AbstractThe traditional surface energy balance (SEB) is investigated by applying the thermal energy balance based on total energy conservation. Based on total energy conservation, the thermal and the kinetic energy balances are connected through non‐hydrostatic energy transfer (QNH) as a result of the hydrostatic imbalance caused by potential energy changes from vertical density fluxes in response to mechanical and thermal forcing in the stratified atmosphere. Field observations show that both QNH and the surface energy imbalance (SEI) have the same diurnal variation; both are near zero under neutral conditions and increase with increasing atmospheric unstable stratification. Energy dissipation due to enhanced turbulent kinetic energy from QNH is estimated to be the largest energy consumption for potentially explaining the largest SEI under free convective conditions. The relatively large value of energy dissipation in the atmospheric surface layer is due to its exponential increase toward the surface and its increase with atmospheric instability. The other two energy transfers that are traditionally missed are related to water mass flowing through the open soil and air layers, but are relatively small in comparison with the energy dissipation. The new understanding of the energy transfers provides not only a potential explanation for the temporal and magnitude variations of the SEI but also the explanation for different heat/moisture transferring efficiencies between thermally and mechanically generated turbulent mixing. Understanding the SEB is important not only for solving the SEI but also for understanding energy conservation in the atmosphere.