Abstract: The invention disclosed provides a new improved method and system for generating heat efficiently by means of frictional heat produced by a rotating impeller disposed within a closed housing which contains a heat transfer liquid and a gaseous layer. Rotation of the impeller generates heat as well as pressure in the system such that circulation of the heat transfer liquid may be readily effected through a closed conduit circuit to a heat dissipator. In a preferred embodiment, the rotating impeller is disposed within a diffuser which functions to increase the velocity of the heat transfer liquid and increase the static pressure within the system.