We present the molecular beam epitaxial growth of nanocomposites consisting of semimetallic ErAs nanoparticles which are epitaxially embedded within InGaAlAs-based semiconductors, The properties of nanocomposites can be drastically different from that of the constituents, and in this case, the incorporation of ErAs is used to increase the thermoelectric power factor and decrease the lattice thermal conductivity, resulting in an increase in the figure of merit, ZT. In addition, the thermoelectric power factor is increased due to electron filtering (solid-state thermionic emission) by barriers within the composite. In one geometry, barriers of InGaAlAs, a wider bandgap semiconductor, are introduced into an ErAs:InGaAs nanocomposite. In a second geometry, ErAs particles are embedded directly into InGaAlAs, Electron filtering occurs due to the Schottky barriers which are formed surrounding the particles. We present a 400-element array based on these materials for thermoelectric power generation; a power density > 1 W/cm2 is demonstrated with a temperature gradient of 120°C.