Norwegian hydrogen technology company Nel ASA (OSE: NEL) said on Tuesday that it has signed a Memorandum of Understanding (MoU) with German defence and engineering group Rheinmetall AG (ETR: RHM) to explore joint opportunities in decentralised renewable fuel production based on renewable hydrogen, enabling low-carbon fuels that can replace conventional fuels without changes to end-use applications.

The collaboration will assess scalable, modular solutions combining Nel's electrolyser technology with Rheinmetall's Giga PtX concept and systems-integration capabilities.

Rheinmetall has been building a network of local partners for its Giga PtX project and is adding Nel as a strategic partner for the Norwegian market. Producing fuels closer to demand centres is intended to reduce reliance on centralised refining and long supply chains, strengthening resilience in periods of disruption.

Norway is viewed as a natural starting point due to its strong renewable power base, industrial capabilities and emerging carbon capture and utilisation value chains. Decentralised fuel production could also ease pressure on transmission and distribution networks by enabling renewable power to be converted and used closer to the source.

Under the non-binding MoU, the parties will assess technical and commercial feasibility, including potential sites, infrastructure needs, renewable power access, sustainable carbon sources and priority use cases. Pilot projects may be considered to validate modular concepts and demonstrate the viability of decentralised fuel systems.