In thermal power stations, mechanical power is produced by a heat engine that transforms thermal energy, often from combustion of a fuel, into rotational energy. Most thermal power stations produce steam, and these are sometimes called steam power stations. Not all thermal energy can be transformed into mechanical power, according to the second law of thermodynamics. Therefore, there is always heat lost to the environment. If this loss is employed as useful heat, for industrial processes or district heating, the power plant is referred to as a cogeneration power plant or CHP (combined heat-and-power) plant. In countries where district heating is common, there are dedicated heat plants called heat-only boiler stations. An important class of power stations in the Middle East uses by-product heat for the desalination of water.
The efficiency of a steam turbine is limited by the maximum steam conditions produced and is not directly a function of the fuel used. For the same steam conditions, coal, nuclear and gas power plants all have the same theoretical efficiency. Overall, if a system is on constantly (base load) it will be more efficient than one that is used intermittently (peak load). steam turbines generally operate at higher efficiency when operated a full capacity.
Besides use of reject heat for process or district heating, one way to improve overall efficiency of a power plant is to combine two different thermodynamic cycles. Most commonly, exhaust gases from a gas turbine are used to generate steam for a boiler and steam turbine. The combination of a “top” cycle and a “bottom” cycle produces higher overall efficiency than either cycle can attain alone.