Energy analysis is an important tool to improve energy efficiency of a thermodynamic system. The conventional method of energy analysis is based on the first law of thermodynamics, which focuses on conservation of energy. The limitation of this analysis is that it does not take into account properties of the system environment, or degradation of the energy quality through dissipative processes. Exergy analysis is very effective in this regard, as it deals with the usable energy with reference to environment. It is based on the second law of thermodynamics. The main purpose of exergy analysis is to identify where and how much exergy is destroyed. This destruction of exergy in a process is proportional to the entropy generation in it, which accounts for the inefficiencies due to irreversibility. This research conducts exergy analysis in one unit of a coal-fired power plant in Central Queensland, Australia. The exergy analysis identifies where and how much exergy is destroyed in the system and its components. Based on the analysis, it assesses different options to improve the efficiency of the system. It shows that only a small amount of useful energy can be recovered through a heat recovery system. Substantial improvement to the thermodynamic cycle is possible, but it requires considerable alteration of the power generation system.