Fuel cells maker Proton Power Systems Plc said on Wednesday its Proton Motor GmbH unit had signed a five-year agreement with contract manufacturer Deutsche Mechatronics GmbH for bulk production of its fuel cell systems in Germany.

At 0833 GMT (4:33 a.m. EDT), shares of Proton Power were up 25 percent at 6.875 pence.

Deutsche Mechatronics will make Proton Motor's fuel cell hybrid systems, with the production capacity to be gradually increased up to 5,000 units per year per shift, Proton Power said.

This contract manufacturing agreement will enable us to prove to our potential customers that we have the immediate capabilities to mass produce and supply our products to them, Proton Power Chief Executive Thomas Melczer said.

The company has seen an increase in demand for its fuel cell systems in recent months, Melczer said, adding that volume production would reduce the cost of its products.

(Reporting by Shivani Singh in Bangalore; Editing by Anne Pallivathuckal)