  Half-Heusler and Heusler compounds have been of great interest for several
decades for thermoelectric, magnetic, half-metallic and many other interesting
properties. Among these systems, Zr-Ni-Sn compounds are interesting
thermoelectrics which can go from semiconducting half-Heusler (HH) limit,
ZrNiSn, to metallic Heusler (FH) limit, ZrNi$_2$Sn. Recently Makogo et al. [J.
Am. Chem. Soc. 133, 18843 (2011)] found that dramatic improvement in the
thermoelectric power factor of HH can be achieved by putting excess Ni into the
system. This was attributed to an energy filtering mechanism due to the
formation of FH nanostructures in the HH matrix. Using density functional
theory we have investigated clustering and nanostructure formation in
HH$_{1-x}$FH$_x$ systems near the HH and FH ends and found that excess Ni atoms
in HH tend to stay close to each other and form nanoclusters of FH. On the
other hand, there is competing interaction between Ni-vacancies in FH which
prevent them from forming HH nano clusters. Effects of nano inclusions on the
electronic structure at both HH and FH ends will be discussed.
