We identify the driving mechanism of the gigantic Seebeck coefficient in FeSb$_2$ as the phonon-drag effect associated with an in-gap density of states that we demonstrate to derive from excess iron. We accurately model electronic and thermoelectric transport coefficients and explain the so far ill-understood correlation of maxima and inflection points in different response functions. Our scenario has far-reaching consequences for attempts to harvest the spectacular powerfactor of FeSb$_2$.
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