The phrase 'VW EPC warning light loss of power' is very specific from the user's perspective, but still technically broad. In the data, key points are: accelerator pedal position vs actual throttle opening (discrepancy >5% = signal problem), requested vs actual boost (target ~1.35 bar at WOT on 1.5 TSI DADA — if actual <0.9 bar, we have underboost), LTFT (norm ±5%, alarm >±15%) and the torque calculated by the ECU.
If the ECU requests e.g. 180 Nm, but the actual torque drops to 90 Nm while ignition angle is pulled back to 0° or negative values, we have active knock protection — and that is exactly why the car cuts power protectively.