a sustainable future, the path to profitability can be unpredictable and fraught with challenges.
Companies like Norlys must weigh growth ambitions carefully against the financial instability of start-ups like GHS.
Conclusion
Norlys Energy Trading’s exposure to Green Hydrogen Systems underscores the need for caution when investing in newer green technologies.
Without swift and effective action by GHS to secure new funding and fix operational issues, Norlys could be facing millions in losses.
This case serves as a reminder of the volatility in the clean energy market and the importance of thorough risk assessment.
