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Heat Rate is an expression of the conversion efficiency of power generating engines or collectively plants. The typical unit for this is Btu/kWh, or British Thermal Units per kilowatt hour. For example 8,000 Btu/kWh means that 8,000 Btu of heat energy which is input into the engine will result in conversion to 1 kWh of electricity. The heat energy is of course input into the plant by combustion of many different types of fuels.

It should not be misunderstood that using different fuels for the same engine will result in different Heat Rates for the engine. However the Heat Rate may be kept constant or even improved marginally by ensuring the engine is always properly maintained so that all working components are working at their peak efficiency. Obviously a poorly maintained engine will result in a deterioration of its Heat Rate, which means that more fuel will have to be burnt to generate the same amount of electricity.

It is easy to understand why investors in power generation projects look at Heat Rate as a key indicator of the profitability of the plant concerned.

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