Hydrogen from natural gas is powering a combined heat and power (CHP) fuel cell for Japan’s homeowners. Toyota is collaborating with a consortium of Japanese gas and manufacturing companies and solar powerhouse Kyocera on this home power plant, which can get twice the bang for the buck out of a fossil fuel that is already piped into most homes in Japan.

Instead of only burning the natural gas, they use it for cogeneration (making both electricity and heat) by mining the natural gas for hydrogen. With its four hydrogen atoms (CH4) natural gas is easy to convert into hydrogen by just stripping off the carbon atom.

image via Kyocera

Since natural gas is already piped into most homes—just to burn a little flame under the boiler to make hot water, into the clothes dryer to dry clothes, and into the gas stove for cooking—household natural gas is an obvious place to extract hydrogen. (But most research into hydrogen fuel is solar, for a cleaner source.)

Because they generate both heat and power, CHP systems can get twice the bang out of fossil fuels, in general. In the U.S. they are used in industrial situations to wring the maximum efficiency from industrial processes that generate a lot of waste heat.

Like electricity, which carries the energy produced by solar or coal power, hydrogen is an energy carrier, but it rarely exist alone in nature. It must be produced by splitting the hydrogen atoms off from water (H2O) or from a fossil fuel such as natural gas (CH4).

The consortium’s micro-CHP—with the, uh, incredibly catchy name ENE-FARM Type S—boasts the highest efficiency level (45 percent) in the world for a residential-use fuel cell, according to Kyocera, but there’s not much competition.

Until now, there have been few options for residential customers who want to use a fuel cell to power their home in the U.S., although they are used in Europe where they are called micro-CHP or microCHP systems (not run on gas, though, but on biomass). Honda last year offered a similar micro-CHP system for residential use.

Although ClearEdge Power  has installed several systems at universities and small commercial pilot programs to assess production and is beginning to target the residential fuel cell market in the United States. Bloom Energy has installed commercial systems (pictured below).

image via Bloom Energy

Fuel cells generate electricity through a chemical reaction. Since it is just a chemical reaction inside a device, a fuel cell stack generates electricity with virtually no pollution. (Of course, this one, since it piggybacks on the existing natural gas supply lines, is only as clean as that natural gas.)

Each cell has two electrodes, one positive, the anode, and one negative, the cathode. Reactions occur at the electrodes that produce electricity. Each also has an electrolyte, which carries electrically charged particles from one electrode to the other, and a catalyst, which speeds the reactions at the electrodes. A stack of fuel cells is a cell stack. Since it is modular, it can be scaled up.

For the Japanese, this in-home system could be very attractive in providing a sense of security in the wake of the electricity uncertainty that followed the disastrous earthquake and tsunami that killed 20,000 people and took down their nuclear power plants. But it is pretty pricey: It goes on sale in April to the Japanese market at ¥2,751,000—about $33,000.

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