Mitsubishi Materials Corporation (MMC) and The Kansai Electric Power Co., Inc. (KEPCO) have been jointly developing intermediate-temperature (IT) solid oxide fuel cells (SOFCs). The primary target of collaboration is the development of modular and scalable SOFC systems for on-site power generation. Planar disk-type cells with the diameter of 120 mm have shown excellent performance between 700 and 800 °C due to highly efficient oxide-ion conducting electrolyte made of doped lanthanum gallate. Long-term stability of a single-cell stack-unit over 8000 hours was evaluated. The third generation 1 kW-class module has been manufactured for co-generation system demonstration. The targeted 1 kW-AC power output was obtained under thermally self-sustained conditions below 800 °C utilizing commercial town gas with internal steam reforming. The electrical conversion efficiency values of 56%LHV for DC power output and 51%LHV for AC were recorded. Hot water of 90 °C was produced via a heat exchanger utilizing the module exhaust gas. A long-term stability test of the module over 2000 hours was performed. As part of the scaling-up process toward 10 kW-class SOFC system, a triple-stack module was constructed. The output of 3 kW-DC was achieved with the electrical conversion efficiency of 55%LHV. Currently, the fourth generation 1 kW-module designed with compact and simplified structure is being tested. The collaborative efforts are focused on the development of 10 kW-class module in the fiscal year of 2005.