The physics involved in moving electrical energy around the power grid means that some of that energy will always be lost. As a result, less energy will exit the system than entered it in the first place. The difference between the amount of incoming and outgoing energy is called grid loss.
In physical terms, grid loss is directly proportional to the square of the energy conveyed and represents between 1% and 7% of the energy transported, depending on grid function and transmission level.
Grid operators are responsible for balancing these grid losses. They do this by purchasing appropriate volumes of energy in the form of scheduled deliveries that supply the actual load required.
Joint grid loss procurement
Every year, Austrian grid operators need to offset grid losses of around 3.1 TWh in Austria’s electricity transmission and distribution grid. An agreement between Österreichs Energie (previously the Association of Austria’s Electricity Companies (Verband der Elektrizitätsunternehmen Österreichs, VEÖ)) and the regulatory authority E-Control Austria established that, from 2011, Austrian Power Grid AG shall procure any grid loss energy volumes centrally for all participating grid operators.
One of the stated aims of Austrian Power Grid AG (APG) is to appeal to an extremely broad range of interested parties, and therefore potential providers, by creating a transparent, market-based and non-discriminatory procurement process for purchasing grid loss energy. A highly dynamic and thereby liquid market is ensured by using a joint tendering process to procure the required energy for the majority of Austria’s grid operators in the form of standard commercial products (annual, quarterly and monthly base and peak products). The intention is thus to encourage providers (traders, energy producers) from across Europe to participate actively as suppliers.
Participating grid operators
The following list shows the grid operators that are supplied with grid loss energy by APG under contract:
- Austrian Power Grid AG
- Netz Oberösterreich GmbH
- Energie Klagenfurt GmbH
- Energie Ried Gesellschaft m.b.H.
- KNG-Kärnten Netz GmbH
- Linz Strom Netz GmbH
- Netz Burgenland Strom GmbH
- Netz Niederösterreich GmbH
- Stadtwerke Kapfenberg GmbH
- Stromnetz Steiermark GmbH
- TIWAG-Netz AG
- Vorarlberger Energienetze GmbH
- Wels Strom GmbH
- Wiener Netze GmbH
- Ebner Netz
- Energy Services (Glatzing)
- Linz Stromnetz
- Salzburg Netz
These grid operators in turn usually purchase grid loss energy for downstream (distribution) grid operators that do not have a direct contractual relationship with APG. As it currently stands, approximately 98% of Austria’s grid loss energy is procured by APG.
If you are an Austrian grid operator that would like to be part of the joint procurement, please get in touch with us directly email@example.com.
Origin of grid loss energy
If the energy industry agrees to voluntarily stop buying electricity of unknown origin and instead switch to renewable electricity, APG will, as the special balancing group representative, strive to do likewise when it comes to procuring grid loss energy volumes, provided that any additional costs are reimbursed by the regulatory authority.
Frequently asked questions - FAQ
When electrical energy is transported via a power grid, losses occur for physical reasons, i.e. less energy can be drawn than is fed in. This difference is the energy loss. It is also called "network losses".
Each grid operator is responsible for balancing the grid losses occurring in its grid. Since 2011, the loss energy required for this purpose has been procured jointly for most grid operators in Austria by Austrian Power Grid AG within the framework of loss energy tenders.
In physical terms, the power loss is directly proportional to the square of the transported current. Depending on the network function and transmission level, the loss energy amounts to between 1% and 7% of the transported energy.
The domestic grid operators have to compensate for grid losses of about 3 TWh per year in the Austrian electricity transmission and distribution grid. Within the framework of joint procurement of grid losses, approx. 97% of this is procured by APG.
In addition to the Austrian market rules (Other market rules, chapter 8), two documents must be observed with regard to the tenders for the procurement of loss energy by APG:
First of all, these are the General Terms and Conditions (GTC), which are to be understood as general tendering/business conditions for the procurement of loss energy.
By signing the Expression of Interest (Annex 1) form, the participant confirms its interest in the tender and accepts the regulations and contracts underlying the tender (these are the Austrian Market Rules "Other Market Rules, Chapter 8", the General Terms and Conditions and the EFET Contract, Version 2.1(a)/September 21, 2007 with the corresponding Election Sheet to the EFET General Agreement").
