Electricity losses usually converge to the difference between the amount of electricity that enters the network and the amount that exits the network (final demand consumption and/or energy delivered to other networks). In the case of a utility that it is vertically integrated, the losses represent the difference between its generation injected into the grid and the amount consumed by the final demand. In a few cases, it may include the electricity billed to consumers but not collected after a reasonable amount of time (usually 180 days). This however represents a financial loss in the account receivable as part of the provision for bad debt (or allowance for uncollectable accounts). For the purpose of the Electrokit it is considered an accounting or financial loss (dependent on the accounting rules of each country), and not an electricity commercial loss.
In this context, the reduction in electricity losses brings important financial benefit to the distribution utility but they cannot be an isolated activity. The reduction of losses is usually part of a strategic transformation of the utility with other performance improvement activities as it requires prioritization of investments and allocation of resources. These are described later in the best practice section.
Electricity losses can be divided in two parts:
* Technical losses: correspond to all the energy dissipated in the transport of electrical current in conductors, equipment, and connections due to resistance in the distribution network. Technical losses can be further divided into: (i) fixed technical losses (caused by physical inefficiencies such as hysteresis, Eddy Currents losses in the iron core of transformers, and the corona effect in transmission lines) and (ii) variable technical losses (which can happen when power current flows through the lines, cables, and transformers of the network. These are also called load losses, or series losses).
* Non-technical losses or commercial losses are those usually associated with the sale of energy supplied to the end user. There is a part of the energy that is produced, transported, and supplied; however, it is not invoiced. These losses can be caused by internal or administrative problems (such as errors in measurement, accounting or record keeping) but they are usually associated with the consumer's own illegal intervention, such as thefts, fraud, alteration of meters, or unmetered supply (when the consumer is responsible).
