The new company titled IE CHP will be aiming to develop systems for the light industrial, commercial and residential markets.
SSE will initially invest £1 million in securing a 50 per cent share of IE CHP, but further funding will be provided by both partners as a series of mutually agreed milestones are reached.
Ian Marchant, SSE chief executive, said: “This joint venture represents a clear statement of intent by SSE that we will continue to expand and develop our portfolio of clean energy businesses.
“We are particularly pleased at commencing our commercial involvement in CHP fuel cell technology using Intelligent Energy’s fuel cell and reforming expertise, which we believe is clearly suited to our business priorities in this future market.”
Henri Winand, chief executive of Intelligent Energy, said: “Together, we have the potential to create a new and energy efficient product portfolio that offers a competitive choice to the consumer.
“This joint venture shows that clean alternatives for energy generation have a real future and we very much look forward to working with Scottish and Southern on this exciting new project.”
In January rival Ceres Power entered a development, supply and distribution deal with British Gas in January which will see the company supply 37,500 units over a four year period.
At the end of February Ceramic Fuel Cells confirmed a deal with Dutch energy giant Nuon to provide 40,000 fuel cell units over a five year period from 2009. Now it is waiting to progress partnership deals with E-On in the UK, Gaz de France and Germany’s EWE.