The cells run on methanol, hydrogen and other fuels cheaper and more efficient than traditional forms of energy. The fuel cells would produce electricity with water as the byproduct — the exhaust.

Through $103 million in grants and other efforts, Ohio has worked to put itself ahead when it comes to fuel cells, widely considered the future as the nation looks for alternative energy sources.

Hundreds of thousands of jobs are at stake if the automotive industry abandons internal combustion engines for fuel cell-powered cars, for example.

“I think Ohio has done exceptionally well — so far,” said Robert Rose, executive director of the U.S. Fuel Cell Council. “It’s a long, slow process. I think staying the course will be well worth it. I think Ohio’s progress has given other states the sense of opportunity.”

The industry association that promotes the commercialization of fuel cells attended the state’s sixth annual symposium on the topic this week at Kent State University’s Stark County campus.

“Ohio makes sense for this industry,” Lt. Gov. Bruce Johnson, who also serves at the Ohio Department of Development director, said Wednesday after his presentation at the symposium.

The industry sees Ohio as “forward thinking” and fuel cell companies are looking to locate in the state “because of the existing manufacturing base, the location and the strength of the technology and the research and development that already exists here,” Johnson said.

“I think fuel cells represent a gazelle industry,” he said. “It’s an industry about to take off. It’s not going to surpass traditional power industries anytime soon, but it’s going to grow.”

While some automakers are trying to develop fuel cell systems to power electric cars, Rolls Royce aims to build stationary power generators that could be placed within existing power grids or work as stand-alone units.

Charles Coltman, chief executive of Rolls Royce’s fuel cell systems division, said the company has used the state’s Third Frontier program to partner with Alliance-based fuel cell researcher SOFCo-EFS Holdings to perfect a device that can “reform” fuels such as diesel into hydrogen.

Rolls Royce plans to assemble 1-megawatt fuel cells — enough to power a large office building or neighborhood — by next year with another state-assisted startup company, OnPower, in Lebanon in southwest Ohio. A typical coal-fired power plant produces hundreds of megawatts and Rolls Royce plans to take the product commercial by 2010, Coltman said.

Utilities are interested in such fuel cell units instead of building new, large power plants.

In November, the Regional Economics Application Laboratory and Environmental Law and Policy Center estimated Ohio could secure 26,000 jobs by luring alternative energy technology such as fuel cell development to the state, which has long struggled with the loss of manufacturing jobs.

Green energy firms have started to appear in the state and are looking to expand. First Solar’s plant in Perrysburg employs 220 and is set to add 180 jobs by 2007. BioGas Technologies in Norwalk and Technology Management Inc. in Cleveland are working to advance biofuel and fuel cell energy.