Thermoelectric devices, such as generators, take a temperature difference and are able to turn it into electrical power. Amazingly, thermoelectric devices can also be run in reverse! If power is put into a thermoelectric generator a temperature difference is created. Small mini-fridges, for just a few sodas, use thermoelectric generators to efficiently cool a few drinks.
To understand how thermoelectrics generate the electricity from a temperature difference, it is important to know how electrons move in a metal. Metals are good conductors because electrons can move freely within them, similar to a fluid in a pipe.
The best way to explain thermoelectrics is imagine a pipe full of water and you raising one end. The water will flow down the pipe from the high end to the low end. This is because when the pipe was raised the potential energy was increased and the water wanted to flow to the lower point. In a thermoelectric material the same general concept applies where fluid-like electrons want to move from one point to another.
Heating one end of a thermoelectric material causes the electrons to move away from the hot end toward the cold end. When the electrons go from the hot side to the cold side an electrical current is formed. The larger the temperature difference, the more electrical current is produced and therefore more power generated.
The tricky part about thermoelectric devices, such as generators is that as one side is heated, the other side, or the cold side of the generator heats up too. In order to generate power with the a thermoelectric generator it is necessary to have both a heat source and a way of dissipating heat in order to maintain a temperature difference across the thermoelectric materials.
An example of a thermoelectric device is known as the power pot. It essentially is a generator that creates electricity with water and a variety of heating sources, such as fire or propane. The power pot is essentially able to limit how hot the cold side can get because water itself cannot get any hotter than 212 degrees Fahrenheit, the point at which it boils. Because the power pot has no moving parts and only requires a heating source and a cold source, it is a great way to provide electricity to communities or people that do not have access to it through a grid. Essentially, it is yet another step to providing power for everyone.
Sources:
https://www.alphabetenergy.com/how-thermoelectrics-work/
http://thermoelectrics.caltech.edu/thermoelectrics/history.html
http://ocw.mit.edu/courses/mechanical-engineering/2-997-direct-solar-thermal-to-electrical-energy-conversion-technologies-fall-2009/audio-lectures/MIT2_997F09_lec02.pdf
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