This paper extends some of the analysis of gravity wave generation and dissipation in the thermosphere given in a previous paper [Richmond, 1978> by defining wave energy for gravity waves of arbitrary amplitude and by analyzing several numerical simulations. Wave energy as defined in this paper is closely related to the sum of kinetic energy and available potential energy of the atmosphere. In the absence of production or dissipation mechanisms, wave energy is approximately, but not strictly, conserved. Its dissipation is related to, but in general is not the same as, entropy generation. Numerical simulations substantiate the findings of Richmond (1978) that both the Lorentz force and the Joule heating of auroral currents can generate substantial gravity wave energy but that the waves produced by Joule heating are more capable of traveling to middle and low latitudes. The simulations also reveal that molecular dissipation of wave energy can be relatively less important, in comparison to daytime Joule dissipation, than the simple treatment of Richmond [1978> indicated.