Energy transformation, also termed energy conversion, is the process of changing energy from one of its forms into another. In physics, energy is a quantity that provides the capacity to perform many actions—some as simple as lifting or warming an object. In addition to being convertible, energy is transferable to a different location or object, but it cannot be created or destroyed - wikipedia 
Energy in many of its forms may be used in natural processes, or to provide some service to society such as heating, refrigeration, lighting, or performing mechanical work to operate machines. For example, in order to heat your home, your furnace can burn fuel, whose chemical potential energy is thus converted into thermal energy, which is then transferred to your home's air in order to raise its temperature.
In another example, an internal combustion engine burns gasoline to cause pressure that pushes the pistons, thus performing work in order to accelerate your vehicle, ultimately converting the fuel's chemical energy to your vehicle's additional kinetic energy corresponding to its increase in speed.
# Entropy and thermal energy conversion
Conversions to thermal energy (thus raising the temperature) from other forms of energy, may occur with essentially 100% efficiency (many types of friction do this). Conversion among non-thermal forms of energy may occur with fairly high efficiency, though there is always some energy dissipated thermally due to friction and similar processes. Sometimes the efficiency is close to 100%, such as when potential energy is converted to kinetic energy as an object falls in vacuum, or when an object orbits nearer or farther from another object, in space - wikipedia
Though, conversion of thermal energy to other forms, thus reducing the temperature of a system, has strict limitations, often keeping its efficiency much less than 100% (even when energy is not allowed to escape from the system).
This is because thermal energy has already been partly spread out among many available states of a collection of microscopic particles constituting the system, which can have enormous numbers of possible combinations of momentum and position (these combinations are said to form a phase space).
In such circumstances, a measure called entropy, or evening-out of energy distributions, dictates that future states of an isolated system must be of at least equal evenness in energy distribution. In other words, there is no way to ''concentrate'' energy without spreading out energy somewhere else.
Thermal energy in equilibrium at a given temperature already represents the maximal evening-out of energy between all possible states. Such energy is sometimes considered Degraded energy, because it is not entirely convertible a "useful" form, i.e. one that can do more than just affect temperature.
The second law of thermodynamics is a way of stating that, for this reason, thermal energy in a system may be converted to other kinds of energy with efficiencies approaching 100%, only if the entropy (even-ness or disorder) of the universe is increased by other means, to compensate for the decrease in entropy associated with the disappearance of the thermal energy and its entropy content.
Otherwise, only a part of thermal energy may be converted to other kinds of energy (and thus, useful work), since the remainder of the heat must be reserved to be transferred to a thermal reservoir at a lower temperature, in such a way that the increase in Entropy for this process more than compensates for the entropy decrease associated with transformation of the rest of the heat into other types of energy.