Energy tech startups that can find applications for the booming natural gas industry will do well in 2013. On Monday startup Alphabet Energy, which is developing materials and devices that turn waste heat into energy, announced that Canadian natural gas giant Encana has led its new $ 16 million Series B financing round.
Alphabet Energy, founded in 2009 as a spin-out from Lawrence Berkeley National Laboratory, makes a next-generation thermoelectric material, which is a semiconductor that can convert heat to electricity. When thermoelectric materials come in contact with heat it causes the electrons to move from the hot side of the material to the cold side, and the difference in temperature causes the material to produce electricity.
While most thermoelectric materials out there come from expensive, rare and exotic substances (like bismuth telluride), Alphabet Energy uses basic and abundant silicon, found in chips and solar cells. That means Alphabet’s products could be much less expensive than the current ones on the market. In addition all of Alphabet Energy’s material manufacturing can be done on existing chip production machines, so it could have much lower manufacturing costs as well.
Alphabet Energy has been working on using its material in generators that can turn waste heat into electricity, and which can tap into heat from industrial sources like exhaust pipes, or power plant flues. The startup already has one of its devices installed in an industrial facility in California that converts exhaust-gas waste heat into electricity.
Encana is interested in using these types of waste heat recovery generators for when it pulls natural gas out of the ground. Natural gas drilling and refining uses a lot of heat and that heat could be recycled into electricity.
Down the road, the holy grail of thermoelectrics is the automotive industry. Alphabet Energy could use its material in auto parts and engines that capture waste heat.
It’s a hard year to raise money for a cleantech startup. Many venture capitalists are moving away from investing in new cleantech companies, and government funds for energy innovation is tight, too. Alphabet Energy’s Series B round included existing investors Claremont Creek Ventures (Oakland-based VC firm), TPG’s venture arm TPG Biotech, CalCEF Clean Energy Angel Fund. Alphabet raised a $ 12 million series A round led by TPG in 2011, and a seed round from Claremont and CalCEF in 2010.
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