Curtailment Minimisation Investment Obligations

1. Introduction

Curtailment minimisation investment obligations are legal or regulatory duties requiring electricity network operators to take reasonable steps to reduce unnecessary curtailment of renewable electricity. Curtailment happens when a wind or solar project is able to generate electricity but is asked to reduce or stop generation because the grid cannot safely or economically accept all the available electricity.

As renewable energy increases, curtailment can become a major issue. Therefore, the law increasingly requires network operators to consider grid expansion, digital technology, storage, flexibility and better network management instead of relying continuously on curtailment.

2. Why Investment Is Necessary

Curtailment often occurs because renewable projects are located far from major demand centres. For example, a region may produce large amounts of solar electricity during the afternoon, while its transmission network may not have enough capacity to transport that electricity to cities.

If this problem continues, renewable generators lose revenue and consumers lose access to available clean electricity. Therefore, investment in transmission and distribution infrastructure can reduce congestion.

Investment may include:

new transmission lines;

upgrading existing lines;

additional transformers and substations;

stronger interconnectors;

smart-grid technology;

battery and storage facilities;

demand-response systems; and

improved forecasting and digital control systems.

3. EU Legal Framework

The European Union provides a clear legal example through Regulation (EU) 2019/943.

Article 13 requires redispatching to be based on objective, transparent and non-discriminatory criteria. It also provides that market-based redispatch should generally be used and financially compensated.

More importantly, Article 13(5) requires transmission and distribution system operators to ensure that their networks can transmit renewable electricity with minimum possible redispatching. They must also take appropriate grid-related and market-related operational measures to minimise downward redispatch of renewable electricity.

This means that repeated renewable curtailment can create a reason for considering network investment and other flexibility measures.

4. Economic Efficiency

The obligation does not necessarily mean that every unit of curtailment must be eliminated.

Building a new transmission line can be extremely expensive. If curtailment happens only occasionally, accepting a limited amount may sometimes be cheaper than constructing new infrastructure.

Article 13 therefore allows network planning to take account of limited redispatching where the operator can demonstrate transparently that this is more economically efficient. The EU framework also contains a 5% annual-generation threshold for certain renewable installations directly connected to the relevant grid, subject to the conditions and exceptions in the Regulation.

Thus, regulators must balance:

cost of new investment vs. economic cost of continued curtailment.

5. Digitalisation and Flexibility Investment

Investment does not only mean building physical power lines.

Modern electricity systems can reduce curtailment through digitalisation and flexibility. Smart-grid equipment can monitor electricity flows in real time. Better forecasting can identify congestion earlier. Batteries can store excess renewable electricity, while demand-response programmes can encourage consumers to use more electricity when renewable production is high.

Article 13(4) specifically requires network operators to report measures taken to reduce future downward redispatching, including investment in digitalisation of grid infrastructure and services that increase flexibility.

6. Regulatory Oversight

Regulators have an important role in ensuring that network operators do not simply accept permanent curtailment without examining alternatives.

Operators must report the reasons, volumes and sources of redispatching and the measures being taken to reduce future renewable curtailment. Regulatory authorities can examine these reports and publish recommendations for improvement.

This creates accountability and allows regulators to determine whether additional infrastructure investment is justified.

7. Relevant Case Laws

TenneT TSO GmbH and TenneT TSO BV v ACER, Case T-482/21

The General Court decided this case on 25 September 2024. It concerned ACER's methodology for sharing the costs of redispatching and countertrading in the European Core electricity region. The Court found legal problems concerning the methodology, including the determination of the threshold for legitimate loop flows and the reasoning supporting the decision.

The case is relevant because it shows that congestion-management decisions can create substantial financial consequences for transmission-system operators and therefore require a proper legal methodology.

TransnetBW v ACER, Case T-476/21

This case was part of the same group of electricity-market cases concerning the methodology for sharing redispatching and countertrading costs. It demonstrates the importance of coordinated network planning and fair allocation of congestion-management costs between interconnected electricity systems.

8. Conclusion

Curtailment minimisation investment obligations are becoming increasingly important in renewable-energy law. Network operators are expected to consider grid expansion, digitalisation, storage, flexibility and demand response to reduce unnecessary renewable curtailment.

However, the objective is not necessarily zero curtailment. A small amount of curtailment may sometimes be economically cheaper than major network construction. The legal framework therefore requires a balance between renewable-energy utilisation, network security, investment costs and consumer interests.

The EU framework under Regulation 2019/943 provides a strong example by requiring networks to accommodate renewable electricity with minimum possible redispatching while allowing limited curtailment where it can be economically justified. The TenneT v ACER litigation further demonstrates that the financial and regulatory consequences of congestion must be supported by clear and lawful methodologies.