The forecast follows the separate announcements today that Ceres Power and Energetix Group will, with financial backing from leading residential energy suppliers, develop new CHP technologies to be used in homes across the UK.

E.ON UK will fund Energetix Group's testing of a Genlec micro-CHP system while British Gas owner Centrica is funding, in staggered 5 mln stg payments, Ceres Power's own micro-CHP program.

The CHP units to be developed will operate in the same manner as domestic central heating boilers, but will also deliver low-carbon electricity into the home to reduce the need to buy electricity.

The eventual outcome, the industry says, will give customers the opportunity to sell power produced in the home back to the grid.

'Both announcements are evidence of an upturn in the interest and commercial development of micro CHP, with a view to getting competitive products to the market by around 2010,' said Smith. 'The companies are really gearing up for that date.'

Smith believes there will be a real appetite for the new technology in households across the UK. 'Residential customers will be open to this sort of technology and there will be an excitement around the product,' he added. 'Nothing has ever been done to simultaneously produce heat and power in the home.'

Other market leaders are likely to follow suit in developing micro-CHP, as old fashioned boiler units are gradually replaced. 'By 2011 you will hopefully see two or three of the early market leaders having a commercially attractive product and then competing for the boiler replacement market. CHP is the right market to plug the gap left by boiler replacements and given the unique properties of a micro CHP unit and its route to market, you're not going to see an awful lot of competing technologies within that space,' said Smith.

Ceres Power said in a statement this morning that fuel cell boilers could cut residential energy bills by 25 pct per year and reduce annual household carbon dioxide emissions by up to 2.5 tonnes.

However, residential customers are likely to need more incentive than just benefits to the environment if the technology is to really take off.

'If the industry can show it is a sensible investment decision to take, on a household basis, and not just an ethical environmental decision, then there should be a huge amount of interest,' Smith said.

edward.mcallister@thomson.com

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