The UK’s largest road-test of hydrogen-powered vehicles began on Tuesday as companies seek low carbon alternatives to oil amid spiralling prices.

Two converted Ford Transit vans began work at Stansted airport along with a mobile hydrogen generating and filling station to test whether the technology is practical.

ITM Power, a Sheffield-based company, is to run trials with 21 companies and state bodies, including DHL and UPS, the logistics companies, Scottish Water, the utility, the RAC, and Enterprise, the facilities managers. Each will have the equipment for a week to test.

Graham Cooley, chief executive of ITM, said it had targeted users with large fleets operating from a base, which therefore did not need to refuel on the road.

“The return to base market is where all alternative fuels will begin,” he said. “The rationale for these tests is to understand the economics. The economics need to be right. We know the technology works.”

However, he said fossil fuels would continue to increase in price. “We believe we are at the end of cheap oil. Hydrogen requires a capital investment then you have free fuel. It is about security of supply. There is a great opportunity for UK plc.”

The vans’ engines have been converted to run on liquid hydrogen as well as diesel. The HFuel unit, built with £350,000 support from the government’s Technology Strategy Board (TSB), produces hydrogen on site by passing electricity through water. The only byproduct is oxygen. As long as the electricity is from renewable sources and generated on site, the process is carbon free. The vans can drive 200 miles on a tank of hydrogen and can refill with diesel if necessary.

Ideally, they would be equipped with fuel cells, making hydrogen within the vehicle, but the cost of this is so far prohibitive.

Mr Cooley said Stansted was also interested in reducing air pollution. He said hydrogen was favoured for vehicles because it could store energy generated outside peak hours.

Germany, Japan and the US state of California have committed to building hydrogen filling stations and in return carmakers have agreed to produce hydrogen models by 2015.

However, pioneering new technologies is risky. Aim-listed ITM has raised £45m from investors. But only this week Modec, an electric van maker in Coventry, went into administration.

Garel Rhys, a motor industry expert attached to Cardiff Business School, said the internal combustion engine was likely to dominate for years to come. “Hydrogen is seen as the great white hope. It is clean at the tailpipe. But it is much more at the margins than electric cars. The hydrogen society does not exist yet. You need the infrastructure to make it in commercially viable quantities. You need the filling stations.”

Nevertheless, Prof Rhys said it could form part of a “pick-and-mix” solution with different technologies.

ITM has adopted its own “pick-and-mix” approach, releasing market-ready products to generate revenue while it waits for its vehicle bet to pay off. These include a welding torch and domestic boiler and cooker.

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