This paper addresses the need for efficiency gains in the modern industrial engine as utilized in combined heat and power (CHP) generation and other distributed generation situations. Power generation is discussed in terms of reciprocating-engine-based plant operating on Otto type thermodynamic cycles. The current state of the technology and the research being conducted is examined. Internal combustion engine performance improvement in the industrial engine sector focuses on improvements in the combustion characteristics of the plant, with emphasis on areas such as piston design, valve timing, and supercharging. Maximum brake-thermal efficiencies, in percentage terms, are currently in the 40s. In CHP generation, most of the energy not utilized for mechanical power is recovered as heat from various engine systems, such as jacket water and exhaust, and utilized for space or process heating. In other distributed generation situations, this energy is not utilized in this manner and is lost to the surroundings. While second law analysis would provide a more meaningful interpretation of the efficiency defect, this approach is still not the norm. Distributed generation benefits directly from efficiency improvements; the more efficient use of primary energy leads to reduced fuel costs. Combined heat and power generation is, however, more sensitive to the matching between the plant and its energy sinks, as its successful implementation is dictated by the ability of a site to fully utilize the heat and electrical power produced by the plant. At present, the energy balance of such engines typically dictates that heat is produced in greater quantity than electrical power, the ratio being of the order of 1.1–1.5:1. Due to this production imbalance, it is accepted that in order to be economically feasible, thermal and electrical demand should be coincident and also all heat and power should be utilized. This has traditionally led to certain sectors being deemed unsuitable for CHP use. Some current research is aimed at tipping the production balance of these engines in favor of electrical power production; however, performance gains in this regard are slow. This paper concludes with some brief commentary on current industrial engine developments and applications.

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