The Shiva Furnace module augments the combat batteries that The Flagship uses to power its weapons during battle. It works by increasing the amount of energy that is fed into the batteries each cycle, allowing them to reach full capacity more quickly. Contrast this with the standard Combat Dynamo, which increases the rate of recharge. There is no limit to the number of furnaces that may be installed, other than free slots on the ship.
The Shiva Furnace does not completely replace the need for dynamos; install a combination of the two for best results. See Flagship Energy Management for details.