| Everyone knows they should be less wasteful of precious energy, to turn off the light, install double glazing and lag the loft. What's less widely understood is that by the time heat and power gets to our houses our efforts are too little too late. The appalling inefficiency of centralised power generation and distribution means that about two thirds of all the electricity generated in our power stations is lost in a leaky transmission system. Now for the fi rst time a viable alternative is on the horizon in the form of combined heat and power (CHP) generation. By bringing a minipower station into your kitchen – generating electricity, heat and hot water from a single wall-mounted device the size of a domestic boiler – fuel can be converted at 80-90% efficiency, a massive improvement. Leader of the pack in the development of CHP devices is Ceres Power, a company spun out of London's Imperial College six years ago. AIM-listed Ceres is on the brink of commercialising a prototype system that it recently demonstrated to enthusiastic analysts. Full-scale manufacturing is expected next year or in 2009, and the signing of a commercial contract, perhaps with current development partner British Gas, is likely within six months.  Chief executive Peter Bance said the response to September's demonstration has been strong. "We've had significant interest from as far away as Asia, the Pacific Rim and North America as well as Europe. The pipeline of opportunities is building.' At the heart of the Ceres story is a unique fuel cell capable of running at lower temperatures than its rivals. This means its cells can be based on cheaper and stronger steel structures than on the ceramics traditionally used. Over the past six years, Ceres has taken its fuel cell technology and developed it into a complete wall-mountable CHP unit capable of using ordinary domestic gas and water supplies to generate 90% of a house's electricity requirement and provide all of its heat and hot water. The device can be installed by any qualified fitter. Although the units are expected to retail at around €4,300 initially, the price is forecast to fall quickly to only around €700 more than an equivalent boiler. With gas consumption rising by only about 10% for the typical user and electricity costs all but eliminated, the payback could be as quick as two years. That opens up an enormous market. It has been estimated that boiler sales in the top five European markets alone are over 4.5 million a year. Britain, where 85% of boilers are wall-hung, accounts for a third of these. Ceres remains at an embryonic stage but the buzz about the company is getting more intense. Following the recent prototype demonstration and full-year results showing more cash in the bank than expected, analysts revisited their forecasts and tweaked their price targets for the shares. Citigroup thinks the shares could be worth over €7, nearly twice their price at the time of the demonstration. |