The first time he sold a batch of his refrigerators to a hospital, Tony Atti gave a long spiel about how the energy-efficient fridges would help the environment. 

"The hospital director looked at me," Atti remembers, "and said, 'Thank you for the energy savings, but last month the air compressor in our lab's fridge went down, and we lost $500,000 of oncology drugs and little kids couldn't get their leukemia treatments. That's why we're doing this.' "

Atti, the founder and CEO of refrigeration company Phononic, says the moment was eye-opening. His company was founded under the guise of creating a new type of refrigeration that's greener than traditional methods, and it's doing just that. However, as with a lot of Earth-friendly technologies, shouting about stopping global warming isn't necessarily the best way to attracting customers. 

Founded in 2009, Phononic creates cooling technology that's unlike the fridges and freezers used today. Phononic's refrigerators are silent and compact, and have no moving parts, so they require little maintenance. They also use up to 40 percent less energy than traditional fridges, which is the feature that gets Atti the most excited, even if it's a secondary benefit to some customers.

Refrigeration is a massive contributor to global warming. Viewed more optimistically, it's an area with huge potential for improvement. Two years ago, when climate change think tank Project Drawdown published a list of 100 solutions to combat globing warming ranked in order of their possible impact, "refrigeration management" finished first.

Facilities like data centers, hospitals, and laboratories have huge cooling needs. With better refrigeration techniques, Project Drawdown estimates, the world could reduce greenhouse gas emissions over the next 30 years by the equivalent of 90 gigatons of carbon dioxide. (Global emissions were 32.5 gigatons of CO2 equivalent in 2017.)

Traditional refrigerators rely on chemical compounds that absorb and release heat. Chlorofluorocarbons (CFCs) like freon were the ingredient of choice for decades, but they damage the ozone layer. When the 1987 international agreement known as Montreal Protocol restricted their use, many manufacturers switched to hydrofluorocarbons (HFCs), which swap the ozone-layer problem for a new one: HFCs warm the atmosphere at a rate 1,000 to 3,000 times that of carbon dioxide, according to the U.S. Energy Information Administration.

Phononic doesn't use HFCs. Instead, it relies on thermodynamic science that has existed for decades--but hasn't been made commercially viable until now.

A cooler world

In 2008, Atti, who earned his PhD in organic chemistry at the University of Southern California, was working for a power fuel cell company in North Carolina's Research Triangle. In search of more funds, he pitched Matt Trevithick, then an investor at VC firm Venrock tasked with finding products that could help mitigate global warming.

For years, Trevithick had been thinking about a very specific question. It was well established scientifically that semiconductor chips could transfer heat. He'd watched as advances in semiconductor technology had led to scalable solar panels and LED light bulbs; was it possible, he wondered, to use similar technology to create energy efficient refrigeration?

"The fundamental science on this was done 150 years ago," says Trevithick, now a program manager in Google's Applied Science division. The obstacle was making it economically feasible.

Five minutes into Atti's pitch that day, Trevithick cut him short. While he wasn't impressed with the company's technology, he was impressed with Atti's passion. So Trevithick asked him: Would he be willing to step away and research this problem?

Atti was. For four months, he compiled data from academic studies on thermoelectric principles while Trevithick paid him a stipend. His conclusion: If semiconductor chips could be manufactured to be small and efficient enough, they could be used to manufacture a scalable, energy efficient form of refrigeration.

Trevithick was sold. Venrock and another firm, Oak Investment Partners, invested a combined $2 million in a Series A round. Atti built a team of engineers and materials scientists, many hailing from universities in the local Research Triangle. They got to work, creating semiconductors that could transfer heat from one area to another, continually refining the products to make them smaller and more affordable.

Within a few years, the team--now a company called Phononic--had something it could show off. "We were flying around the world," Atti says, "with a catalog of thumbnail-size chips, making some pretty crazy claims about what they could deliver." When he would finish pitching potential clients, they would often ask how the product would work in conjunction with traditional refrigerator parts, like coils or evaporators.  

"We would try to explain that you don't need those things," he says, "and they would scratch their heads."

A critical pivot

Atti realized that to convince people of the technology's potential, he would need to create a complete product. By the end of 2013, the startup had secured nearly $40 million in funding. Atti used some of it to hire more engineers with backgrounds in thermals and electronics with a goal in mind: to build an entire refrigerator.

The resulting product uses a process known as solid state cooling. While standard fridges and freezers work by creating cool air and blowing it throughout an area, Phononic's device uses semiconductors that draw heat out and transfer it elsewhere. Without the need for a compressor, there's less energy required, more space inside, a more consistent temperature throughout, and, Atti says, far less chance of a malfunction.

Woochul Lee, an assistant professor at the University of Hawaii, has published research on thermoelectric coolers using semiconductors. "They don't require any moving parts, so they're reliable and can be made compact," he says. "But the cost of manufacturing is relatively expensive. Not many companies are pursuing thermoelectric devices to make profits."

Depending on their size, Phononic fridges run $1,800 to $6,500--expensive, but not much more than most lab refrigerators.

Those traits have made the refrigerators appealing to companies like Pepsi Bottling, one of the Pepsi cola company's largest distributors. Last year, as a pilot test in North Carolina supermarkets and convenience stores, Pepsi Bottling installed Phononic fridges at the ends of aisles and near cash registers. Not surprisingly, sales were higher in those stores than in ones that keep their beverages in larger fridges in the back, as many do since these fridges often require ventilation and a separate power circuit. Phononic officially inked a deal with Pepsi Bottling earlier this year to use its fridges in stores throughout the country. Atti says a major ice cream company is currently trying a similar pilot test.

Phononic's other clients include hospitals, laboratories, and life sciences giant Thermo Fisher, all of which use the fridges for safe keeping of samples and medicines. Computing companies like Cisco, Broadcom, and Hisense use Phononic's semiconductors in data centers to keep servers cool and prevent overheating.

Eventually, Atti wants to push Phononic, which now has 140 employees and a total of $160 million in funding, into commercial and residential cooling. The company has a test underway in Singapore to assist HVAC systems in keeping homes cool, thereby conserving energy and taking some pressure off the local power grid.

The company isn't yet profitable, but Atti says sales are growing rapidly. And in many cases, saving the world isn't part of the pitch.

"I have three children. I want to leave a better planet to them," Atti says. "Right now, maybe half of the people that are using these fridges and freezers really appreciate the sustainability impact we've given them. But they're all using them nonetheless."

Published on: Mar 4, 2019