A new simple framework was proposed to quantify the efficiency of converting incoming solar radiation into phytoenergy in annual crops. It emphasizes the need to account for (i) efficiency gain when scaling up from the leaf level to the canopy level, and (ii) efficiency loss due to incomplete canopy closure during early and late phases of the crop cycle. Equations are given to estimate losses due to the constraints in various biochemical or physiological steps. For a given amount of daily radiation, a longer daytime was shown to increase energy use efficiency, because of the convex shape of the photosynthetic light response. Due to the higher cyclic electron transport, C4 leaves were found to have a lower energy loss via non-photochemical quenching, compared with C3 leaves. This contributes to the more linear light response in C4 than in C3 photosynthesis. Because of this difference in the curvature of the light response, canopy-to-leaf photosynthesis ratio, benefit from the optimum acclimation of the leaf nitrogen profile in the canopy, and productivity gain from future improvements in leaf photosynthetic parameters and canopy architecture were all shown to be higher in C3 than in C4 species. The indicative efficiency of converting incoming solar radiation into phytoenergy is ~2.2 and 3.0% in present C3 and C4 crops, respectively, when grown under well-managed conditions. An achievable efficiency via future genetic improvement was estimated to be as high as 3.6 and 4.1% for C3 and C4 crops, respectively.