The experiment will be Japan's first on a hybrid cogeneration system that combines a polymer electrolyte fuel cell and a high- purity hydrogen oxygen generator, the utility firm based in this western Japan city said. The PEFC separates hydrogen from water, and the HHOG generates power and hot water using the hydrogen.

The system will operate at night when electricity charges are low, separating hydrogen from water through electrolysis. The hydrogen will then be stored to be used during the day. Hydrogen is regarded as an eco-friendly fuel, as it has zero emissions and becomes water after power generation.

Tests, to be conducted jointly with Kobelco Eco-Solutions Co. of the Kobe Steel Ltd. group, will take place at Chugoku Electric's affiliate based in Matsue, Shimane Prefecture, western Japan, Chugoku Electric said.

The feasibility study will continue through next year. The company will make assessments on the system by March 2005.

Chugoku Electric is hoping to sell the system for about 600,000 yen per unit, a company official said.