The effects of ion partitioning on the electrokinetics in a polyelectrolyte grafted nanochannel, which is the representative of a soft nanochannel, are analyzed. Earlier studies in this regard have considered low polyelectrolyte layer (PEL) grafting density at the rigid nanochannel wall and, hence, an equal permittivity inside and outside the grafted layer. In order to overcome this shortcoming, the concept of Born energy is revisited. The coupled system of the modified Poisson–Boltzmann and Navier–Stokes equation is solved numerically, going beyond the widely employed Debye–Hückel linearization and low PEL densities. The complex interplay between the hydrodynamics and charge distribution, modulated by the ion partitioning effect, along with their consequent effects on the streaming potential and electrokinetic energy conversion efficiency (EKEC) have been systemically investigated. It has been observed that the ion partitioning effect reduces the EKEC in comparison to the case with equal permittivity up to a certain electrical double layer thickness after which it increases the EKEC. For a high concentration of mobile charges within the PEL, the net gain in the maximum EKEC due to the ion partitioning effect is about 10 fold that of the case when the ion partitioning effect is not considered. We delve into the various scaling regimes in the streaming potential and intriguingly point out the exact location of peaks in efficiency. The present study also reveals the possibility of improvement in streaming potential mediated energy conversion by the use of polyelectrolyte materials, which possess substantially lower dielectric permittivity than the bulk electrolyte.