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.

Methodology

• Methodology for Calculating Forward-Looking Transmission Loss Factors

Guidelines

• Treatment of Loss Factors
• Proportioning of Inter-Regional Losses Within Regions

Transmission Loss Factors

AEMO publishes final Marginal Loss Factors for 2019/20

AEMO has released the final marginal electricity loss factors (MLFs) that will apply from 1 July 2019 to 30 June 2020 for electricity generation and loads connected to the National Electricity Market (NEM). The final determination follows the publication of draft MLFs in March and April, and incorporates new information subsequently received by AEMO.

AEMO calculates MLFs for the NEM transmission grid every year. After publishing initial draft electricity loss factors for 2019–20 in March 2019, AEMO became aware that some information previously received by AEMO no longer reflected expected commissioning schedules for several new generation projects.

AEMO deferred finalisation of the 2019–20 MLFs to give proponents an opportunity to provide the most recent and accurate information for AEMO to use in the MLF calculations. Updates were requested for 46 projects, with 29 providing AEMO with updated generation profiles.  

AEMO has recalculated all MLFs based on this updated information from proponents. This has resulted in changes to the MLFs from the draft factors published on 1 April 2019, including material changes for areas of Northern Queensland, South West New South Wales and North Western Victoria.

Participants who wish to meet with AEMO to discuss their results should contact MLF 2019-20 Feedback.

• Regional Boundaries and Marginal Loss Factors for the 2015–16 Financial Year
• Regional Boundaries and Marginal Loss Factors for the 2014–15 Financial Year
• Regional Boundaries and Marginal Loss Factors for the 2013–14 Financial Year
• Regional Boundaries and Marginal Loss Factors for the 2012–13 Financial Year
• Regional Boundaries and Marginal Loss Factors for the 2011–12 Financial Year
• Regional Boundaries and Marginal Loss Factors for the 2010–11 Financial Year
• Regional Boundaries and Marginal Loss Factors for the 2009–10 Financial Year
• Regional Boundaries and Marginal Loss Factors for the 2008–09 Financial Year

Distribution Loss Factors

• Distribution Loss Factors for the 2019–20 Financial Year (681 KB, pdf)
• Distribution Loss Factors for the 2018–19 Financial Year (677 KB, pdf)
• Distribution Loss Factors for the 2017–18 Financial Year (673 KB, pdf)
• Distribution Loss Factors for the 2016–17 Financial Year (657 KB, pdf)
• Distribution Loss Factors for the 2015–16 Financial Year (253 KB, pdf)
• Distribution Loss Factors for the 2014–15 Financial Year
• Distribution Loss Factors for the 2013–14 Financial Year
• Distribution Loss Factors for the 2012–13 Financial Year
• Distribution Loss Factors for the 2011–12 Financial Year
• Distribution Loss Factors for the 2010–11 Financial Year
• Distribution Loss Factors for the 2009–10 Financial Year
• Distribution Loss Factors for the 2008–09 Financial Year

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

Provision of indicative marginal loss factors

Interested parties may on occasion require marginal loss factors (MLFs) under conditions that differ from the Forward Looking Loss Factor (FLLF) methodology. Examples include:

• A proponent may wish to assess the potential impact on published MLFs if a generating unit is installed or upgraded at a particular connection point.
• A market customer may wish to assess the impact on the published MLF at a connection point without the contribution of a nearby generating unit.
• A market participant may wish to assess the MLF of an embedded generator for which AEMO does not normally calculate and publish an MLF.

To assist interested parties with such requests, AEMO currently provides a service to calculate indicative MLFs under non-standard assumptions for a nominal fee.The following document provides details of the indicative MLF calculation process, including fees and data requirements.

Indicative extrapolation input data for 2019-20 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 2019-20 MLFs calculation.

Indicative extrapolation input data for 2019-20 Marginal Loss Factors:

• Indicative extrapolation input data for 2019-20 loss factors (458 KB, docx)
• Indicative extrapolation results for 2019-20 loss factors (106 KB, xlsx)

Review of Marginal Loss Factor Calculation Processes

In August 2018 AEMO held several information sessions to seek feedback from participants and interested parties on the current MLF calculation process.

Specifically, AEMO asked:

• Whether the current MLF calculations are fit for purpose.
• Potential improvements to MLF calculations that AEMO can make through a market consultation to amend the Forward Looking Loss Factor Methodology.
• Potential improvements to MLF calculations that require changes to the National Electricity Rules.
• Ways AEMO can increase the transparency of the MLF calculation process and improve the ability of participants and intending participants to forecast MLFs.

The slide pack that was presented at the sessions is available here, and the high-level notes of the discussions available here.

AEMO will be continuing this review in 2018 and 2019.