More Project Cancellations: Direct and Indirect Consequences Emerging

Key Points

Project cancellations, especially those with large write downs, imply lost revenue for those associated with the project – equipment suppliers and engineering companies – compensation is implied in some write downs.
Even if your customer has paid you 25-35% down on equipment orders, you may have little further recourse if projects are delayed or cancelled, leaving you with either finished or unfinished equipment to sell.
Electrolyzer companies are investing heavily to expand capacity, based on longer-term demand forecasts as well as both firm orders for equipment and indicators of interest – project delays or cancellations could prove fatal.
As the industry regroups, we are likely to see interest in equipment suppliers that have focused on cost of ownership – equipment, installation, service, etc. – versus power efficiency. The winners here will get bought.
Otherwise, we look at some very expensive projects in Germany, comment on a more organized Chinese market, discuss the potential weakness in grey ammonia markets, and more power bottlenecks.

Exhibit 1: Spending is rising to add capacity, but sales are lagging meaningfully.