Startup of the Day: Estonian cleantech Efenco
Efenco develops Cold-Plasma-Assisted Carbon Neutral Combustion technology for industrial heat production. The startup claims that its HERC technology slashes CO2 and fuel costs by at least 18% in energy-intensive industries. Recently, Efenco, received a €4.5 million in funding. Currently, Efenco has a team of 13, and expect to double it to 2025.
In the Startup of the Day column, the team of Efenco share more details about the startup’s idea, its product, and future plans.
The Startup of the Day column on AIN.Capital is dedicated to tech projects from all sectors that originated from the CEE countries. If you would like to introduce your project, please fill in the questionnaire.
Tell us about your startup. How does it work?
Efenco is a cleantech startup that maximizes the energy conversion efficiency of industrial furnaces and boilers and reducing their carbon footprints. Its flagship product, the patented high-energy ray ceramic chip (HERC), slashes CO2 and fuel costs by an unprecedented 18% in energy-intensive industries such as electricity generation, steel manufacturing, pulp and paper manufacturing, ceramics and cement production, and district heating.
HERC technology uses waste heat to generate plasma-assisted combustion that increases thermal conversion efficiency during combustion. Efenco’s technology – already in use in large-scale commercial applications – can be retrofitted to existing gas-fired infrastructure in a matter of hours.
How did you come up with the startup’s idea? What was the reason/motivation behind it?
Efenco’s founders’ motivation was to find a cleantech solution that addresses the energy transition gap facing the world. The key to Efenco’s technology is that, unlike other plasma-assisted systems in use in jet aircraft engines, its breakthrough does not require an external energy source. Instead, Efenco’s patented high-energy ray ceramic (HERC) chip uses waste heat generated by combustion to generate cold-plasma and enhance reaction efficiency.
The co-founder Aleksandr Nagornoy. He conjectured that the emerging field of cold-plasma-assisted combustion could transform the output of industrial heat production – a major component of global energy demand.
“Efenco’s 2019 proof of concept on a 2kW methane prototype showed efficiency gains of 18% over conventional furnaces and boilers, with the same uplift achieved the following year on a hydrogen system,”Aleksandr Nagornõy added.
How long did it take to reach the prototype or MVP? What did you encounter?
Efenco was incorporated in 2015, but work on its technology started years before. It took four years to get to our proof of concept project in 2019, a 2kW methane prototype that immediately showed energy gains of 18% over conventional furnaces and boilers.
Before that point, self-powered plasma production with HERCs was confirmed by scientists from the University of Tartu in 2016 (and again in 2022). The process was EU patented in 2016 (EP3280230) and financially supported in 2019 by the EU’s Horizon programme and Estonia’s Archimedes Foundation.
When exactly did you launch your product? Or when the launch is planned?
Efenco already has six commercial partners lined up for commercial-scale pilot projects, including Adven, Thermory, and Bepco. The first of these is targeting 1,000 hours of continuous operation as early as November 2023.
Tell us about the startup’s business model. How do you monetize your product?
Efenco’s cold-plasma-assisted combustion technology can be retrofitted to existing gas-fired heat and electricity generators in a matter of hours.
HERC chips are inserted by Efenco technicians into otherwise unmodified combustion boilers. They can be applied across any industry that requires high-output energy generation. Smaller scale boilers, including domestic heat boilers, are also a target in due course.
“To ensure rapid roll out beyond the first six partners, Efenco’s business model eliminates the need for capital outlay by adopters, who reap the benefits of greater energy efficiencies from day one to meet their financial and ESG commitments.”
Efenco’s preferred revenue model is the rental/lease model, where they rent the HERC tech to their customers. The rental price is determined based on the saved fuel costs and CO2 allowances.
What are your target markets and consumers?
Efenco’s HERC technology can be used in varioues energy-intensive industries such as electricity generation, steel manufacturing, pulp and paper manufacturing, ceramics and cement production, and district heating.
Among our main markets are:
- TAM, global industrial energy consumption, which is approximately 7,000 TWh, with the potential for annual HERC savings of €60 billion.
- Serviceable Available Market (SAM), an annual iron, steel and chemicals gas-based heat consumption, which is 1,121 TWh, with an annual HERC savings potential of €9 billion.
- Serviceable Obtainable Market (SOM), an 88 TWh with potential annual HERC savings of €1 billion, that we aim to achieve by 2030.
If the startup has already launched the product, what are the results: metrics, income, or any clear indicators that can be evaluated.
Efenco calculates that its initial technology could be installed in the 30% of gas boilers being used in the EU for high temperature industrial process heat applications. Even at an 18% efficiency gain, this represents a potential 5% total reduction in the EU’s energy consumption and carbon emissions from natural gas combustion; a greater potential saving than from solar and wind combined, or nuclear.
The Efenco process also holds immense potential for the generation of green hydrogen. Flue gas reduction systems are a future target for Efenco as well.
What about your team? How many people are working in the startup? If you’re looking for new employees, indicate whom exactly.
Our team currently comprises 13 people and expect to more or less double every year in the coming couple of years.
Specific roles available include Scientists, lab technicians, engineers, R&D managers, project managers, purchase manager, logistics, quality specialists, assistants, IP manager, Salesforce and marketing manager.
Have you already raised any investments? Provide us with more details on each funding round: the amount, investors, the purpose of the investment.
To date, Efenco has raised €4.5 million, including a research grant from the European Innovation Council, €1.3 million in private equity from angel investors, and an €8 million equity commitment from the European Investment Bank.
The funding will support the rollout of Efenco’s technology to existing and new commercial partners, with the aim of achieving cash neutrality by 2027.
What’s next? Tell us about your future plans.
After the first six commercial-scale pilot projects referred to earlier, we expect to keep improving our product and growing in new countries. We are already thinking of the next generation HERC chip which will be more durable.
“We at Efebco aims to help remove 77 million tonnes of CO2 emissions by 2030, the equivalent of a whole day’s global carbon emissions. However, we understand that reducing carbon emissions from hydrocarbon combustion is an important but temporary solution to the world’s energy crisis. There is a risk that adding new energy capacity does not change the game but leads to faster usage of fuels.”
Thats why we will have a HERC nanoceramic coating material that will help for more demanding and non-standard combustion environments.