Energy quality is a measure of the ease with which a form of energy can be converted to useful work or to another form of energy: i.e. its content of thermodynamic free energy. A high quality form of energy has a high content of thermodynamic free energy, and therefore a high proportion of it can be converted to work; whereas with low quality forms of energy, only a small proportion can be converted to work, and the remainder is dissipated as heat. The concept of energy quality is also used in ecology, where it is used to track the flow of energy between different trophic levels in a food chain and in thermoeconomics, where it is used as a measure of economic output per unit of energy. Methods of evaluating energy quality often involve developing a ranking of energy qualities in hierarchical order. The consideration of energy quality was a fundamental driver of industrialization from the 18th through 20th centuries. Consider for example the industrialization of New England in the 18th century. This refers to the construction of textile mills containing power looms for weaving cloth. The simplest, most economical and straightforward source of energy was provided by water wheels, extracting energy from a millpond behind a dam on a local creek. If another nearby landowner also decided to build a mill on the same creek, the construction of their dam would lower the overall hydraulic head to power the existing waterwheel, thus hurting power generation and efficiency. This eventually became an issue endemic to the entire region, reducing the overall profitability of older mills as newer ones were built. The search for higher quality energy was a major impetus throughout the 19th and 20th centuries. For example, burning coal to make steam to generate mechanical energy would not have been imaginable in the 18th century; by the end of the 19th century, the use of water wheels was long outmoded. Similarly, the quality of energy from electricity offers immense advantages over steam, but did not become economic or practical until the 20th century.

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