Energy and exergy analyses were studied for an integrated gasification combined cycle (IGCC) power plant with CO2 capture using hot potassium carbonate solvent. The study focused on the combined impact of the CO conversion ratio in the water gas shift (WGS) unit and CO2 recovery rate on component exergy destruction, plant efficiency, and energy penalty for CO2 capture. A theoretical limit for the minimal efficiency penalty for CO2 capture was also provided. It was found that total plant exergy destruction increased almost linearly with CO2 recovery rate and CO conversion ratio at low CO conversion ratios, but the exergy destruction from the WGS unit and the whole plant increased sharply when the CO conversion ratio was higher than 98.5% at the design WGS conditions, leading to a significant decrease in plant efficiency and increase in efficiency penalty for CO2 capture. When carbon capture rate was over around 70%, via a combination of around 100% CO2 recovery rate and lower CO conversion ratios, the efficiency penalty for CO2 capture was reduced. The minimal efficiency penalty for CO2 capture was estimated to be around 5.0 percentage points at design conditions in an IGCC plant with 90% carbon capture. Unlike the traditional aim of 100% CO conversion, it was recommended that extremely high CO conversion ratios should not be considered in order to decrease the energy penalty for CO2 capture and increase plant efficiency.