We demonstrate a new method for the direct conversion of heat to electricity using the recently discovered multiferroic alloy, Ni45Co5Mn40Sn101. This alloy undergoes a low hysteresis, reversible martensitic phase transformation from a nonmagnetic martensite phase to a strongly ferromagnetic austenite phase upon heating. When biased by a suitably placed permanent magnet, heating through the phase transformation causes a sudden increase of the magnetic moment to a large value. As a consequence of Faraday’s law of induction, this drives a current in a surrounding circuit. Theory predicts that under optimal conditions the performance compares favorably with the best thermoelectrics. Because of the low hysteresis of the alloy, a promising area of application of this concept appears to be energy conversion at small ΔT, suggesting a possible route to the conversion of the vast amounts of energy stored on earth at small temperature difference. We postulate other new methods for the direct conversion of heat to electricity suggested by the underlying theory.