A project, jointly funded by VSEL and CJB Developments Limited, is aimed at the development of complete power generation systems based on PEM fuel cell technology. Potential markets for such systems are seen as being very broadly based, ranging from military land and marine systems through to commercial on-site power generation and transport. From the outset the project was applications driven, the intent being to identify market requirements, in terms of system specifications and to use these to produce development targets. The two companies have based their work on the Ballard PEM stack and have focused their efforts on the development of supporting systems. This benefits all three companies as it allows Ballard to obtain applications information on which to base future research and VSEL/CJBD are able to capitalise on the advanced development of the Ballard stack. Current work is focused on the production of a 20 kW, methanol fuelled, power generation system demonstrator, although work is also in hand to address a wider range of fuels including natural gas. The demonstrator, when complete, will be used to indicate the potential benefits of such systems and to act as a design aid for the applications phase of the project. Preliminary work on this next phase is already in hand, with studies to assess both systems and fuel cell stack design requirements for specific applications and to generate concept designs. Work to date has concentrated on the development of a methanol reformer, suitable for integration into a fuel cell system and on extensive testing and evaluation of the Ballard fuel cell stacks. This testing has covered a wide range of operating parameters, including different fuel and oxidant combinations. The effect of contaminants on the performance and life of the fuel cells is also under evaluation. PEM fuel cells still require a great deal of further development if they are to gain widespread commercial acceptance. A recent study conducted by VSEL in conjunction with the UK Department of Energy has addressed the fuel cell cost and performance requirements in order to both focus future research and to aid understanding of the time-scale to reach full commercialisation.