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Off Grid Energy Independence
Posted on September 6, 2016 by  & 

Learning from the death of Micropelt

Fabrice Poulin writes to a Linkedin energy harvesting group, "The industry was already buzzing about the difficulties of Micropelt end of last year. It became a fact with a notice on a German insolvency portal published late December 2015 1. Further, in April 2016, a German auction company, Dechow Auktionen, advertised on its website2 the selling of Micropelt's laboratory equipment and furniture.
Still, their website is still online, indicating just a contact phone number change but the official termination of the company doesn't appear clearly yet. We believe that company assets (IP in particular) can still be valued and transferred to third parties or management may look for a possible salvation plan...

But let's try first to understand the background of the company

Micropelt was considered as a startup in 2006, as a spin-off from a research cooperation between Infineon Technologies and Fraunhofer Institute IPM of Freiburg initiated in 1999. Dedicated to thermoelectricity, Micropelt pioneered the "2nd generation" of ThermoElectric Generator components (a.k.a. "TEG") with a thin-film approach. This approach allows thinner TEG compared to the previous ones (a.k.a. "Bulk" TEG) used in the industry since 1960s. Another benefit is the lower quantities used of costly (and rare) thermoelectric materials (Tellurium in particular). Also, even though it uses more advanced production equipment (wafer based) compared to the Bulk, Thin Film TEG don't require a clean room and are rather easy to produce.
On the funding side, Micropelt raised 6M€ (series A) in 2006, then 6.5M€ in May 2012 to fuel its development. In 2014, the company faced its first crisis and had to restructure: "the IP and assets of Micropelt were then sold to the consortium of LEF (Ludgate Environmental Fund) and Wika Instruments to re-launch Micropelt"3 at a cost of 2M€. During last fiscal year and until Q2 2015 4, LEF was pumping £0.4 million into Micropelt each quarter.
On the business side, Micropelt invested significant resources into screening potential application and into business development efforts since 2006. It succeeded to secure some designs in industrial and building automation (more details in our market report5). But from 2014, the business team was scaled down and focus was set on "intelligent" electronic Thermostatic Radiator Valve a.k.a. the "iTRV". So Micropelt opted to change job and become an OEM selling a complete system and not any more a component (TEG) alone.
So they got into the selling of their iTRV and were planning early 2015 to sell 17,500 units in the whole year. In May, it looked like they had secured 48% of this target and were setting plans to multiply this amount by 7 the following year (125,000 units for 2016).
On the financial side, with a team of 17 employees plus factory and lab assets, the goal was to reach break-even from 2017. Micropelt was losing money each year with an EBIDTA at -4M€ in 2015 and -1M€ target in 2016. They wanted also to raise 5M€ early 2015 but apparently without success. Lack of cash logically led the company to insolvency in December 2015.

So let's speculate about the possible root causes for this insolvency

First, we can suspect a market adoption issue. As we saw, Micropelt secured some designs by leading OEMs for its components, but was it enough for them to make a living?
So they became a system integrator, focused on their iTRV. The move was bold but it made sense on a narrow market with an innovation adoption issue. This is what we call at Infinergia "going downstream to facilitate the adoption of a technology".
But they may have been unsuccessful with the sales of their iTRV. It's indeed a totally different job to sell a system instead of components. In addition, the building market is quite demanding and pressure on prices is intense. They would most probably have benefited from a large scale production facility to drive down costs, but this required extra investment and I'm not sure their investors were willing to go for this extra funding round...
This leads us to conclude that energy harvesting is still currently crossing the chasm in terms of adoption and Thin Film thermoelectric in particular. Such a situation requires strong financials and Micropelt seemed weak in that respect. There's still a long way to go before thermoelectrics turn mainstream but there are companies with new technologies that are ready to take the challenge and make things happen!
Fabrice Poulin.
Disclaimer: we didn't get in touch with company officials to write this article. We try here to stick to the facts as much as possible and quote our sources. We'll also clearly indicate when we speculate or make our own analysis."
4 More recent data being not available at the time of writing
IDTechEx comments
Nice analysis. At analysts IDTechEx we believe that thermoelectric and piezoelectric EH are staying a long way behind electrodynamic and photovoltaic EH but thermoelectric is overtaking piezoelectric partly because it is more acceptable at higher power and partly because it does not keep losing out to electrodynamic eg mW vibration harvesters and wireless light switches, because it is not motion capture. Most startups fail to find a killer product at that early stage so one of the leading indicators of their success is the number of innovative new applications demonstrated and sampled to potential customers and quality in the eye of the customer. Obviously adequate finance and excellent partners are also key and it is easier to make money in systems and services. The EH industry is ripe for consolidation so a customer gets what they want, whatever the technology, and global marketing is viable. In triboelectric energy harvesting we are hugely impressed by the variety and virtuosity of the demos and proof of concept in only four years from microW to MW, healthcare to houses. Those enthusiasts have also got the message that combining several EH technologies in one device has huge market potential and they keep demonstrating new examples.
One final point. There are many energy harvesting blogs, associations and other groupings that confine themselves to low power outputs typically under one watt and often almost entirely focussed on no more than mW level. That is rather like a trade association for yellow cars. They should get out more. The big money is elsewhere and the subject is one subject microwatts to megawatts with often the same technologies, researchers and materials suppliers across that span. If Micropelt had capability at up to 10kW like say Komatsu KELK perhaps they should have given it greater priority. Burkhard Habbe worked tirelessly to make promote the technology. One problem was that at the lower powers the power density of thermoelectrics is often rendered unacceptable by large cooling fins.

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Posted on: September 6, 2016

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