Excess heat energy is captured from the turbo with the generator instead of blowing the excess out of the waste gate. The turbo is pre-spooled by turning it with the electric motor so the internal combustion engine runs at or near stoichiometric optimal fuel-air mix at all times.
The other motor generator does regenerative braking and can drive the engine.
The Mercedes engine is rumored to develop around 950 horsepower from the 1.6l V6 engine (of which about 160 are from the electric motors).
I'm hopeful that similar technology will find its way to road cars. City buses in particular would benefit a lot due to frequent stops.
http://www.motorsportmagazine.com/opinion/f1/ferraris-formul...
My understanding is that they pre-ignite a tiny amount of fuel in a special chamber, which forces the main fuel-air charge into the cylinder through targeted nozzles, making a very effective and targeted fuel air mixture, which can be leaner as the mix is so good.
But it does provide a fair bit of power, and I'm looking forward to seeing Honda race it tomorrow for the first time (Mercedes and Ferrari have it already, Honda bringing it to Canada this weekend, not sure about Renault). This might improve McLaren's lackluster performance and even up the racing a little.
"Furthermore, this process allows ... peak indicated thermal efficiencies up to 45% - not to be confused with the reported > 48% thermal efficiency that Mercedes is achieving for its entire F1 power unit."
I don't remember anyone struggling with fuel loads in a long time like they did early on with the new engines.