One of the main reasons why this inefficiency exists is because a spinning propeller imparts a substantial outward radial velocity to the water it is trying to push rearward. The energy expended in causing this outward radial motion is wasted energy. Since the radial distribution of this outward velocity is uniform and symmetric, the net effect is that all the force vectors cancel out and no net thrust comes from it. Only the rearward component of the velocity of the water that is accelerated by the action of the propeller, contributes to the desired thrust.
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The structure of the shroud-duct does increase the drag in the water. But the exponential horn shape of the interior improves the acoustic impedance match of the propeller throat with the surrounding water. For all practical vehicle speeds, standard Engineering calculations show that the added drag is much less than the extra thrust created by the structure. At extremely high vehicle speeds, the drag does grow to be greater than the added thrust. However, as mentioned above, at all practical watercraft speeds, the benefit much exceeds the added drag.
There are actually already two existing technologies similar to this. One is called a Kort nozzle system, where the intake tube tapers smaller for specific reasons. The other is called a Pump-jet arrangement, and this concept uses an intake tube that enlarges as it proceeds. Both are different in principle from the current concept, and their results are different, too. A Kort nozzle system has very great thrust while stationary, and the tapered housing usually represents a aerodynamic disadvantage at speed. The pump-jet technology has its own advantages and disadvantages. This current concept involves a tube with a relatively constant inside diameter, only very slightly flaring out toward each end in an exponential horn manner, and essentially it has a constant outside diameter, to minimize drag. This slight flaring permits the water flow to have good acoustic impedance matching with the surrounding water, which again reduces energy losses.
Appropriate aerodynamic design considerations can reduce the drag. A straight, constant diameter tube would certainly have substantial good effect. But it is generally also beneficial to slightly flare out both ends of the shroud-duct. Such a shape would have the contour of an exponential horn. This shape would correct for any differences in acoustic impedance in the water ahead of the shroud, in the shroud, and behind the shroud.
The value of this concept is in ensuring that ALL of the energy put into the water by the spinning propeller will result in productive thrust, and not wasted as radially ejected water.
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C Johnson, Theoretical Physicist, Physics Degree from Univ of Chicago