The proposal was met with much scepticism, but Walter persisted, and in 1937 showed his plans to Karl Dönitz, who was able to assist in obtaining a contract to produce a prototype.

Despite these spectacular results, problems with the production, supply, and safe handling of hydrogen peroxide prevented wide-scale implementation of Walter's revolutionary engine.

The original design of simply decomposing hydrogen peroxide was soon changed to its use as an oxidizer (much like dinitrogen tetroxide would be used later) when combined with a hydrazine/methanol true rocket fuel designated C-Stoff, into the hot, high-pressure gases, and in later, never-deployed developments, a second, 400 kg (880 lb) thrust "cruising" combustion chamber, nicknamed a Marschofen, was added below the main chamber to allow for more precise control of the engine.

Versions of this engine were intended to power a variety of aircraft design proposals and missile projects and was also licence-built in Japan (see HWK 109-509).

The end of the war saw all of his research materials confiscated by the British military and Walter and his colleagues taken to the UK to work for the Royal Navy.

The Royal Navy constructed two more submarines using AIP engines before abandoning research in this direction in favour of nuclear power.

In 1950 he emigrated to the United States and joined the Worthington Pump Corporation of Harrison, New Jersey, eventually becoming vice president of research and development.