A by-product of how market boundaries are defined, loop flows are phenomena in electricity markets that manifest as flows going in one direction across parts of a network loop and goes the opposite way in other parts of the same network loop.
Regardless of whether the market design is nodal or regional, loop flows occur because network constraints force flows on parts of a network loop to go against the efficient dispatch. Transmission losses and market costs are generally higher when loop flows occur. Over time, the prevalence and the magnitude of loop flows are an indication of market inefficiency.
In this Chart of the week, we look at loop flows across the interconnectors between Victoria and South Australia to check if our networks can support market and operational efficiency.
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