Thermodynamic efficiency of small diesel engines.

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Spinnor
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Could a 10 HP diesel engine be made as fuel efficient as say a 100 HP diesel engine, that is (work done/fuel used). Does thermodynamics prevent a smaller engine from being more efficient?

Thank you for your time.
 
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The efficiency of the engine isn't based on it's total power generated, but on other things like the compression ratio and if it's turbocharged or not. A 100hp diesel engine will probably be turbocharged, while its unlikely a 10hp engine would be; turbocharged engines are as a general rule more efficieint than naturally aspirated engines.
 
Ignoring engine design considerations (such as compression ratio and turbocharging) for a minute, big engines have two key advantages in terms of efficiency.

- Higher combustion volume to surface area ratio
- Lower specific parasitic losses

The former means that less heat is rejected to radiation and coolant. The latter means that you get more shaft power for a given amount of fuel. Like-for-like, big engines are inherently more thermally efficient.