Alphabet Energy Wants to Be the “Intel of Waste Heat Recovery”

Alphabet Energy wants to make electricity from hot air.

The Hayward, CA-based company later this year will release what it says will be the first large-scale thermoelectric generator to convert heat from industrial activities into usable power.

Earlier this month, Alphabet Energy licensed a material developed at Michigan State University that will go into the company’s first product. If Alphabet can deliver a viable commercial product, it would be a breakthrough not only for the company but for the whole field of thermoelectrics, which remains caught in small market niches despite the technology’s large potential.

CEO Matthew Scullin started Alphabet Energy in 2009 with a license for a novel thermoelectric material—a silicon nanowire developed at Lawrence Berkeley National Laboratory. About a year ago, though, company engineers came upon research from Michigan State University on a tetrahedrite material, an abundant, naturally occurring mineral, which they believed could be suitable for a broad set of applications. Until now, materials scientists have focused on having the highest heat-to-electricity conversion efficiency, but that’s less meaningful in real-world applications, Scullin found.

“We recognized that if you were designing a thermoelectric generator from scratch, you would optimize for the average range of temperatures,” Scullin (pictured above) says. “You’ve got to talk to customers to find out what their average range is and build a system that can work when temperatures and other conditions change.”

The new materials (see image below), made of lighter elements than the traditional bismuth telluride and lead telluride, will open up new markets for thermoelectrics because of their efficiency and cost, Scullin predicts.

Alphabet Energy's thermoelectric materials, called PowerBlocks

There are a handful of other startups also trying to take advantage of new thermoelectric materials, although none has had much commercial traction so far. Phononic Devices in Durham, NC, which raised $21 million in a Series C round in December, has decided to target the cooling and refrigeration market. Its thermoelectric chips effectively act as a heat pump by using a flow of current to remove heat.

GMZ Energy in Waltham, MA, which had to bring in a new CEO in May, is now developing a thermoelectric generator for military vehicles under a Department of Energy grant. The challenge, according to Scullin, is getting this technology beyond government-funded research into the realm of commercial products.

It’s not for lack of raw resource: about half of the energy content in fossil fuels goes up in the air as unused heat, a potentially valuable resource engineers have long tried to tap. A number of automakers, for instance, have researched whether thermoelectric devices could be attached to exhaust pipes or engines to generate electricity and improve fuel economy.

The advantage of thermoelectrics is that there are no moving parts for power conversion. The problem has always been that the conversion efficiency is too low and the cost of materials too high.

For new companies entering this area, one of the biggest challenges is getting an initial foothold, or finding customers willing to try out new technology to address an issue—waste heat—that has largely been ignored.

Indeed, choosing which application to go after has been a drawn-out and thoughtful process for Scullin and Alphabet Energy. (The University of California’s Haas School of Business did a case study on it.) The company’s materials are well suited for exhaust heat around 300 Celsius, which covers everything from the waste heat from an industrial furnace to aluminum production.

Its first product will be optimized for a specific industry—Scullin won’t say which, but notes that the company has or is developing partnerships with large companies in oil and gas, mining, steel, glass, defense, and the auto industry. The idea is to prove the technology works in an initial vertical market and then engineer generators to suit specific needs of other industries. A generator on an offshore oil and gas rig, for instance, will look very different from one made for locomotives.

“Our vision is to be the Intel of waste heat recovery. Our strategy is to build the entire computer, or in our case the whole generator, but recognize that the technology inside is what’s revolutionary,” he says.

One clue to where Alphabet’s first product may turn out comes from its list of investors: Its $16 million Series B round last year was led by Calgary-based oil and gas driller Encana. With few Silicon Valley venture capitalists investing in cleantech, startups are turning to “strategic investors,” or big corporations that can provide some technical and market expertise in addition to their money.

“We’re trying to break into very, very old and somewhat stodgy industries. The idea of disrupting energy is very different than, say, tech. You have to do it with the people you’re disrupting,” Scullin says.

Taking materials-based energy technology from the lab to market, in general, takes many years, and Alphabet Energy still has a long way to go. But by focusing on customer needs and differentiated technology, it’s positioning itself to land giant industrial customers. And, who knows, maybe it can help us stop losing all that valuable heat.

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