But after field trials here - probably including an eco-village display home - this new fuel cell product will go to market first in Europe, not Australia.

"It is a sad fact," said Helen Millicer of Melbourne-based Ceramic Fuel Cells, the country's only commercial developer of hydrogen fuel cell systems.

"If there was greater (government) support given to energy efficiency in this country then micro CHP (combined heat and power systems) would be more favoured here."

She said Australia's coal-fired electricity was dirty but cheap, making it difficult for cleaner, more efficient energy to compete. In Europe, especially in Britain and Germany, governments were strongly promoting micro CHP systems.

A CSIRO spin-off, Ceramic Fuel Cells announced yesterday that a TAFE campus in Melbourne training gasfitters and electricians would host the first field trial of the 1kilowatt unit.

The generator could reach the European market "in a couple of years" and cost roughly $15,000, business development manager David Peck said.

He said the fuel cell had an electricity efficiency of 40 to 50 per cent, compared with 10 to 30 per cent for rival combustion engine-based products already in the new but fast-growing European market for micro CHP generators. About 13,000 units, priced between $7000 and $23,000, sold in 2004.

"In the United Kingdom it would certainly be economical to install (a system like the Australian fuel cell) now because the natural gas price is about a third of the price of electricity," said Andrew Dicks of the Australian Institute of Energy.

Dr Dicks, a senior research fellow at the University of Queensland, said the fuel cell's efficient use of waste heat for hot water or central heating made it ideal for households in colder European climates.

He said its baseload power would work well with intermittent wind or solar power - another argument for more serious Australian government backing of energy alternatives to fossil fuels.

The company's shares closed at 72c yesterday, up 2.86 per cent.