There are many sources of free energy available in the form of heat that is often simply wasted for want of an effective way to convert it into useful energy such as electricity. The aim of this research project is to design and build a low temperature differential Stirling engine capable of generating electric power from heat sources such as waste hot water or geothermal springs. The engine that has been developed is a research prototype model of a new type of design featuring a rotating displacer which is actuated by a pair of stepper motors. The rotating displacer design enables the use of readily available and comparatively cheap and robust steam pipe as the housing for the engine, and it also avoids problems associated with sealing and heat exchange that would be present in a large engine of a more traditional configuration. Owing to the fact that this engine is a research prototype, it has the ability to have some of its critical operating parameters such as phase angle and stroke length adjusted to investigate the effects on performance. When the next phase of development takes place most of these parameters will be fixed at the optimum values which will make manufacture cheaper and easier. Unfortunately, construction of the prototype engine has not been completed at the time of writing so no power producing results have been achieved; however thorough results are presented on the operation of the control system for the stepper motors which actuate the displacer. Additionally, after a thorough history and background of Stirling engines was researched, the understanding gained of how these engines work has enabled a design process to take place which has hopefully led to a successful design. Analysis of various aspects of the engine have been carried out and results look promising for the engine to produce around 500 Watts of electrical power output whilst running on hot water up to around 90°C.