The efficiency of a power supply shows how much from the power being pulled from the power grid is being effectively converted into DC. Efficiency is the ratio between the power being pulled from the wall and the power actually being delivered to the PC.
Efficiency = DC power / AC power
For example, if your PC is consuming 250 W and your power supply is pulling 350 W from the wall, this means that your power supply efficiency is of 71.4%.
Good power supplies will provide an efficiency of at least 80%, the higher, the better. We recommend you to buy power supplies with at least 80% efficiency.
A power supply with higher efficiency brings two advantages. First, a lower electricity bill. Using the same example as above, if you replaced that power supply with a unit with 80% efficiency you would be pulling only 312.5 W from the wall, thus saving 37.5 W. If you use your computer a lot (for instance, during the whole day, every day), this savings are noticeable and at the end it pays off buying a power supply with higher efficiency, even if it initially costs a little bit more.
The second advantage is less heat being produced. In our first example the power supply would be converting 100 W into heat, while on our second example the heat dissipation would drop to 62.5 W, a 37.5% decrease in heat dissipation. This is really nice and it is always good to keep our computers running as cool as we can.
If you see a typical efficiency curve you will notice that efficiency varies according to the power being delivered and usually the power supply achieves its highest efficiency when delivering between 40% and 60% of its maximum capacity. Efficiency is also higher when the power supply is operating at 220 V. See Figure 31 for a real example.

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Figure 31: Example of an efficiency curve.
Because of this effect it is recommended that you buy a power supply with double the power you are actually going to pull. This explains the offer of high-wattage power supplies above 700 W. Manufacturers don’t expect you to pull the full power from their units, but that you operate them around 50% load for a higher efficiency (during our reviews, however, we need to see if the power supply can really deliver its labeled power, because if a power supply is labeled as, let’s say, 600 W unit, we want to be capable of pulling 600 W from it, if we want to). The only disadvantage to this approach is the price of a higher wattage unit. But at the long run it is a good idea, as you will save money on your electricity bill, you computer will run cooler, you have enough headroom for a future upgrade and you won’t face any stability problems when playing games at their maximum quality for hours. As we mentioned you will be surprised that most systems will require a power supply with less than 450 W, even with our adjustment.
Read our Understanding the 80 Plus Certification to learn more about the 80 Plus efficiency certification.