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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.

Methodology

Guidelines

Regional Boundaries and Marginal Loss Factors
Distribution Loss Factors 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 2020-21 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 2020-21 MLFs calculation.

Indicative extrapolation input data for 2020-21 Marginal Loss Factors:

 

Indicative extrapolation archive
Indicative extrapolation input data for 2019-20 loss factors(458 KB, doc)
Indicative extrapolation results for 2019-20 loss factors(106 KB, xls)
Indicative extrapolation input data for 2018-19 loss factors (391 KB, pdf)
Indicative extrapolation results for 2018-19 loss factors (100 KB, xlsx)
Indicative extrapolation input data for 2017-18 loss factors (391 KB, pdf)
Indicative extrapolation study results for 2017-18 loss factors (100 KB, xls)
Indicative extrapolation input data for 2016–17 loss factors (486 KB, pdf)
Indicative extrapolation study results (78.9 KB, xls)
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 presented at the sessions is available here: MLF Engagement Session (1.33 MB, pdf)

The high-level notes of the discussions are available here: Marginal Loss Factor (MLF) Engagement session notes (232 KB, pdf)

AEMO will be continuing this review in 2018 and 2019.

List of Regional Boundaries and Marginal Loss Factors

This document has been prepared by AEMO as required by clauses 2A.1.3 and 3.6 of the National Electricity Rules (Rules), and has effect only for the purposes set out in the Rules. The Rules and the National Electricity Law (Law) prevail over this document to the extent of any inconsistency.

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