What does energy efficiency measure?
It measures the ratio of the energy available for use to the amount of energy from the source.
Energy can be neither created nor destroyed, only changed in form. Entropy (disorder) is always increasing, so even the change of energy from one form to another also “loses” energy to the surroundings. Knowing how “efficient” an energy conversion process is helps us to select processes that use the least amount of source energy for the desired final form or use.
For example, a vehicle engine makes several energy conversions. The first is from chemical (potential) energy into thermal energy (heat) in the combustion of the fuel. The second is from that thermal energy to mechanical energy through the engine design. That mechanical energy goes through several other mechanical energy changes from the initial pistons to the final drive of the wheel axles. Some of the mechanical energy is converted to electrical energy by generators. EVERY time the energy is changed in form or application, SOME of it is lost to the surroundings as thermal (heat) energy.
Thus, we NEVER get “100%” of the available energy from a source into useful work. In this example, we may only end up using 15-30% of the chemical energy contained in the fuel! See also: https://www.fueleconomy.gov/feg/atv.shtml for automotive details.
This is also true for power generation, whether from coal, oil, hydro, nuclear or solar. To really understand environmental impacts it is necessary to look at the TOTAL cost of energy production, not just the final stage! Construction materials, costs, environmental impacts (pollution), land and water use, operating costs, waste materials, AND production and distribution efficiencies all need to be evaluated carefully before we can really decide what is a “better” energy technology.