Clean Energy Council slams AEMC on MLF decision, says it will undermine investment

Australia’s Clean Energy Council has slammed the Australian Energy Market Commission for refusing to change the way transmission losses are calculated, saying the decision to retain Marginal Loss Factors (MLFs) will further undermine investor confidence in clean energy generation.

As reported yesterday on RenewEconomy, the transmission losses have ranked among the biggest roadblocks for wind and solar developers in Australia, who have lobbied for a shift to “average loss factors” (ALFs) as a fairer and more predictable means of measuring the impact of grid congestion.

And while the AEMC conceded on Thursday that the rules governing the market needed a complete makeover to catch up with new technologies, it refused to budge on MLFs in its final ruling, even on a temporary basis as the new rules are designed and put in place – a process likely to take five years.

The decision has delivered another blow to the renewable energy industry in Australia which, as the CEC notes, has already seen new investment in large-scale solar and wind energy projects collapse by more than 50 per cent in the past 12 months.

CEC chief executive Kane Thornton said the decision to retain the existing regime did not reflect the needs of the broader Australian energy industry, let alone of renewables.

“While industry welcomes debate and analysis of alternative reforms, simply retaining the current regime is deeply problematic and undermines the energy transition underway in Australia,” Thornton 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.”

“The AEMC has missed an opportunity to think openly and creatively about reform to the current flawed MLF framework,” Thornton added.

For its part, the AEMC argues that its modelling showed the current system of MLFs would “likely” result in lower costs to consumers than changing the method to ALFs, which proponents said would still use an important “locational” pricing signal, but would seek to average out any losses to multiple generators in the same location.