The first development cycle of a residential power generation system is described. A steam reformer was chosen to produce hydrogen out of natural gas. After carbon monoxide purification with a preferential oxidation (PrOx) unit the hydrogen rich reformat gas is feed to the anode of the PEM-fuel cell, where due to the internal reaction with air oxygen form the cathode side water, heat and electricity is produced. Due to an incomplete conversion the anode off gas contains hydrogen and residual methane, which is feed to the burner of the steam reformer to reduce the needed amount of external fuel to heat the steam reformer. To develop the system the components are separately investigated and optimized in their construction or operation to meet the system requirements. After steady state and dynamic characterization of the components they were coupled one after another to build the system. To operate the system a system control was developed to operate and characterize this complex system. After characterization the system was analyzed for further optimization. During the development of the system inventions like a water cooled PrOx, an independent fuel cell controller or a burner for anodic off gas recirculation were made. The work gives a look into the interactions between the components and allows to understand the problems by coupling such components.