The performance of energy systems usually degrades gradually away from the best operation conditions during continuous operation. Since the components in an energy system are interconnected with each other, the performance degradation or anomalies occurring in one component can propagate down- stream, affecting the performance of other components and even that of the whole system: Any anomaly occurring in a component may cause obvious performance degradation. However, locating the compo- nents where anomalies occur in an effective and accurate way is often difficult due to the interactions among components. Therefore, in this paper, we propose a diagnosis method to effectively locate the components with performance degradation, to find the sources over the system which may cause the degradation, thus to prevent the energy systems from anomalies. The proposed diagnosis method is based on the advanced exergy analysis, in which the exergy destruction within each component is split into endogenous and exogenous parts. The endogenous exergy destruction is due to the irreversibility of the component itself, while the exogenous is caused by the inefficiencies of the remaining components. The exogenous exergy destruction is, in fact, the major obstacle to accurately pinpoint the original sources causing the performance degradation. Therefore, the proposed method compares only the endogenous exergy destruction between the reference and degradation conditions for degradation quan- tification, once the degraded components are identified by an effective internal indicator. The diagnosis method is then applied to a case study of coal-fired power plant, in which the anomalies is introduced to one specific component. It is shown that the proposed method successfully and readily locates, and more importantly, quantifies the degradation.