One of the biggest stumbling blocks on the road to hydrogen power has long been the difficulty in storing the fuel. Hydrogen atoms are so small that they can slip between the spaces in molecules of other materials, and the gas can be a hazard if it escapes.

But a cheap and practical way of storing hydrogen has been developed by a British company. Cella Energy used nanotechnology to develop microbeads – about the size of a grain of sand – that can trap hydrogen and release it when heated. The energy can then be used safely to power vehicles – drivers could simply top up with microbeads on filling station forecourts. What's more, the beads are not just for hydrogen vehicles - they also work in standard combustion engines, in which they can be used as an additive to help the petrol burn more cleanly, reducing greenhouse gas emissions.

Cella's invention, developed at its lab in Oxford, was in the limelight on Tuesday after the company scooped this year's Springboard award from Shell.

Stephen Voller, chief executive, said the prize was "a great boost [that] will give us real credibility in the eyes of customers and potential investors alike". Cella received £40,000 from Shell, which the company will use to scale up its technology to an industrial scale.

Second place in the awards went to VPhase, a Chester-based company, for a voltage optimisation product for households. This works on the basis that standard voltage is variable, meaning some devices are using more energy than they need to run. So installing the device should result in instant savings on electricity bills.

Among the runners-up and regional winners from the 200 small businesses that entered were Ashwoods Automotive, with a product that lengthens the life of electric car batteries, and Naked Energy, with a solar panel that generates both electricity and hot water in cool climates.

The Springboard awards have been running since 2005, in which time 53 companies have shared more than £2m.