When Chattanooga Mayor Bob Corker traveled to California's Silicon Valley last summer looking for business opportunities, he discovered a start-up venture that was not looking to be found.

But at Mayor Corker's urging, the leaders of an energy business startup known as Ion America soon discovered Chattanooga as a possible site to test and manufacture its products.

K.R. Sridhar, a former colleague of UTC Professor Harry McDonald, is still reluctant to say much about what he calls his "stealth corporation."

But the former University of Arizona scientist believes he has developed a clean way to generate electricity and hydrogen on a relatively small scale. If successful, Ion America could provide a major boost to building both a dispersed power system and the hydrogen-powered economy of the future touted by President Bush.

"This has a tremendous opportunity as we move forward with fuel cell and hydrogen technologies," Mayor Corker said. "But Silicon Valley is really not a good place to make things. It's a great place for developing cutting-edge technologies. But in Chattanooga we know how to build what others may have invented and we can usually do so at less cost than in places like Silicon Valley."

Within weeks of their initial meeting, Mayor Corker arranged for Mr. Sridhar to meet with top congressional leaders in Washington, D.C., including Senate Majority Leader Bill Frist. The result? Congress allocated $2.5 million this year for Ion America to test its new technologies in Chattanooga. Congress has been asked to provide another $2.5 million for the venture next year.

The federal grant will flow through Chattanooga's Enterprise Center, a city-sponsored agency created to foster new technology ventures, and will work through UTC's computer simulation facility on M.L. King Boulevard.

"There has certainly been a great deal of interest and support from Chattanooga," Mr. Sridhar said after meeting with local business leaders earlier this week. "You have quite a few of the facilities already here that could prove very useful."

Ion America is an outgrowth of the space research that Dr. Sridhar worked on while director of the Space Technology Laboratory at the University of Arizona from 1996 to 2001. To help NASA with its mission to Mars in the 1990s, Dr. Sridhar and other scientists worked to find a way to make oxygen in space for rocket air supply and energy.

The lab won a large NASA contract to develop a method to convert electrical energy into chemical energy. But that was later scrapped along with much of NASA's Mars efforts in the late '90s.

"I still wanted to make a big impact and started looking at what I knew," Dr. Sridhar said. "I knew if I took the reverse of what we had developed -- taking chemical energy and converting it to electricity -- it becomes this new promising fuel cell technology."

Ultimately, Ion America could develop a device the size of a typical furnace to convert natural gas or other fuels into electricity. The process would generate hydrogen as a byproduct, helping to fuel the new cleaner-burning hydrogen-powered cars of the future.

Dr. Sridhar believes he has solved the technical problems and is eager to test a unit in a Chattanooga office building capable of producing several megawatts of electricity. One of the first units will be at the UTC Sim Center.

"We're very excited about demonstrating the performance of the unit," said Dr. McDonald, director of the Sim Center. "This could really be national or even international dynamite that could revolutionize both energy and travel."

Ion America hopes to have its first units for sale by 2006, Dr. Sridhar said.

Chattanooga could be an attractive site because of its links with the Oak Ridge National Laboratory, the Tennessee Valley Authority and the Advanced Transportation Technology Institute, among others. Even the shuttered former Coors Ceramics plant could help in providing the technical ceramics needed for the Ion America product, officials said.

"Ultimately, we would like to be the place that these devices are manufactured," said Joe Ferguson, executive director of the Enterprise Center.