In the past decades, the Second Law of thermodynamics has left a clear mark on theoretical and practical engineering. Manifestations like exergy' and entropy generation minimization' (EGM) have acquired scientific renown and are applied in different engineering disciplines. This paper assesses these Second Law manifestations in engineering design. A simple comprehensible power plant model is used throughout this work to illustrate the challenges associated with the Second Law. Opportunities and promises of both exergy and EGM are verified while pitfalls are addressed and tackled using a new component-based iterative design approach. It is found that this iterative design approach is promising but inherently case dependent. Copyright (c) 2014 John Wiley & Sons, Ltd.