You can use Energy Hammer during the hammering phase, however you have to use it in place of your regular hammer.  If you use your regular hammer, then you can't use your Energy Hammer.

As far as when should you use 1.  If you do not have a lot of friends, and your doing a fusion that your having trouble getting the CP for., or a regular sword that the quality just isn't getting as high as you want(try to limit it to tier 3ocean/cloud/meteorite & 4sacred/demon), those are when you would use the hammer.  Just remember to change back to your regular hammer.

And you can also use it on friends crafts if you wish.