The energy confinement characteristics of neutral beam heated plasmas with a divertor configuration in Doublet III have been examined. The data were obtained in 1984, with a neutral beam injection power of up to 7.6 MW. The confinement characteristics depend on the size of the gap between the plasma surface and the limiter, as well as on the occurrence of Hα/Dα bursts or edge localized modes. These bursts have been observed in well confined divertor discharges. In the region of high heating power (>4.5 MW), the energy confinement time τE is degraded by these bursts. When the gap between the separatrix surface and the limiter is increased, the energy confinement time improves linearly in the low heating power region, whereas it is degraded by bursts in the high power region of discharges with a large gap. Taking these effects into account, the confinement characteristics can be summarized as follows. Divertor discharges have a better confinement (H-mode) than limiter discharges. In discharges with bursts or in the high power region, τE shows a linear positive dependence on the plasma current and an inverse square dependence on the heating power. In discharges without bursts, τE shows a linear positive dependence on the plasma density but no dependence on plasma current. The ion heating efficiency is greatly improved in divertor discharges; this is correlated with the high ion temperature in the edge region and with the increase in ion heating power caused by the high electron temperature. The ion heating efficiency is less affected by the Hα/Dα bursts than the energy confinement time.