Energy is most important entity for the economic development of any country in the world. It is more important in large and developing country such as India and China where approximately one third of the world population is livening. These large populations have increased the need of energy rapidly in the recent years due to industrial and economic growth. Considering the environmental protection and in the context of great uncertainty in future energy supplies, awareness is concentrated on the sustainable utilization of energy sources and the energy conservation methodologies. Diesel engines are most widely used for power generation units. High capacity C.I. engines are well suited to a variety of applications such as industrial, commercial, CHP, and institutional facilities for power generation. Main advantages of these are start quickly, follow load well, have good part load efficiencies, and generally have high reliabilities. But these engines are wasted nearly two-third of input fuel energy through exhaust gas, cooling fluid (water or air), friction and radiation.