A diffuser surrounding a rotor is able to increase the power coefficient of a wind turbine above the Betz-Joukowsky limit (16/27), and so has attracted great attention for many years. This work presents a novel analysis of the performance of diffuser-augmented wind turbines (DAWTs) taking into account the influence of the diffuser efficiency and thrust, in which a new formulation for the far-wake velocity is proposed. The mathematical model extends Blade Element Theory to include the diffuser efficiency in the axial velocity formulation, which in turn, modifies the thrust and power. Additionally, a correction for high rotor thrust is presented, where a quadratic equation is used to incorporate the losses within the diffuser that are associated with the efficiency being less than 100%. An algorithm to assess DAWT performance was developed and implemented. The new model was validated by comparison with experimental data match and shows good agreement when a diffuser efficiency of 80% is assumed. The impact of the diffuser is assessed by the augmentation factor, the ratio of turbine efficiency to the Betz-Joukowsky limit. It is shown, for example, that the augmentation factor exceeds unity only for efficiency greater than 74% when the diffuser thrust is 0.2 of the total thrust and ratio of the rotor area to diffuser exit area is 0.54. (C) 2018 Elsevier Ltd. All rights reserved.