The data of the form in Annex 3 “Membership of an Austrian Balance Group” are required to enable the physical transfer of energy after an award.
A “Letter of Comfort” can be submitted to increase the trading limit set after the company valuation.
The second document is the EFET Standard Agreement, Version 2.1(a)/September 21, 2007 with associated "Election Sheet to the EFET General Agreement" already pre-filled by APG.
Both the General Terms and Conditions and the EFET Standard Agreement do not have to be (necessarily) signed by the participant, as the terms and conditions contained therein have already been "accepted" by signing the "Expression of Interest" form (Annex 1).
Registration as a bidder is required for participation in the tenders.
The documents required for the evaluation of bidders are listed in chapter 3.2. of the General Terms and Conditions.
The following documents are required for setting a trading limit:
- Annual reports for the last three years
- Official documents from rating agencies, if available (optional)
- Registrations at energy exchanges and traded volumes, especially for futures trading (if available)
Based on these documents, APG will determine a (maximum) trading limit of the bidder.
In the event of an award, an Austrian balance group is specified as the physical place of delivery or service provision. (Therefore, Annex 3 of the General Terms and Conditions must be completed by the bidder in advance).
If you are already registered in an Austrian balance group, you can send this form together with the other documents by e-mail to firstname.lastname@example.org and by post to APG:
Austrian Power Grid AG
UMM/Purchase of electricity
Subject: Loss energy procurement
Wagramerstrasse 19, IZD Tower
If the supplier has not yet had access to an Austrian balance group and is therefore unable to complete the form in full, the missing information must be submitted as soon as it is known. How to gain access to an Austrian balance group is explained under point 12.
As soon as the registration documents have been received by APG, you will receive a confirmation of receipt from APG. The documents will be forwarded to the relevant departments for review. The providers will then be notified of the result.
Yes, hard letters of comfort are taken into account. These can be used for credit assessment after signing by the parent company. The corresponding form is available for download on the page ?Conditions of Participation for Suppliers of Loss Energy?
According to Chapter 4.2 of the General Terms and Conditions, the bidder must bear all costs and expenses in connection with the tenders. Of course, this only refers to the costs incurred directly by the bidder as a result of its participation (time expenditure, IT resources, bank charges, schedule management).
The bidder must always (at least once a year) submit to APG the latest version of the documents provided for its registration (e.g. the latest annual reports). If the trading limit (creditworthiness) of a bidder changes as a result of these documents, the bidder will be informed of this by APG. (If the trading limit remains unchanged, no notification will be made).
In the course of registration, each bidder is assigned a (maximum) trading limit and released in the tender system. If the bidder participates in tenders and is awarded contracts, the available trading volume is reduced and an "open position" (future delivery obligation) is created. This open position is valued as part of our risk management using a "mark-to-market" principle, and the trading volume still available is calculated according to this valuation. As this market-based calculation is performed daily, the available trading volume may also change daily. With the fulfillment of a delivery obligation, the corresponding trading volume is "released" again at the end of each calendar month (and can therefore be used again for new tenders).
In the tender system, the existing trading volumes are of course only visible to the registered employees of the same company.
APG conducts loss energy tenders on a weekly basis (with the exception of December to mid-January). However, if the quantity to be tendered is too small for a tender, the quantity to be tendered can also be "carried over" to the next week. Traders will be informed of the new tender date at least 24 hours in advance.
In exceptional situations APG is forced to cancel tenders already started (see chapter 4.4 of the General Terms and Conditions). Reasons may be an insufficient number of participants or a failure or technical defect of the electronic tender platform of APG. In such cases, participants will also not receive confirmation of accepted bids and will be informed by e-mail that the tender has been cancelled.
APG is not obliged to provide a reason for the cancellation of the tenders, but will nevertheless publish corresponding information for reasons of transparency.
These are annual, quarterly and monthly products for base and peak products up to two years in advance.
The participating grid operators provide forecasts of grid loss quantities to APG up to three years in advance. Overall, there are long-term and short-term procurement processes.
Conditions of participation
The conditions of participation for suppliers are set out in detail in the General Terms and Conditions.