That statement in the article didn't make any sense to me. By my understanding it's a violation of the second law of thermodynamics. You can't take a process that creates waste heat and convert that into energy with less entropy, electricity in this case, and have less total resultant waste heat. Any physicists care to chime in?
Sure you can. As long as overall entropy increases, you're AOK.
Imagine a thought experiment not too dissimilar. You have a bike, that you pedal up to speed. You then let yourself slow to a stop naturally. All the energy you put in goes to heat.
Then you do the same again, pedal the bike up to speed, but this time you click a dynamo (attached to a battery) into place and let yourself stop naturally. This time some of the energy is converted to heat, and some into energy in the battery.
It the same principle of hydro electric power. You can let water just move down some tunnels from high to low gravitational potential energy (GPE -> water velocity), or you can put some turbines in the way.