This article contains an analysis of the major problem related to the development of a power plant based on fuel cells for diesel-electric submarines - hydrogen storage/production. Various options of hydrogen storage/production have been studied. The analysis shows that hydrogen production based on hydrolysis of aluminium onboard the submarine seems to be promising. The article describes a block diagram of the developed plant for hydrogen production via hydrolysis of aluminium, and the test results of the full-scale prototype. The tests confirmed the possibility to create an efficient ship system for continuous hydrogen production based on hydrolysis of coarse-dispersed aluminium powder. As a result, hydrogen can be used in fuel cells of any type without purification, and the reaction product, that is boehmite, is commercially profitable. (C) 2010 Professor T. Nejat Veziroglu. Published by Elsevier Ltd. All rights reserved.