A methane catalytic decomposition reactor-direct carbon fuel cell-internal reforming solid oxide fuel cell (MCDR-DCFC-IRSOFC) energy system is highly efficient for converting the chemical energy of methane into electrical energy. A gas turbine cycle is also used to output more power from the thermal energy generated in the IRSOFC. In part I of this work, models of the fuel cells and the system are proposed and validated. In this part, exergy conservation analysis is carried out based on the developed electrochemical and thermodynamic models. The ratio of the exergy destruction of each unit is examined. The results show that the electrical exergy efficiency of 68.24% is achieved with the system. The possibility of further recovery of the waste heat is discussed and the combined power-heat exergy efficiency is over 80%. (C) 2010 Elsevier B.V. All rights reserved.