Fuel cells are poised for their first commercial home installations. By early next year, Tokyo Gas will install the technology outside 50 Japanese homes, with plans to install 900 more units by 2007. The units will extract hydrogen from natural gas and use it to create supplemental electricity for the homes. Waste heat from the fuel cells-rather than electricity-will heat water for household use. All told, using fuel cells to reduce the homes' reliance on electricity from gas-fired power plants should cut their fossil fuel consumption by about one-quarter.

The households will be able to replace their hot-water heaters with the new fuel cell system "and also get one kilowatt of electricity for free"-enough to satisfy all the home's electricity needs during the periods of lowest demand, says Dennis Campbell, president and CEO of Ballard Power Systems in Vancouver, British Columbia, whose fuel cells are part of the Tokyo Gas system. The program will be followed by early 2006 by a similar effort from another Japanese utility, Osaka Gas.