Understanding the energy changes that occur as atoms and molecules interact forms the foundation for understanding the macroscopic energy changes that accompany chemical processes. In order to identify ways to scaffold students' understanding of the connections between atomic-molecular and macroscopic energy perspectives, we conducted a qualitative study of students' conceptualization of potential energy at the atomic-molecular level. We used semi-structured interviews and open-ended surveys to explore how students understand potential energy and use the idea of potential energy to explain atomic-molecular interactions in simple systems. Findings suggest that undergraduate chemistry students may rely on intuitive interpretations of potential energy, incorrect interpretations of curricular definitions (including the idea that potential energy represents stored energy) and heuristics rather than foundational understandings of the relationships between atomic-molecular structure, electrostatic forces and energy. Thus, we suggest that more explicit attention to the nature and role of potential energy in the undergraduate chemistry curriculum may be needed.