As electricity flows through the transmission and distribution networks, energy is lost due to electrical resistance and the heating of conductors. The losses are equivalent to approximately 10 percent of the total electricity transported between power stations and market customers.
Energy losses on the network must be factored in at all stages of electricity production and transport to ensure the deliver of adequate supply to meet prevailing demand and maintain the power system in balance. In practical terms, this means that more electricity must be generated than indicated in simple demand forecasts to allow for this loss during transportation.
The impact of network losses on spot prices is mathematically represented as transmissions and distribution loss factors. Loss factors are calculated and fixed annually to facilitate efficient scheduling and settlement processes in the NEM.
Archived loss factor documents may be obtained upon request from the AEMO Information & Support Hub.