Curtailment Minimisation Policy Design Frameworks

1. Introduction

Curtailment minimisation policy design frameworks are legal and regulatory systems designed to reduce unnecessary reduction of electricity generation from renewable-energy projects. Curtailment happens when wind, solar or other renewable generators are able to produce electricity but are required to reduce output because of network congestion, limited transmission capacity, low demand, or electricity-system security requirements.

In a renewable-heavy electricity system, some curtailment may be unavoidable. Therefore, the purpose of policy is not necessarily to achieve zero curtailment, but to ensure that curtailment is necessary, transparent, economically reasonable and fairly managed.

2. Clear Legal Objectives

The first part of a good policy framework is to establish clear legal objectives. Legislation should require electricity-system operators to:

minimise unnecessary renewable curtailment;

maintain system reliability;

use network capacity efficiently;

protect consumers;

encourage renewable investment; and

consider storage and flexibility alternatives.

The EU provides an important example. Regulation (EU) 2019/943 requires redispatching to follow objective, transparent and non-discriminatory criteria. It also requires network operators to take appropriate measures to minimise downward redispatch of renewable electricity.

3. Network Planning and Investment

A central policy tool is long-term network planning.

If renewable projects repeatedly face curtailment because of transmission congestion, regulators should examine whether network reinforcement is necessary. Policy frameworks can require transmission and distribution operators to consider:

new transmission lines;

upgrading existing lines;

stronger substations;

interconnectors;

smart-grid technologies; and

improved distribution networks.

Article 13 of Regulation 2019/943 requires transmission and distribution operators to ensure that their networks can transmit renewable electricity with minimum possible redispatching.

4. Market-Based Redispatch

Policy should also establish clear rules for redispatching.

Market-based redispatch allows generators and flexible consumers to offer changes in production or consumption. The system operator then selects suitable offers according to market rules.

This approach can make curtailment decisions more transparent and economically efficient. Non-market-based redispatch should normally be used only where the legal conditions are satisfied, such as where alternatives are unavailable or would create disproportionate costs or serious system-security risks.

This prevents the system operator from simply choosing renewable curtailment without considering other available solutions.

5. Compensation Policy

A good policy framework should clearly determine when compensation is payable.

Where qualifying non-market-based downward redispatch affects renewable generators, EU law provides for financial compensation. The calculation can take account of relevant additional operating costs and net revenues that would otherwise have been earned.

Compensation is important because the renewable generator should not automatically bear the economic consequences of a system constraint created by the wider electricity network.

At the same time, compensation rules should avoid creating incentives for inefficient investment or excessive claims.

6. Storage and Flexibility

Policy design should not depend only on building new transmission infrastructure.

Governments and regulators can encourage:

battery storage;

pumped-storage facilities;

demand response;

flexible industrial consumption;

electric-vehicle charging;

hydrogen production; and

cross-border electricity trading.

These mechanisms can absorb excess renewable electricity and reduce the need for curtailment.

EU electricity regulation also recognises flexibility services and digitalisation as important tools for reducing future renewable redispatch.

7. Transparency and Regulatory Oversight

Policy frameworks should require operators to publish information about:

amount of renewable electricity curtailed;

reasons for curtailment;

duration and location of constraints;

redispatch costs;

compensation payments;

network investment; and

measures adopted to reduce future curtailment.

This allows regulators to determine whether repeated curtailment is genuinely necessary or whether better planning and investment are required.

8. 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 European Core electricity region. The case demonstrates that congestion-management decisions have significant financial consequences and must follow a lawful regulatory methodology.

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 case illustrates the importance of clear rules for allocating costs in interconnected electricity networks.

9. Conclusion

Curtailment minimisation policy design requires a combination of clear legal duties, network investment, market-based redispatch, compensation, storage, flexibility and regulatory oversight. The policy objective should be to reduce unnecessary renewable curtailment while maintaining system security and controlling costs.

A successful framework therefore does not simply prohibit curtailment. Instead, it requires electricity operators to justify curtailment, consider alternatives, invest where economically reasonable, compensate affected generators where required, and report their actions transparently. This creates a balanced legal structure for renewable-heavy electricity systems.