Nowadays, specifying the quality of a transparent conducting electrode (TCE) using a figure of merit (FoM) is considered nearly mandatory. However, not much attention is paid to the local variations in the FoM itself across the large area of the TCE. This calls for the definition of a local FoM (LFoM), particularly relevant with regard to several new generation TCEs which have been and are being proposed recently. A LFoM based on local measurements of transmission and sheet resistance, pixel by pixel, would be a Herculean task. The present article addresses this central issue by defining a LFoM based on the diffraction efficiency (DE) of a calibrated high-resolution transmission grating overlaid with a given TCE. The DE value, which critically depends on the periodic nature of the grating material, is shown to be highly sensitive to the various nonuniformities in the TCE overlaid on the grating, with length scales comparable to the grating period. The effectiveness of the so-defined LFoM was demonstrated using a pointer laser and a photodiode in combination with a transmission grating with ∼μm periodicity by taking ITO/glass and ITO/PET as case examples. A metal grating pattern of Cu deposited on seed Pd grating lines was fabricated as an example of new generation TCE and examined for FoM and LFoM, however, without the aid of the external grating. The LFoM based on DE presented here should serve as an excellent screening method for both conventional and emerging TCEs. © 2012 American Chemical Society.