I'm having trouble understanding よりも多くand 多い, Is it literally saying 'more than many needed to use' and 'many energy'?
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Your understanding of the first 多く is correct, "more than necessary for (using) the ワザ". The second 多い is indeed tricky, but in this context it obviously means "surplus/excess".
When [it] has more water energy than what is necessary for the ワザ,
Inflicts additional 10 damage per 1 surplus water energy.
You can think ワザに必要なエネルギーよりも is omitted before the second 多い. In other words, this
多い「水」エネルギー is not simple "much energy" but "more-than-necessary-to-use-the-ワザ energy". It can be understood in the context, but 余剰の or 余った would've been more concise.
1 and 2 are apparently different from each other.
However, although the nuance is slightly different between 2 and 3, they are the same when translated into English using "google translation".
I examined here whether "よりも多く" and "より多く" are interchangeable. According to my brief examination I can see that in most cases they are not interchangeable. So what is the difference? I will investigate the difference further in order to explain it clearly. The answer will be made after the survey is over.