Loss factors and regional boundaries

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% 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 delivery of adequate supply to meet prevailing demand and maintain the power system in balance. In practical terms, this means 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 transmission and distribution loss factors. Loss factors are calculated and fixed annually to facilitate efficient scheduling and settlement processes in the NEM.

Current reports

AEMO determines Marginal Loss Factors for each financial year, and updates are made on a quarterly basis throughout the period to reflect new and revised connection points. The Marginal Loss Factors being applied in AEMO’s market systems are updated daily and published through NEMWEB.

AEMO determines Boundary Point Loss Factors for each financial year, and updates are made on a quarterly basis throughout the period to reflect new and revised boundary points. The Boundary Point Loss Factors are utilised by primary Transmission Network Service Providers for allocation of intra-regional residues.

AEMO publishes Distribution Loss Factors for each financial year as advised by the relevant Distribution Network Service Provider, and updates are made required.

Previous reports

Archived loss factor documents may be obtained upon request from the AEMO Information & Support Hub.

Indicative extrapolation input data for 2025-26 Marginal Loss Factors

AEMO conducted an indicative extrapolation study to assist generators in determining whether the historical generation data used by AEMO is reasonable for the 2025-26 MLFs calculation.

Indicative extrapolation input data for 2025-26 Marginal Loss Factors: