Abstract This paper investigates the energy budget of mesoscale eddies in wind-driven two-layer quasigeostrophic simulations. Intuitively, eddy energy can be generated, dissipated, and fluxed from place to place; regions where the budget balances generation and dissipation are “local” and regions that export or import large amounts of eddy energy are “nonlocal.” Many mesoscale parameterizations assume that statistics of the unresolved eddies behave as local functions of the resolved large scales, and studies that relate doubly periodic simulations to ocean patches must assume that the ocean patches have local energetics. This study derives and diagnoses the eddy energy budget in simulations of wind-driven gyres. To more closely approximate the ideas of subgrid-scale parameterization, the authors define the mean and eddies using a spatial filter rather than the more common time average. The eddy energy budget is strongly nonlocal over nearly half the domain in the simulations. In particular, in the intergyre region the eddies lose energy through interactions with the mean, and this energy loss can only be compensated by nonlocal flux of energy from elsewhere in the domain. This study also runs doubly periodic simulations corresponding to ocean patches from basin simulations. The eddy energy level of ocean patches in the basin simulations matches the level in the periodic simulations only in regions with local eddy energy budgets.