Australia rejects industry calls for reform of contentious power loss rules

Facebook
Twitter
LinkedIn
Reddit
Email
Uluru. Source: Flickr, Robert Young

The Australian Energy Market Commission (AEMC) will maintain for now the controversial Marginal Loss Factor (MLF) regime despite repeated calls for reform from the renewables industry, it emerged today. 

Calculated annually by the Australian Energy Market Operator, the MLFs – used to predict losses of power as it flows through the network to customers – are seen in the industry as a make-or-break revenue multiplier for electricity projects. 

This article requires Premium SubscriptionBasic (FREE) Subscription

Unlock unlimited access for 12 whole months of distinctive global analysis

Photovoltaics International is now included.

  • Regular insight and analysis of the industry’s biggest developments
  • In-depth interviews with the industry’s leading figures
  • Unlimited digital access to the PV Tech Power journal catalogue
  • Unlimited digital access to the Photovoltaics International journal catalogue
  • Access to more than 1,000 technical papers
  • Discounts on Solar Media’s portfolio of events, in-person and virtual

Or continue reading this article for free

The MLFs are not tradeable, meaning developers cannot hedge against them unlike in nodal markets. When a developer establishes a plant in an attractive transmission location, every rival that follows suit undermines its MLF and makes the charge impossible to predict. Interviewed by this publication for a recent PV Tech Power feature, the managing director of FRV Australia likened the MLFs to a “black box”.

The renewables industry has pushed the rulemaking body for some time to replace MLFs with 'average loss factors,' which they say will be easier to predict and fairer to new generators.

However, in a decision published on Thursday, the AEMC said it would uphold the MLF framework because the averaging approach favoured by renewables players would shift the costs on to consumers and generators installed in places where losses were lower.

Kane Thornton from the Clean Energy Council slammed the decision in a statement on Thursday. “While the industry welcomes debate and analysis of alternative reforms, simply retaining the current regime is deeply problematic and undermines the energy transition underway in Australia,” he said.

“We had expected that the AEMC would consider how losses could be shared by generators in a way that presents less volatility and more manageable risk, without increasing consumer costs or ignoring transmission losses,” Thornton added.

Transmission loss regime could prompt investor exodus

A consortium of investors that counts John Laing, Macquarie Group, Innogy, Blackrock and Neoen and represents about AU$11 billion (US$16.7 billion) of investment has warned that lack of reform to the framework will cause private investment to leave Australia.

Last September, the investor coalition told the commission that unpredictable year-on-year MLF rating swings of over 20% each year have materially impacted revenues.

Adani Green Energy – the instigator of the rule review in November 2018 – said in October that it would put further investment in Australian renewables on hold until the nation's transmission issues were resolved. Its 65MW Ruby Run solar farm in Queensland waited seven months to get grid-connected after construction was completed.

UK-based infrastructure investor John Laing has also put investment in Australian renewables on ice. It reported a write-down of £66 million (US$85 million) on three projects due to changes in MLFs last year.

Investment in large-scale renewable energy in Australia halved last year, according to the CEC.

The feature examining the state-of-play of Australian solar was part of PV Tech Power's Volume 21, which you can subscribe to here

Read Next

June 30, 2025
Australian module manufacturer Tindo Solar has secured a 30MW solar module supply agreement to power Australia's first "net zero pipeline”.
June 26, 2025
PV solar cell manufacturer Halocell Energy has launched its first perovskite-based product called the Halocell Ambient Modules.
June 25, 2025
JinkoSolar has submitted a 133.76MWc solar-plus-storage project in New South Wales to the federal government under the EPBC Act.
June 25, 2025
Australia’s National Electricity Market (NEM) achieved a new record high for solar PV and wind generation at 12,463MW.
June 25, 2025
The New South Wales government has earmarked AU$2.1 billion (US$1.36 billion) for transmission infrastructure to connect its Renewable Energy Zones (REZ) and support utility-scale renewable and energy storage projects.
June 24, 2025
Western Australia’s Lithium Universe has secured the commercial rights for a solar PV module recycling technology known as Microwave Joule Heating Technology (MJHT).

Subscribe to Newsletter

Upcoming Events

Upcoming Webinars
June 30, 2025
10am PST / 6pm BST
Solar Media Events
July 1, 2025
London, UK
Solar Media Events
July 1, 2025
London, UK
Media Partners, Solar Media Events
July 2, 2025
Bangkok, Thailand
Media Partners, Solar Media Events
September 2, 2025
Mexico City, Mexico