This paper describes a solar powered reciprocating engine based on the use of a tethered hot air balloon fuelled by hot air from a glazed collector. The basic theory of the balloon engine is derived and used to predict the performance of engines in the 10 kW to I MW range. The engine can operate over several thousand metres altitude with thermal efficiencies higher than 5%. The engine thermal efficiency compares favorably with the efficiency of other engines, such as solar updraft towers, that also utilize the atmospheric temperature gradient but are limited by technical constraints to operate over a much lower altitude range. The increased efficiency allows the use of smaller area glazed collectors. Preliminary cost estimates suggest a lower $/W installation cost than equivalent power output tower engines. (C) 2008 Elsevier Ltd. All rights reserved.