What if hot air could become electricity? That is the goal of clean technology startup company, Alphabet Energy, based in California. It has a new so-called thermoelectric material which it says can turn waste heat – such as that from car exhausts and industry – into usable electric power more cheaply and efficiently than ever before, saving both money and the environment. “It is the first really low-cost efficient thermoelectric material for waste heat recovery,” says CEO and founder Matthew Scullin.

The company, which was founded in 2009 and has raised over $30m in investment, released its first product which uses the material last October. The E1 thermoelectric generator, which comes in a shipping container, is designed to help make remote-location mining and oil and gas extraction operations more efficient by capturing waste heat from the exhaust of the small, diesel-fuelled power plants they use. Fuel consumption and greenhouse emissions for a one-megawatt power plant can be cut by up to 2.5% – the equivalent of saving 52,500 litres of fuel a year. There has never been a larger thermoelectric generator, Scullin says, adding it is more than 20 times bigger than existing ones. He won’t disclose sales figures but says it is getting “very good early traction” and he expects to see sales ramp up further in 2015, with improvements continuing to be made to the core technology.

The company is prototyping other products, with the possibility that some could be ready to launch in 2015. “The E1 is simply our market entry point,” says Scullin. The company is working on more industrial applications – such as a generator to attach to a factory furnace – and is also working with car manufacturers to harness heat from vehicle exhaust. “From huge mining trucks all the way down to passenger cars we are actively pursuing products,” says Scullin. There are no thermoelectric generators on car exhausts, although a few prototypes have been built and tested in the past, he says.

Thermoelectric materials can generate electricity from heat because electrons flow from warmer areas to cooler ones. But only a few known materials have the rare combination of properties that make them effective. They have to be good electrical conductors but also poor thermal conductors so the temperature difference across the material doesn’t disappear too quickly. Commercial manufacture is difficult because the materials can be rare, expensive, toxic or complex to synthesise. Thus far they have only really found niche applications. For example, their reliability – they are solid materials that don’t require maintenance – has led to their use on space probes, where the steady decay of radioactive material warms the thermoelectric material to create electricity.

However, Alphabet Energy’s material – based on the mineral tetrahedrite – amply satisfies requirements. First developed by researchers at Michigan State University but exclusively licensed to the company, the raw ore is abundant, environmentally friendly and easy to manufacture into the material on a large scale, says Scullin. It is also more efficient than existing thermoelectric materials.

The company puts the cost of tetrahedrite at about $4 per kilo compared to between $24 and $146 for other thermoelectric materials. Scullin says a thermoelectric system in cars today based on it could lead to net fuel and greenhouse emissions savings of up to 5%. That is double the saving other car prototypes have achieved to date, he says.

Jeff Snyder, a thermoelectrics expert at the California Institute of Technology, says little information is available publicly about the company’s tetrahedrite technology so it is hard to know if it is onto a breakthrough. But he added it was good to see a product like the E1 thermoelectric generator finally coming to market, though the cheap cost of fuel might make it hard to win traction. “Thermoelectric materials are great in principle,” he says. “The real reason it doesn’t get done is simply economics.”

He added that the technology was difficult to apply to car exhausts because the engine temperatures change as we stop and start. Thermoelectric materials work best when the heat is constant. Payback times would also be longer than for a continually operating machine like a power plant because we don’t drive all the time.

Eventually Scullin sees applications of Alphabet Energy’s technology to consumer devices. Maybe the dryer could power the alarm clock, he suggests. “The coolest thing about what we are doing is making people recognise that this thing that’s all around them, waste heat, is actually valuable.”