This thesis outlines the development of a one-dimensional simulation of a 2.4-litre diesel engine used on a Wrightbus hybrid bus. The engine model, created using Ricardo WAVE, was validated against an extensive experimental data set and was shown to accurately predict key performance parameters such as in-cylinder pressures and fuel consumption. A turbogenerator was subsequently included on the exhaust line of the engine model and used to simulate the effects of recovering otherwise wasted energy. The turbogenerator size was optimised and a device that produced 7kW was shown to offer up to 2.7% improvement in brake specific fuel consumption (BSFC) at full engine load. The turbogenerator model was then run across a series of engine operating points and a modified engine BSFC map was produced which included the effects of the turbogenerator. This map was then used in a hybrid vehicle model, which simulated the diesel-electric hybrid bus platform. The hybrid vehicle model was modified to include the turbogenerator and the effects of recovering waste heat were then investigated over several real-world drive cycles. An improvement in fuel efficiency of 2.4% was shown by using the turbogenerator on one urban drive cycle, while after optimisation of the hybrid bus platform, the benefit increased to almost 4.4% over a mixture of urban and standardised test cycles.