Fuel cell systems that use city gas or liquefied petroleum gas were launched in Japan earlier this year. Fuel cells create electricity by the chemical reaction of hydrogen--in this case, converted from kerosene--and oxygen.

The new system was developed jointly by the Japanese oil distributor and Ebara Ballard Corp., a joint venture between Japanese engineering firm Ebara Corp. and Canadian fuel cell maker Ballard Power Systems Inc.

The new cogeneration system can generate 60 pct of the electricity used by a household and at the same time supply hot water for the bathroom and kitchen, Nippon Oil said.

The system has a high energy efficiency and has 30-40 pct fewer carbon dioxide emissions than conventional power generation systems, according to the company.

Users need to pay an annual fee of 60,000 yen for a three-year contract for the use and maintenace of the fuel cell system. Nippon Oil plans to install 100 units in fiscal 2006 at houses around the Kanto region, including Tokyo, as well as other major northern cities in Japan.