Fuel cell developer Ceres Power (LON:CWR) has signed an evaluation agreement for its proprietary technology with another large manufacturing group.
Under this new agreement Ceres will supply a complete system for testing by the (unnamed) potential customer.
If successful, the two will jointly develop a multi kW electricity generation system.
The fuel cell uses a perforated sheet of steel that has layers of ceramic ink printed on to it. The ceramic layer coverts fuel directly to electricity and can be used with different fuel types such as natural gas or hydrogen.
The agreement follows recent advances on its technology that have opened it to higher power applications, a market forecast to be worth US$40bn for fuel cells alone by 2020.
Last month, Ceres signed a research & development (R&D) collaboration for its technology with car giant Honda.
Phil Caldwell, the fuel cell group's chief executive, said: "There is a growing demand for low carbon distributed power due to increasing pressure on conventional power generation.
“We are now developing high efficiency power systems which provide superior performance to the grid in terms of efficiency and emissions and enable power to be generated at the point of need in the home or business.“