Competition Law and Negotiated Settlements in Competition Proceedings

1. Introduction

Curtailment minimisation optimisation frameworks are legal, regulatory and technical systems designed to reduce unnecessary curtailment of renewable electricity. Curtailment occurs when a wind, solar or other renewable-energy project is capable of producing electricity but is instructed to reduce generation because the grid cannot safely or economically accept all available power.

In renewable-heavy electricity systems, the aim is not always to achieve zero curtailment. Instead, the objective is to find a reasonable balance between renewable-energy utilisation, grid security, infrastructure costs, electricity prices and consumer interests.

2. Main Elements of an Optimisation Framework

A proper framework normally combines several measures.

A. Better Grid Planning

The first approach is to identify areas where renewable generation is regularly curtailed and improve network capacity. This may involve:

new transmission lines;

upgrading existing networks;

stronger substations;

additional interconnection;

improved distribution infrastructure.

EU Regulation 2019/943 requires transmission and distribution operators to ensure that their networks can transmit renewable electricity with minimum possible redispatching. (eur-lex.europa.eu)

3. Market-Based Redispatch

A second element is market-based redispatch.

When congestion occurs, the system operator can use market participants to increase or decrease electricity production or consumption. Market participants are selected according to transparent rules and receive financial compensation under the applicable arrangements.

Article 13 of Regulation 2019/943 establishes market-based redispatch as the general approach, while allowing non-market-based redispatch under specified circumstances. The rules are intended to make congestion management more economically efficient and transparent. (eur-lex.europa.eu)

4. Storage and Flexibility

Energy storage is another important optimisation tool.

During periods of high renewable production, batteries or pumped-storage facilities can absorb surplus electricity. That electricity can later be supplied when demand is higher.

Similarly, demand response can shift electricity consumption to periods when renewable generation is abundant.

Other flexibility mechanisms include:

flexible industrial loads;

electric-vehicle charging;

thermal storage;

hydrogen production; and

flexible conventional generation.

These mechanisms can reduce the need to curtail renewable electricity.

5. Digitalisation and Forecasting

Modern optimisation frameworks also depend on accurate forecasting and digital grid management.

System operators can forecast:

wind generation;

solar generation;

electricity demand;

transmission congestion;

storage availability; and

interconnector flows.

Real-time monitoring can then allow operators to identify congestion before it becomes serious.

EU Regulation 2019/943 expressly recognises digitalisation of grid infrastructure and flexibility services as measures relevant to reducing future downward redispatch of renewable electricity. (eur-lex.europa.eu)

6. Economic Optimisation

A key legal and economic principle is that eliminating every unit of curtailment may not always be efficient.

For example, if a transmission line costing millions is required to prevent only a small amount of occasional curtailment, the cost of the infrastructure may exceed the value of the electricity saved.

EU law therefore allows limited redispatch where it can be transparently demonstrated to be more economically efficient than available alternatives. (eur-lex.europa.eu)

Therefore, optimisation requires comparison between:

Cost of additional grid investment + flexibility costs

and

Cost of continued renewable curtailment + compensation + lost electricity value.

7. Non-Discrimination and Renewable Priority

An optimisation framework must also protect generators from arbitrary treatment.

Regulation 2019/943 requires redispatching to be based on objective, transparent and non-discriminatory criteria. Non-market-based downward redispatch of renewable generation is subject to specific legal conditions and must be properly justified. (eur-lex.europa.eu)

This is important because an optimisation algorithm or system operator should not favour one generator without a lawful and transparent reason.

8. Compensation Mechanisms

Where renewable generation is curtailed through qualifying non-market-based redispatch, financial compensation may be required.

Under Article 13, compensation can include relevant additional operating costs and the net revenues that the facility would otherwise have earned. This creates an economic incentive for system operators to consider whether repeated curtailment is genuinely necessary. (eur-lex.europa.eu)

However, certain non-firm connection arrangements can affect entitlement to compensation.

9. Relevant Case Laws

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

In T-482/21, decided on 25 September 2024, the General Court examined ACER's methodology for sharing the costs of redispatching and countertrading in the Core electricity region. The case shows that congestion-management costs require a clear legal methodology and proper regulatory reasoning. (eur-lex.europa.eu)

TransnetBW GmbH v ACER, Case T-476/21

In T-476/21, the General Court examined the methodology for allocating redispatching and countertrading costs between transmission-system operators. The judgment is relevant to optimisation because cost allocation influences how network operators evaluate congestion, investment and flexibility solutions. (eur-lex.europa.eu)

10. Regulatory Oversight

Regulators must monitor whether optimisation frameworks actually reduce unnecessary curtailment.

They can require operators to publish:

curtailment volumes;

reasons for curtailment;

redispatch costs;

network constraints;

investment plans; and

measures adopted to reduce future curtailment.

This creates accountability and allows regulators to compare the cost of continuing curtailment with the cost of network reinforcement and flexibility.

11. Conclusion

Curtailment minimisation optimisation frameworks combine grid investment, market-based redispatch, storage, demand response, forecasting, digitalisation and transparent compensation rules. Their purpose is to use renewable electricity efficiently while maintaining electricity-system security.

The legal framework should not require zero curtailment regardless of cost. Instead, it should require transparent and economically justified decision-making, minimise unnecessary renewable-energy losses and ensure that congestion-management costs are fairly allocated. EU Regulation 2019/943 and cases such as TenneT v ACER and TransnetBW v ACER provide important legal foundations for this approach.