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This lecture covers the technical challenges in implementing the Carnot cycle, such as heat transfer limitations and the use of dry compression. It also discusses the analysis of heating and refrigeration cycles, including energy and exergy balances, as well as the graphical representation of exergy losses. The concept of exergy efficiency is explained, along with its application in cases without dissipation. The advantages of exergy analysis are highlighted through a plot showing the impact of thermal devaluation at different temperature levels.