Solar-hydrogen systems are approaching competitiveness for remote area power supply. One option for improving the economics of such systems compared to conventional systems such as diesel generators is to use the fuel cell to supply both electricity and low temperature heat for domestic water heating. A theoretical investigation has been conducted into a solar-hydrogen system employing a PEM fuel cell to supply both power and heat to a remote household. Simulation modeling of a standalone system of this kind to supply a household in south-eastern Australia with a 5 kWh daily electricity demand has revealed that harnessing the heat generated by the fuel cell increases the average annual efficiency of the fuel cell from about 33% for power generation alone, to about 63% in the combined heat and power application. The economic gain of this heat recovery is equivalent to about 9% of the capital cost of the system over an assessment period of 30 years if the recovered heat is assumed to save LPG consumption used for hot water supply. An experimental investigation into the performance of a 500 W PEM fuel cell system used to supply both electricity and heat is reported. The results agree closely with the predictions of the theoretical model for both electrical power and heat production. It is also found that relatively small deviations from ideal values for key parameters of the fuel cell such as temperature, air pressure and air stoichiometry could lead to reductions in electrical output of about 25%.