The Carson City, Nevada, startup also announced that it was picked by the magazine Popular Science for one of the best technology innovations in 2008 in the green technology category.

“We want to become the No. 1 waste heat-to-power company in the world,” said Bill Olsen, ElectraTherm’s VP of business development.

Industrial processes, such as fuel-fired furnaces, kilns, or ovens, waste energy through heat losses. The same goes for stationary engines used for gas compression, pumpin, or inert gas production. ElectraTherm has developed a modular generator, called the Green Machine, that captures that waste heat and generates electricity. The company says the machines pay for themselves in three years.

ElectraTherm is building 50kw units in its Carson City plant, but it plans to manufacture larger, 500kw units in late 2009. It has singed distribution deals with two companies in the U.S. and one in Taiwan.

Founded in 2005, ElectraTherm also is developing a product for the oil and gas industry that generates electricity from pressure drops in gas transmission and distribution systems.

Mr. Olsen said ElectraTherm is the only company to build a modular generator that doesn’t use a turbine, meaning a two-thirds reduction in cost. Instead, ElectraTherm uses a closed-loop, organic Rankine Cycle to create pressure and turn a patented Twin Screw Expander, which drives a generator.

The company says this means its products generate electricity without producing additional emissions. Mr. Olsen said ElectraTherm expects to raise $6 million to $8 million in a second round of financing next year from private investors.