In a steam engine, an intermediate phase is provided for preheating the feedwater before it enters the boiler. The preheating is achieved by means of the reapplication of the otherwise dispensable exhaust steam in a simple feedback operation in which the exhaust steam is introduced directly into the feedwater. By means of electronic controls the operation of the system at the highest possible point of preheat (up to 210.degree. F.) is achieved thus assuring both high efficiency of the machine and cumulative economy in fuel consumption as well. The latter is further augmented by generous application of insulation to prevent wasteful dissipation of thermal energy as well as to effect protection of the system against the elements.