When you start play, you have a reserve of 5 whole points of power. We call these points of power permanent. When you use this power, it recovers at a rate of one point per day, until you reach your maximum (in this case 5). When you are awarded power at the end of a story arc, this power increases your maximum reserve of permanent power.
Expendable power is power that does not recover at the end of the day. When it is spent, it is gone. You can use expendable power to pay for the cost of spells, to dodge, to buy off damage etc. You cannot use it to permanently advance abilities or items. You can use it to make scrolls, potions, or magical devices that use charges.
Some kinds of immortals have to sacrifice power and essences to learn spells, and you can use expendable power in the place of essences. Similarly, when an immortal initiates, they can increase how tough their spells are, and/or how much they cost to cast. But, they can only be increased 1 and the cost reduced by 1. However, if you have expendable power or essences of the appropriate colour, then you can advance the spell more than 1 or reduce the casting cost by more than 1.
Each (expendable power point/essence) of the appropriate colour must be matched by a point of the immortal's permanent power. The loss of the power is permanent, and effects your maximum power reserve. If you have 15 fire essences, you can a) raise you fire bolt spell by 5, then b) reduce the casting cost by 10, but c) this will cost you 15 points of permanent power, as well. You could use 15 points of Expendable Fire in exactly the same way as the essences.
Clearly, permanent power is more useful than expendable power, which is in turn more useful than essences. Expendable power can be generated from a House, and this reduces the House power by 1 point for each point of expendable power to be generated per year, or 1 point for 10 essences per year. There are devices, most commonly in the form of wells, that can be used to colour the points so generated.
The main point to be aware of is this: There is no free bloody lunch. Of course I'm not going to say, here, have a huge pile of expendable power, and by the way, pump your character up so that they're god-botheringly tough after 4 initiations.