Fire Essence is a Tier 1 Rune crafting material. It is used to make Fire Rune, which when slotted into a weapon, inflicts +10 fire damage on each weapon strike. In order to make this you will need to have completed War Table Operation: Acquire the Arcanist. Fire Essence drop from Rage Demons.
Can be harvested from the respawning Rage Demons in the Tomb of Fairel quest in Hissing wastes.