Technical vs Non-Technical Losses:
What You Need to Know

For electric utilities and grid operators, minimizing losses that occur during power transmission and distribution is a key priority both operationally and economically. However, not all losses are created equal. There is an important distinction to be made between "technical losses" and "non-technical losses".

Technical losses refer to the unavoidable dissipation of electric power that takes place as current flows through utility wires, transformers and other equipment to transport electricity over long distances. They are an inherent part of powering homes and businesses due to resistive heating of conductors. Technical losses typically range between 5 – 10% depending on the infrastructure and voltage levels involved.

Non-technical losses, sometimes called commercial losses, on the other hand involve electricity that is lost due to improper metering, fraud, or theft of power through unauthorized connections. This may include meter tampering, bypassing meters, billing errors and other supply chain inefficiencies. Non-technical losses are generally preventable through measures like upgrading payment and metering systems, infrastructure monitoring, site inspections and enforcement against power theft.

Technical Losses

Technical losses are coming from current flowing in electrical installations. They can not be avoided, but can be reduced by proper installation and maintenance practices. Technical losses can also be calculated based on system characteristics. The key contributors to technical losses include:

  • Losses due to conductor resistance
    As current passes through conducting materials like copper wires, it encounters electrical resistance which results in I2R heating losses.
  • Losses due to induction of electromagnetic fields
    Varying electromagnetic fields induced by current flow can lead to dielectric heating losses.
  • Dielectric losses due to insulation material between the conductors
    All insulating materials absorb some power in the form of heat.
  • Losses due to harmonic distortion
    Non-sinusoidal waveforms (harmonics) increase losses compared to pure sine waves.
  • Losses due to poor earthing
    Inadequate or faulty grounding/earthing systems increase stray currents and associated losses.

Non-Technical Losses

Non-technical losses, sometimes called commercial losses, on the other hand involve electricity that is lost due to improper metering, fraud, theft or other supply chain inefficiencies. They are more difficult to reduce compared to technical losses, as they involve human and process factors outside the control of pure engineering solutions.

The key contributors to non-technical losses include:

  • Meter tampering
    Unauthorized alteration of meters to under-report consumption.
  • Hooking or bypassing the meter
    Diverting power supply before or after meter to avoid billing.
  • Wrong programmed instrument transformer ratios in the meter
    Programming errors lead to inaccurate metering.
  • Burden for instrument transformers too high
    Components exceeding capacity tolerances reduce accuracy.
  • Wrong meter readings
    Inaccurate recording or transmission of meter data.
  • Meter is faulty or out of accuracy class
    Defective or non-calibrated meter equipment.
  • Unpaid electricity bills
    Electricity supplied but not billed or collected due to process lapses


Understanding the distinction between technical and non-technical losses is crucial for electric utilities and grid operators. While technical losses are inherent and can be minimized through infrastructure upgrades, addressing non-technical losses through targeted interventions offers a higher return on investment. By implementing preventive measures, such as upgrading payment and metering systems, and utilizing advanced solutions like our portable meter test equipment and smart meter AMI solutions, utilities can effectively curb losses, strengthen revenue streams, and ensure the efficient distribution of electricity.

If you have any inquiries about how our CLOU solutions can support your loss reduction activities, please don't hesitate to reach out to us. We are here to assist you and provide further information on how our portable meter test equipment and smart meter AMI solutions can help optimize your operations.

Editor's note: This article was originally published in July 2019 and has been updated for comprehensiveness.

8 Replies to “Technical vs Non-Technical Losses: What You Need to Know”
    1. To reduce non-technical losses is involving a lot of different aspects. There is no such thing like buying a complete package. There will always be some non-technical loss, e.g. the customer doesn't pay the bill.

  1. Good info about losses. I forgot to mention to you about in a visito to a big Utility in US, they had around 10% losses. I am almost sure in the way they install rev meters with no any protection, A Base, so it is very easy to theft energy, so different how is in Latin America, Utility install the rev meters in "shelters" to avoid any hands from users. We have worked around from 50 years to reduce tech and com losses. On question: do you know the tariff Chile system? It was copied by UK at the end of 1999. My recommendations is to make a paper to support users what to select, what to install, etc., in order can measure very accuracy and no loose money by using same quantity of energy.

    1. Actually, a 10% total loss is a dream for many utilities. Germany has around 7%, but increasing due to the high energy cost. Good developed countries are between 7% and 15%. For everything above, I would recommend some action. Secured boxes with integrated additional tamper detection have a high utility acceptance in African and Asian countries. These are simple measures to protect the revenue.
      I know the UK system, but I wasn't aware that it's integrated in Chile too. Thank you for the article suggestion. I put it on my list.
      I always appreciate your comments, Mariano.

  2. Thanks Laoren. Latin America is a market very complicated. In most markets utility do not receive Transformers how they did in the past, so some manufacturers are not serious and responsable. Same with the metering and so on. Similar I saw at India, etc. America utility say the are "very rich country" so doesn't care about losses. Have you seen their rev meters installations ? With last crisis at 2008, increased theft losses at 6B/year and so on. Your info is very important for Utility and users , because put the alarm about tech-comm losses. Congratulations !

    1. Thank you for your contributions and insights for the Latin American market.
      This is increasing the knowledge and awareness of our readers.

  3. * I will add: Transformers: high losses, CT&PT accuracy degradation, revenue meters affected by temperature, variation of Hz, Volts, poor quality, internal clocks without GPS clocks, etc.
    *I will add Poor quality of meters, thefts of energy directly from low voltage ( in Chile we worked to reduce losses for Chilectra from 28% to 6% losses, program called DAE (Economical air distribution)

    1. Thank you for valuable input, Mariano.
      You highlighted very clear the grey-zone between technical- and non-technical loss. A transformer loss can be determined by measurements. When a power company decides that the loss is acceptable, they book it under technical losses. The other option is exchanging the transformer to a higher rating. It's a commercial decision. The same decision is necessary when the purchased energy meters are not compliant with the relevant standards for environmental conditions. Non synchronized clocks should also be avoided, as well as the purchase of low quality meters. All these things can be checked and measured for decision-making.
      Still, the higher portion of the losses is coming from tamper in the low voltage distribution networks. Your loss reduction to 6% is a great achievement. Germany is now on 4.5%. At a certain stage you know how to improve, but it's not reasonable in terms of cost.
      Thanks again for sharing.

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