A hybrid propulsion engine for a satellite that includes a satellite housing and electronics carried by the satellite housing, may include a rechargeable electrical power source carried by the satellite housing. The hybrid propulsion engine may also include a combustible fuel supply carried by the satellite housing, and an engine housing defining a combustion chamber for fuel from the combustible fuel supply. The hybrid propulsion engine may also include an electrical arc heater associated with the combustion chamber and configured to supply additional heat from the rechargeable electrical power source, and an exhaust nozzle downstream from the combustion chamber.