Alternative energy firm Ceres Power has signed a deal with Calor Gas for the development, manufacture and supply of LPG-fuelled residential CHP products.
Enabling Calor to enter the residential mini-CHP market, the terms of the deal specify that the firm pays Ceres £2.5 million in milestone payments during the development and trialling of the LPG-fuelled CHP product (the initial phase). This includes an up-front £1 million payment.

Calor has placed a call-off order for 20,000 LPG CHP products over a five year period for the UK market, conditional upon successful completion of the first phase (and agreement on standard commercial terms for product supply).

Subject to Calor meeting annual minimum order volumes, Ceres has agreed to sell the LPG CHP product to Calor for the UK market on an exclusive basis for five years from 2012.

Ceres Power said the LPG CHP product, generating electricity and all of the home's heating and hot water, will address the energy needs of residential customers and small businesses around the globe, that are not connected to the mains natural gas grid.

Ceres and Calor plan to reach the UK's two million off-gas-grid homes and small businesses using oil, solid fuel or conventional electrical heating in the UK. More than 100 million exist across Europe.

Peter Bance, CEO of fuel cell specialist Ceres Power, said: 'We are delighted to have formed this relationship with Calor which builds on Ceres Power's experience in LPG and uses our core technology platform's fuel flexibility to open up substantial new markets. We are confident that this new LPG CHP product has real potential both here in the UK and across many other territories including Europe, North America and Asia'.

Stephen Rennie, managing director of Calor, said: 'Working with Ceres on this revolutionary technology further highlights Calor's position as the UK's off-gas-grid market leader.

'The Ceres Power CHP product will help accelerate a transition from dirty domestic fuels like heating oil, to cleaner convenient fuels like LPG. We look forward to bringing this product to residential and small business customers as part of
our strategy to provide green energy solutions to the rural market.'

Ceres Power retains the right to supply and distribute LPG CHP products anywhere else in the world and the right to exploit its fuel cell technology in other applications globally, including in the UK.

The Calor agreement builds upon Ceres Power's existing mains natural gas CHP programme with British Gas, and will use the same core technology.