Nippon Oil to make small fuel cells with Kyocera

TOKYO, Sept 30 (Reuters) - Nippon Oil Corp 5001.T, Japan's largest refiner, said on Wednesday it will make smaller fuel cells using ceramics from Kyocera Corp (6971.T) to power homes and meet growing demand for alternative energy sources.

Nippon Oil aims to make smaller and more efficient solid oxide fuel cells by the financial year ending March 2012 to target apartments, and could expand its lineup to fuel cells with more power for commercial use, a spokesman said.

The fuel cells produce electricity from hydrogen extracted from liquid petroleum gas, emitting water vapour instead of global warming emissions. The refiner will continue its existing venture with Sanyo Electric Co 6764.T to make proton exchange fuel cells, which are less efficient than solid oxide fuel cells but can vary output quickly.

It hopes to expand its total sales of fuel cells to more than 40,000 units by March 2016, the spokesman said.

Kyocera also jointly develops solid oxide fuel cells for residential use with Osaka Gas (9532.T), Toyota Motor Corp (7203.T) and Aisin Seiki Co (7259.T).

Japanese makers of fuel cells also include Toshiba Corp (6502.T), Panasonic Corp (6752.T), Mitsubishi Materials Corp (5711.T) and Toto Ltd (5332.T). (Reporting by Mayumi Negishi; Editing by Joseph Radford)