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Perhaps a poor use of words on their part. Water does not burn, but boils. And when it boils, it turns to steam. Steam engines have tons of torque. Steam also will cool the hot spots in cylinders.

I had a friend who had a Mustang SVO. Remember, that little turbo 2.3. He would pull the hose off the waste gate and run 27 psi boost. It had a big turbo. But he had to run race gas and it was expensive for the street. He got the idea one day to try water injection. He rigged up a small tank that was pressurized by the boost and it forced water into the turbo inlet. The turbo atomized the water very well. He could run the full 27 psi boost on 92 octane with no problems. He had no problem stomping 5.0s and Camaros of the day.

Water injection does work and I have used it in my Pantera. Makes a big difference on a turbo motor. Not sure it would be of any benefit on an N/A low compression motor since they are already running as much timing as they can.
They are working on a new engine that doesn't use the otto cycle but fires the fuel with heat of compresion. It doesn't have spark plugs. It doesn't even attempt to cool the boosted air, they leave it hot and it also has variable compression. It also uses a direct injector that shoots pure ethanol into the cyclinder. The idea is that when the knock sensor detects that cyclinder is begining to detonate too much before TDC, it starts injecting ethonal to cool it off to stop the advane in timing. It uses regular gas most the time and only uses as much ethonal as what it need to control combustion. They said you would have like a 15 gallon gas tank and a little five gallon ethonal tank that you would only have to fill every now and then, depending on how you drove the car.
Water injection is difficult to get the amount correct.
The Spearco system that I tried worked like a mechanical fuel injection system.
It required changing of jets.

First power drops simply because the water vapor in the combustion chamber displaces oxygen and fuel.

Second, it's next to impossible without a computer to get the combination of ignition advance rate, water injection amount and timing of the water shot right.

Then the winter comes and you need to use windshield washer fluid instead of water so it doesn't freez.

Of course turbos probably don't care at all about any of this. They just stuff the cylinder with whatever is available.
I have always heard stories about the water injection on the Wright 3350's used in the Constellation and many other aircraft at the time:

The engine was high performance for the time period; so much so things on the airplane were critical to trouble free operation. Things like cylinders were matched to the pistons and the position on the engine. Oil dripped into the lower cylinders and if I remember correctly these had to have a tighter tolerance. All thinks like this were critical on this engine as they were not critical on engines before; such as the Wright 2800. On a 2800 if you blow a cylinder you could grab any cylinder and put it on any position.

These engines had higher compression and turbos which gave them tremendous power. They needed the water injection to cool them down. That was the key to water injection, the evaporation was a cooling process. It didn’t add power but it enabled them to use more power.

Ironically the process did have 2 other effects. One effect was it increased compression. You stuff more in a cylinder. Second it did release oxygen which partially reclaimed some of the space it took up. They use these engines on Reno Racers even today:

These engines could run about 2400hp. If they cooled them with water they could run them up to about 3500hp. At Reno they run them in excess of 4500hp with water injection, anti detonation injection and NOS; and they are lucky if they can make it through the heat races to the gold race with out destroying the engine.

I just installed a system on my car. A simple RPM switch activated one, not the computerized version. As Crazy Dave said, it shows the most performance difference in forced induction engines, but I notice that I can run more advance without detonation on my normally aspirated car. My car runs really cool normally but I did notice that at sustained higher speeds when the injection is active, the temperature drops as the mixture cools the combustion chambers. I have mine kick in at 3100 rpm so it come in during acceleration or at sustained speeds over 80 mph. I am currently running a 50/50 mix of water and ethanol. You can see my system on the Paradise Pantera web site at the "under construction" page.
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