Energy relates to how much the NPC moves around while in combat. Characters with an energy level of 100 or greater (anything above 100 has no extra effect) will move around constantly, making them near-impossible to hit. Characters with an energy level of 0 will stay in one position as long as they are in a position to attack (for example, marksmen and casters with target spells will stay in the same spot, but melee fighters and touch-based casters will run up to their opponent to hit them, making them easier to fight).
Unlike aggression and confidence, energy cannot be modified by any in-game means (not even the console can modify energy). The only way to change a character's energy is with the Construction Set.