Theoretical solution is derived for power generation efficiency and electrical output power of the co-axial MHD energy conversion device using liquid metal. Although the electrical output power is proportional to the square of Reynolds number, the power generation efficiency is independent of Reynolds number. The energy input to the liquid metal is converted into electrical output power, viscous and Joule dissipation. For obtaining high power generation efficiency, viscous and Joule dissipation should be minimized. The combination of Hartmann number and electrical resistance ratio exists for the maximum power generation efficiency under the condition of the weak MHD interaction rather than that of the maximum electrical output power. The theoretical analysis clearly shows that the maximum power generation efficiency of the co-axial MHD energy conversion device is 1/3 ≈ 33.3% at the highest.