A composite of wide bandgap lithium-nickel-zinc-oxide (LNZ) and gadolinium-doped-cerium-oxide (GDC) was systematically analyzed for a low-temperature nanocomposite fuel cell in a so-called single-component configuration in which the electrodes and electrolyte form a homogenous mixture. We found that the operational principle of a single-layer fuel cell can be explained by electronic blocking by the oxide mixture with almost insulator-like properties in the operating voltage regime of the fuel cell, which will prevent short-circuiting, and by its catalytic properties that drive the fuel cell HOR and ORR reactions. The resistance to charge transport and leakage currents are dominant performance limiting factors of the single-component fuel cell. A test cell with Au as current collector reached a power density of 357 mWcm-2 at 550 o C. Changing the current collector to a Ni0.8Co0.15Al0.05LiO2 (NCAL) coated Ni foam produced 801 mWcm-2 , explained by better catalytic properties. However, utilizing NCAL coated Ni foam may actually turn the 1-layer fuel cell device into a traditional 3-layer (anode-electrolyte-cathode) structure. This work will help in improving the understanding of the underlying mechanisms of a single-layer fuel cell device important to further develop this potential energy technology.