Marginal Loss Factors: final determination

2 min

AEMO has today 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.

The location of new generation has a significant impact on the size of loss factors. In the near term, AEMO is committed to providing the market with as much transparency as possible about where new generation is expected to connect to the grid. AEMO is also considering more frequent MLF update publications which may assist in identifying changes and trends, as well as working with industry and the AEMC on possible options to reduce the impact of large year on year changes in MLFs.

In the longer term, Australia will need a stronger energy system to transport energy from where it is produced with fewer losses, to where it is consumed, minimising costs to consumers. AEMO’s Integrated System Plan is a blueprint for Australia to do just that. We need to start implementing this now.

We look forward to working with the Australian Energy Market Commission (AEMC) and market participants to find improvements in how losses in the system are accounted for.

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