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The concept of the dimensionless thermoelectric figure of merit zT was derived by A.F. Ioffe and has been widely used to assess the desirability of thermoelectric materials for devices. Solid state physics does not set limits on this criterion, but it can be shown that such restrictions are imposed by the laws of thermodynamics. The physical meaning of zT can be interpreted as the ratio of the virtual efficiency of a thermoelectric generator (TEG) ηo and the Carnot efficiency ηc: zT = ηo/ηc. Hence, the conclusion about the zT restriction: lim(zT) ≤ 1, which is correlated with the data on the properties of well-studied thermoelectric materials, but contradicts much new experimental data. This contradiction serves as a pretext for further study of possible constraints on zT. An additional bonus from this analysis is the possibility of the experimental determination of zT by direct measurement of temperatures, heat flux, and open circle voltage. An analysis of the expanded mathematical model of a TEG shows that the influence of the Biot criterion on the power capacity of the TEG significantly exceeds the influence of zT. That is, it is possible to compensate for the high thermal conductivity of materials due to more intense heat transfer. This approach to improving the characteristics is demonstrated by developing a TEG for the conversion of latent heat of liquid natural gas (LNG).