Engine maker Caterpillar of Peoria, IL, has signed a distribution agreement with FuelCell Energy of Danbury, CT, to fuel cell engine systems for industrial and commercial markets.

Under the agreement, Caterpillar will distribute FuelCell Energy products through selected Caterpillar dealers in the United States. Both companies will also pursue an alliance to jointly develop fuel cell systems, including hybrid products integrating Caterpillar’s turbine engine technology.

FuelCell Energy’s system generates electricity without combustion. It is designed to provide steady, reliable power to industrial and commercial customers such as hospitals, hotels, factories and telecommunications facilities.

Fuel cell technology is also being developed for transportation uses, most notably by Ballard Power Systems of Canada. Caterpillar said its engine business accounted for 35% of the company’s revenue of $20.18 billion last year and it believes fuel cell technology will help it triple sales for electric power generation by 2006.