Stirling energy systems
The Stirling engine is "an external combustion engine" that industry has largely overlooked since its invention in 1816, says Zik.
"Unlike an internal combustion engine, the Stirling engine is sealed more like a compressor than an engine," he explains. "You have gas in a cavity in there, and when you heat it up, the gas expands, then it cools, then it expands again. Once you have this motion, you can create electricity with a magnet moving inside a copper coil."
Addz Zik: "It's very reliable, it's fuel-agnostic -- it can work with any type of fuel -- and it's very efficient. What's not to like?"
But there's a catch: "Nobody managed to commercialize a power generator based on a Stirling engine," says Zik. "When I came in to Qnergy [in 2017] and I saw a product that was ready to be shipped and commercialized, I was blown away -- and stuck around."
The company has installed more than 600 units as of early 2022. "We will celebrate unit 1,000 in a few months," says Zik.
A Qnergy PowerGen unit can generate electricity for years without maintenance. "It's more expensive than the other power generators on the market, because of the quality that we have, but it has those beneficial qualities of being fuel-agnostic and very reliable," says Zik. "There is no lubrication required, and no wear and tear, even if it works for tens of thousands of hours. In fact, our engines are designed to work for 10 years continuously maintenance-free -- probably two orders of magnitude more than an internal combustion engine in terms of not requiring any lubrication or oil changes."
Zik sees the technology as a perfect salve for a broken system: "There is a substantial system failure. The system failure is that methane is a distributed problem, but the current solutions are centralized."
About 90 percent of the company's sales are currently coming from the oil and gas sector, and there's a reason for that. "Natural gas is 80 percent methane, and methane is a very potent greenhouse gas -- 18 times more potent than carbon dioxide -- and the industry needs to reduce methane emissions," says Zik. "One of the key applications for our systems is to run air compressors at those remote sites that don't have electricity. This allows the industry to replace methane as a source of power with compressed air."
Zik calls this "the killer application" for Qnergy's CAP3 system. TotalEnergies reduced methane emissions by 98 percent during a 30-day pilot in March 2021 at a well pad in the Barnett field near Fort Worth and subsequently ordered 100 units to install by the end of 2022, with more to come.
Dairies and industrial-scale kitchens can also use organic waste to power a Qnergy system. "It can be turned into biogas that we can turn into power," says Zik. "It's the second-fastest growing market after oil and gas and methane abatement."
Qnergy manufactures at its 60,000-square-foot space in Ogden -- where about 60 of the 70 employees are based -- and also has locations in Houston, Boston, and Calgary.
"We build these engines soup to nuts," says Zik. "We build many of the parts ourselves, because it's our own architecture. Hundreds of companies build internal combustion engines, but there's only one that builds a Stirling engine."
But that's not the only reason for keeping as much manufacturing in-house as possible. "The world has changed from a manufacturing perspective," says Zik. "Lean relies on a stable supply chain. For a smaller company that doesn't have the procurement muscle of a large company, you're not a top priority for many of the key suppliers."
"We found insourcing reduces our cost and improves our efficiency. We are sourcing some components from the Far East, but we are trying to move everything that we can to the U.S. and -- when it makes sense -- to the factory."
He adds, "At the end of the day, you want to control your own destiny as much as you can yourself."
As of early 2022, Qnergy's growth trajectory has hit an exponential phase. "You grow slowly and then you ramp up, maintaining the quality," says Zik. "Our forecast is to more or less double year-over-year for the next five years. The next two years are actually supported by the pipeline, so we feel very confident that this can be done."
Challenges: Atop the list is a good problem to have. "The big challenge is we see more demand than we can easily supply," says Zik, citing disruptions in the supply chain as a related issue that also drives increased costs.
"Second is hiring good people," he adds. "The unemployment rate in Ogden is very, very low."
Opportunities: The demand for methane mitigation is growing rapidly across multiple sectors, and Zik sees potential for Qnergy in all of them. "I think biogas will be the strongest driver in the next 10 years," says Zik, noting that agriculture and food waste emit more methane than the oil and gas supply chain worldwide. Other target markets include residential power, electric vehicle charging, and telecommunications.
Needs: More space -- Zik anticipates at least doubling to 120,000 square feet in the near term -- and capital to support new hires. "We're looking to be more than 100 people in Ogden by the end of the year," he says. "We plan to expand in the Ogden area. We like the area, we think that it's a great area to work in, a lot of good people, good talent, especially on the manufacturing side."
After closing on a $16 million Series C round led by the Oil and Gas Climate Initiative in November 2021, Zik anticipates pursuing more outside investment in 2023. "We feel quite comfortable with our ability to raise equity," he says.