Losses or gains? What do transmission upgrades mean for Marginal Loss Factors

AEMO’s 2022 Integrated System Plan has listed a group of committed and anticipated network projects, including VNI Minor, QNI Minor, and the Western Renewables Link (WRL). Besides relaxing network constraints, improving reliability, and unlocking generation capacities, transmission upgrades may also impact the Marginal Loss Factor (MLF) around the planned area.

MLF represents the contribution to electricity losses along the transmission network between a connection point and Regional Reference Node (RRN). It is used in the NEM to reflect the losses along the network and is applied to the market settlements, which can highly affect generators’ revenue. In this Chart of the week, we investigate the impact of Western Renewables Link on MLFs using our in-house Power System Analysis model.

Western Renewables Link (WRL), formerly known as the Western Victoria Transmission Network Project, is a project to connect Bulgana in western Victoria to Sydenham in Melbourne’s north-west. The project includes a 220kV double circuit overhead line from Bulgana to a new terminal station north of Ballarat, a 500kV double circuit overhead line from North Ballarat to Sydenham, and network upgrades to support new assets. There is no doubt that WRL can unlock the renewable energy potentials of Western Victoria Renewable Energy Zone (REZ). However, it is not clear how much impact WRL has on MLFs. To investigate this, we carried out MLF forecasting for the following scenarios:

  • Business-as-Usual (BAU): assuming there is no WRL;
  • Western Renewables Link (WRL): having WRL in place.

The time-of-day loss factors are illustrated in Figure 1. The loss factors are calculated for each dispatch interval by running power flows using our Power System Analysis model, while the marginal loss factor is calculated as the generation weighted average of the loss factors for an entire year. The results for the BAU case are shown on the left of Figure 1, while the results for the WRL case are shown on the right.

[1] A loss factor of 1 means that there is no loss in the network, while a loss factor of 0.9 means that having one additional generation at the site results in 0.1 units lost in the network.

With the presence of WRL, the loss factors are increased significantly. The lowest loss factor is raised from 0.79 to 0.86. This 7% increase may bring substantial improvement in the business cases for renewables within Western Victoria REZ significantly as it rightfully discounts the losses associated with generation. Similar results, i.e., improvements in the loss factors, are also observed for other terminal stations within Western Victoria REZ.

It is worth noting that both scenarios have similar trends in the time-of-day loss factors, i.e., the lowest loss factors (i.e., highest losses in the network) are observed around 12 pm-1 pm. This is mainly due to the concentrated solar generation during midday around the location. Another trend is that the loss factors deteriorate over the years, mainly due to the increase of generation capacity within the area.

Since MLF plays an important role in the business cases of new generators that are planning to enter the NEM, it is important to forecast the MLF at the potential connection sites over the project life span, as well as all the various factors, e.g., transmission network upgrades, generator retirement, new entries of generation, load forecasting, fuel prices, additional power system constraints, etc., that the MLF is impacted by.

Our in-house Power System Analysis and Market Modelling provide MLF forecasting based on sound engineer techniques and assumptions based on our vast experience, comprehensive research and independent view on relevant areas. For more information on Power System Analysis or other modelling products, please contact enquiries@cornwall-insight.com.au.

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