Lyngby, Denmark--Stirling engines, which convert heat into other forms of energy, are incredibly efficient, in theory. Harnessing them for real-world work has proved somewhat difficult. Stirling Denmark, however, says it has come up with a version of the engine, as well as a target market, where the devices make sense. It has created a biomass furnace powered by a Stirling. It works as follows. Biomass is burned in a kettle. The heat from the biomass is then condensed and passed through a heat exchanger. The difference in temperature between the heat exchanger and the ambient temperature of the engine--which climbs to around 1100 Celsius--drives the Stirling engine. The output from the process is electricity, hot water and heat. The device is 90 percent efficient if the customer takes advantage of the hot water as well as heat and power of the system, said Peter Tottrup, a partner at Seed Capital, a venture fund sponsored by the Danish government, in an interview. (Seed is an investor.) The efficiency goes way down if the hot water isn't used. The heat from the biomass can be sent directly to the heat exchanger. Alternatively, the biomass can be converted into a gas and burned. The flame from the gas is directly applied to the heat exchanger. "It's like applying a Bunsen burner," he said. The secret sauce to Stirling's technology is figuring out a way to prevent the ash from the biomass from gumming up the works, he said. Unlike an internal combustion engine, where the combustion of fossil fuels takes place in the cylinder, the biomass is combusted outside of the Stirling's cylinders. Stirling is primarily targeting rural communities and isolated industrial sites with the product. Right now, remote towns and buildings often get power by running diesel generators. In Alaska, some communities have been known to bring in diesel by helicopter, he said. Oil derricks at sea need diesel shipped in. (Savor the irony.) Stirling's engine can cost 1/3 the price of running a diesel generator in these situations, he said. Customers in some EU countries can also get credits for replacing fossil generators with a biomass engine. If the customer wants both power and hot water, the price of using Stirling's product comes to around 14 cents a kilowatt hour. Without water, it comes to around 33 to 35 cents per kw/h. Although that's a high price to pay for power in a lot of U.S. cities, it's not that unusual in stranded communities, he said. The taxes, though, can be 10 to 15 cents a kw/h if using regular power. Maintenance is also easy. "There are fewer moving parts than a diesel engine," he said. The company started selling some of its systems, which cost around $400,000, last year. (Peter was going to show me one at the Stirling warehouse but the most recent ones from the production line had just shipped off to Italy the day before.) The company will also make an appearance in the U.S. later this year at the Dow Jones Alternative Energy conference taking place in October. Like many companies, Denmark has been investing heavily to build up a local clean tech industry. Although small, it does have some pretty good expertise in the area. Wind giant Vestas comes out of here.