Alex,
 
The efficiency refered to in this case is NOT just the efficiency of the
engine at producing mechanical work, but rather the efficiency of the co-gen
SYSTEM at producing BOTH mechanical work PLUS recoverable heat.
 
In a diesel, about 1/3 of the heat value in the fuel gets converted to
mechanical energy (- giving the efficiency rating you are used to 
seeing), 1/3 of the heat value is lost in heat to the cooling system,
and 1/3 of the heat normally goes out with the exhaust.
 
As a co-gen system, with the engine mounted in the space to be heated,
all the cooling system heat is recovered and a substantial portion of the
exhaust heat as well.  This gives efficiency as a co-gen system, as:
33% (mechanical energy) + 33% (heat recovered from engine cooling) +
say, a 78% recovery of the heat in the exhaust - .78(.33) or 26%.
SO.. as a co-gen efficiency is .33 +.33 +.26 = 93%.
JMcA
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