This paper considers the effect of heat transfer between fluid streams on the work output of a turbine. To correctly characterize the effect of heat transfer requires a new property, ‘mechanical work potential’, which is a measure of the maximum useful work that can be extracted from a fluid by an isentropic turbine exhausting to a fixed exit static pressure. A balance equation for the property, over a control volume, is developed. The equation shows that entropy creation through thermal mixing has no effect on turbine work. It does, however, show that a second heat transfer term, ‘thermal creation’, does alter turbine work. Thermal creation occurs in regions of the turbine where heat transfer occurs across a finite pressure difference. The term is the non-linear version of the acoustic energy creation term proposed by Lord Rayleigh in his thermo-acoustic criterion. The balance equation is then used to link local regions of thermal creation to changes in stage efficiency. The method is used to show that, in a modern high pressure turbine stage, heat transfer due to thermal mixing in the freestream causes a negligible change in efficiency and therefore can be ignored in the design process. The method is also used to show that heat transfer due to convective cooling results in ∼0.5% rise in stage efficiency. This is a significant and should be accounted for in the design process.

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