In this study, the authors report on the results of an empirical investigation of teachers’ understanding of energy. In particular, the focus is placed on pre-service teachers’ ability to employ energy as a framework for analyzing the operation of physical systems. The results corroborate the claim made in the literature that teachers typically do not possess functional, coherent understanding of this principle. Most importantly, the data serve to identify and document specific difficulties that hamper attempts to use energy for the analysis of the operation of physical systems. The difficulties which the authors were able to document lend support to the idea that it is important to introduce the idea of energy degradation alongside the conservation of energy principle.