External combustion engine

An external combustion engine (EC engine) is an engine which converts heated fluid into kinetic energy. The heated fluid, called working fluid, can be air, hot water, pressurized water or liquid sodium which is heated in a boiler. The fluid used to power the engine is cooled and reused in a closed cycle and the fluid is dumped in an open cycle. 
Idea.
Any combustion engine follows the basic idea of converting fossil fuels into motion. Internal combustion engines do this by converting the energy created by an explosion of the fossil fuels, into motion. External combustion engines, on the other hand, use the energy from burning fossil fuels to expand a gas or liquid and use the expansion to create motion. The addition of this intermediate step is what differentiates an internal vs. external combustion engine. External combustion engines came first, and tend to be more inefficient. Famous examples of external combustion engines are steam engines
Types.
There are two types of external combustion: single phase and dual phase. In a single phase engine, the fossil fuels are burned to heat up a gas, which then expands and creates motion. In this case, there is no phase change.
With dual phase, you need one additional mechanism known as a phase transition. This process transforms the phase of liquid to gas. This converts temperature to usable work. Some common examples that use dual-phase engines are steam engines and engines that use Organic Rankine Cycle.