The energy efficiency of a conventional thermal power station is defined as saleable energy produced as a percent of the heating value of the fuel consumed.  A simple cycle gas turbine achieves energy conversion efficiencies from 20 to 35%. Typical coal-based power plants operating at steam pressures of 170 bar and 570 °C run at efficiency of 35 to 38%, with state-of-the-art fossil fuel plants at 46% efficiency. Combined-cycle systems can reach higher values.  As with all heat engines, their efficiency is limited, and governed by the laws of thermodynamics.
The Carnot efficiency dictates that higher efficiencies can be attained by increasing the temperature of the steam. Sub-critical pressure fossil fuel power stations can achieve 36–40% efficiency. Supercritical designs have efficiencies in the low to mid 40% range, with new "ultra critical" designs using pressures above 4400 psi (30.3 MPa) and multiple stage reheat reaching 45–48% efficiency. Above the critical point for water of  and 3212 psi (22.06 MPa), there is no phase transition from water to steam, but only a gradual decrease in density.
Currently most nuclear power stations must operate below the temperatures and pressures that coal-fired plants do, in order to provide more conservative safety margins within the systems that remove heat from the nuclear fuel. This, in turn, limits their thermodynamic efficiency to 30–32%. Some advanced reactor designs being studied, such as the very-high-temperature reactor, Advanced Gas-cooled Reactor, and supercritical water reactor, would operate at temperatures and pressures similar to current coal plants, producing comparable thermodynamic efficiency.
The energy of a thermal power station not utilized in power production must leave the plant in the form of heat to the environment. This waste heat can go through a condenser and be disposed of with cooling water or in cooling towers. If the waste heat is instead used for district heating, it is called cogeneration. An important class of thermal power station is that associated with desalination facilities; these are typically found in desert countries with large supplies of natural gas, and in these plants freshwater production and electricity are equally important co-products.
Other types of power stations are subject to different efficiency limitations. Most hydropower stations in the United States are about 90 percent efficient in converting the energy of falling water into electricity while the efficiency of a wind turbine is limited by Betz's law, to about 59.3%, and actual wind turbines show lower efficiency.