Abstract In this work the concept of exergy is used to define criteria of performance of thermal plant. Different criteria are defined for plants with useful outputs expressible in terms of exergy and those without. General methods for formulating criteria of performance for specific thermal plants are outlined and a number of examples of application of steadily operating plants of open and closed type are considered. Also, expressions for the irreversibility rates of the plants are given. In an appendix, an expression for the energy balance for the general case of a control region undergoing a non-steady process with chemical reaction is derived.