Today,
the Australian Energy Market Operator (AEMO) released its final report
determining Marginal Loss Factors (MLFs) for the 2020-21 financial year.
This report builds on the indicative and draft reports released in November
2019 and March 2020, which provided early insights into expected MLF changes
across the National Electricity Market (NEM).
In
recent years, supply and demand patterns in the NEM have been changing at an
increasing rate, driven by new technology and a changing generation mix. This
has led to large year-on-year changes in MLFs that applied between 2017/18 the
2019/20 financial years calculated under the current regulatory framework and
methodology, particularly in areas of high renewable penetration that are
electrically weak and remote from load centres.
AEMO’s final MLF report for 2020-21 provides for smaller changes compared to those seen in preceding years due to a slowdown in new project development and additional network constraints, both of which have reduced the need for MLF adjustments.
System
strength limits in north-west Victoria and south-west New South Wales
(collectively referred to as West Murray), and in northern Queensland have been
included in the MLF study, to better reflect the forecast operating conditions
of impacted generators.
AEMO remains committed to providing the market with as much transparency as possible about where new generation is expected to connect to the grid, publishing MLF updates more frequently to 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. The forecasts do not factor in the impact COVID-19 may have on the economy and energy sector, including MLFs.
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