Hydrogen is considered an energy vector of the future because of its potential use for clean energy generation. Portable electronic devices can be powered when hydrogen is supplied to fuel cells. In order to avoid massive equipment for hydrogen storage, direct hydrogen production can be achieved on-site during the reaction between metals/metal alloys/metal hydrides and water. Magnesium hydride offers great perspective for widespread applications as its weight yield of hydrogen reaches 6.4% according to the reaction with water and it can even increase to 15.2% if water produced in the fuel cell is used in the reaction again. In the present work, Mg powder with the content of Ni was synthesized under low temperature hydrogen plasma conditions changing the DC magnetron current from 0.5 to 1 A. As pure Mg powder was immersed into hydrogen plasma, the simultaneous hydrogenation process was ensured. Nickel was chosen as a catalyst capable to influence the growth of hydride. The process of electric power generation was investigated when reaction between modified Mg powder and water was applied to laboratory-built equipment consisting of a reactor for hydrogen production, gas dryer before H2 introduction to the fuel cell, fuel cell, load and energy meter. Solutions of acetic acid and sodium chloride were used as promoters during powder-water reactions. The characterisation of predicted magnesium hydride powder was done using scanning electron microscopy, electron dispersive spectroscopy and X-ray diffraction. XRD analysis showed only Mg, MgO and Ni peaks indicating that hydrogen generation during powder-water reaction was evoked because of microgalvanic corrosion at Mg-Ni intersections.