Case Aims: To illustrate how a company might determine how to initially exploit the energy-generation market
In their introduction to their case study on the American entrepreneur Dr Scullin, Alexander et al. (2013) noted that approximately 60 % of energy generated in the USA is wasted as unutilised heat. Thermoelectric technologies could revolutionise energy efficiency by capturing lost heat and putting it to work. Thermoelectrics have had a long history of use as both electricity generators and heat pumps. As generators, they convert heat into electricity. As heat pumps, they transfer heat from one side of a device to the other, serving in applications like car seat coolers and small refrigeration systems. In general, thermoelectric systems have been optimised to serve as either generators or heat pumps. However, in 2008 Dr Scullin founded Alphabet Energy in California to seek new ways of exploiting thermoelectric technologies. His first employee was Adam Lorimer.
Together these two individuals identified over 80 industries with medium and high-grade waste heat that could benefit from the efficiency brought by thermoelectrics. These ranged from industrial equipment to camping stoves. Ranking in relation to potential opportunities was based on the following operating criteria:
- 1. Was the heat source the right temperature?
- 2. Was the heat source in a corrosive or dirty operating environment, with high maintenance and engineering costs?
- 3. What was the total amount of waste heat generated annually in the industry?
- 4. Was the customer currently paying a high price for electricity?
Their final decision was to focus on opportunities in the automotive, military, power generation and manufacturing sectors. All four markets were tempting, but Scullin decided that Alphabet did not had the resources to pursue more than one initially. The issue was the classic dilemma for a new technology entrepreneurship small firm of where to focus attention. As is often the case access to funding was a key factor in the company's decision. Alexander et al. noted that this situation was reflected by the company's move in 2011 to establish projects with the US Air Force and the US Army. These are expected to bring in a combined $1.48 million in revenues. Certainty of funding was achieved because these contracts fell within the Small Business Innovation Research programmes run by the Air Force and the Army. The product to be tested involve mobile auxiliary power generation, potentially in battlefield situations.