Abstract In recent years, from the cooperation of the VARTA R&D centre in Kelkheim and the University of Kassel (Prof. A. Winsel) a new kind of Eloflux fuel cell and electrolysis technology was developed. This alkaline hydrogen-oxygen system is a continuation of the VARTA fuel cell system with its sinter nickel electrodes of the late 1960s. The decisive progress was the development of a new Raney-Ni hydrogen electrode with a simple and inexpensive manufacturing technique in 1983. Together with a new oxygen electrode of the same kind, first Eloflux fuel cells were built within the scope of the HERMES fuel cell project in 1988. Eloflux electrolysis cells which have the same design and similar electrodes to those of the fuel cells were made in 1989. In an extended cooperation with the ISET, a compact 3 kW fuel cell system, including all peripheral components, will now be developed.