AFC Energy has teamed up with Industrial Chemicals Limited to build the UK's largest fuel cell facility to generate clean energy.
The facility is designed to created one mega watt of power - enough energy to power 500 homes - by harnessing hydrogen created as a waste product at ICL's plant in Essex.
The plant manufactures chlorine and caustic soda which have a range of uses including household cleaning products, detergents and water treatment.
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Hydrogen produced as a waste by-product during this process will be used to generate power using AFC's fuel cell system and would reduce ICL's dependence on the National Grid.
Work on a beta system will begin later this year and on the full-scale project once finance for the project is found.
Jointly, both companies are seeking grants from UK and European funding to accelerate the demonstration of the large-scale fuel cell system.
Ian Williamson, AFC's Chief Executive, said the development would put British fuel cell technology and innovation on a global stage.
"I have previously emphasised our goal to move to a commercial demonstration phase for our technology and ICL have now provided the perfect opportunity for us to demonstrate commercial electricity supply," he said.
"We now need the funding agencies to step up to the challenge and support our vision."
The company said harnessing the gas in this way would help the environment as around 1.4m metric tonnes of hydrogen is produced globally by the chlor-alkali industry, of which 15% is vented or flared.
AFC's shares rose almost 9% following the announcement.
