The free-energy analysis is essential to understand and control a chemical process in condensed phase. The current status of theoretical/computational chemistry is, however, that the free energy remains a most difficult quantity to compute. For the fast computation and molecular understanding of the free energy, a new theory of solutions is introduced and is combined with molecular simulation. This theory is called the method of energy representation, and constructs the solvation free energy as a functional of distribution functions of the solutesolvent interaction energy. The method of energy representation greatly expands the scope of solution theory and is amenable to such frontline topics of physical chemistry and biophysics as supercritical fluid, flexible molecules with intramolecular degrees of freedom, inhomogeneous system, and quantum-mechanical/molecular-mechanical (QM/MM) system. We present a brief introduction to the distribution-function theory of solutions, and describe the method of energy representation with its performance. As an application to inhomogeneous system involving flexible species, the molecular binding into micelle and lipid membrane is analyzed by treating micelle and membrane as a mixed solvent system consisting of water and amphiphilic molecule.