Fuel cell company Ceres Power has signed a new agreement with Calor Gas Limited for the development of residential combined heat and power (CHP) products operating on liquefied petroleum gas (LPG).

The move follows a similar programme with British Gas, using the same core technology, to develop a product that can use mains natural gas CHP.

The new LPG variant will address residential customers and small businesses in the many areas of the world that are not connected to the mains natural gas grid, the company says. There are more than 100 million such homes and small businesses across Europe.

Under the terms of the new agreement, Calor will pay £2.5 million (US$3.75 million) to Ceres in milestone payments during the development and trialling of the LPG CHP product, including an up-front payment of £1 million ($1.5 million). In addition, Calor has placed a call-off order for 20,000 LPG CHP Products in aggregate over a five-year period for the UK market, conditional upon successful development of the product. Ceres has agreed to sell the LPG CHP product to Calor for the UK market on an exclusive basis for a five year period anticipated to begin in 2012.

Peter Bance, CEO of Ceres Power, commented: ‘We are confident that this new LPG CHP product has real potential both here in the UK and across many other territories including Europe, North America and Asia.’