Competition Law and Negotiated Settlements in Competition Proceedings

1. Introduction

Curtailment minimisation policy obligations are legal duties placed on governments, energy regulators, transmission-system operators (TSOs), and distribution-system operators (DSOs) to reduce unnecessary reduction of renewable electricity generation.

Curtailment occurs when a wind, solar, or other renewable-energy plant can generate electricity but is instructed to reduce or stop generation because of grid congestion, insufficient transmission capacity, low demand, or system-security requirements.

In a renewable-heavy electricity system, some curtailment may be unavoidable. The legal objective is therefore not always zero curtailment, but to ensure that curtailment is necessary, transparent, proportionate and economically justified.

2. Duty to Minimise Curtailment

A central policy obligation is that network operators should actively try to reduce renewable curtailment.

Under Regulation (EU) 2019/943, redispatching must generally be based on objective, transparent and non-discriminatory criteria. The Regulation also requires transmission and distribution operators to take appropriate measures to minimise downward redispatching of renewable electricity.

This means an operator should not repeatedly curtail renewable generators simply because curtailment is operationally convenient. It should consider whether other solutions are available.

3. Network Investment Obligation

One important policy obligation concerns network development.

Where repeated curtailment results from inadequate transmission capacity, operators may need to examine:

new transmission lines;

reinforcement of existing networks;

new substations;

stronger transformers;

interconnectors;

smart-grid technology; and

improved distribution infrastructure.

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

However, this does not mean that every network constraint must be removed regardless of cost. Limited curtailment can sometimes be more economically efficient than very expensive network construction.

4. Duty to Consider Alternative Flexibility

Curtailment minimisation policies should require operators to consider flexibility alternatives.

These may include:

battery storage;

pumped hydro;

demand response;

flexible industrial consumption;

electric-vehicle charging;

hydrogen production;

cross-border electricity trading; and

flexible generation.

These alternatives can absorb excess renewable electricity and reduce the need to switch renewable generators off.

EU electricity law recognises flexibility services and digitalisation as measures that can help reduce future renewable downward redispatch.

5. Transparent Redispatch Obligation

Another important obligation is transparency.

When renewable generation is curtailed, the system operator should be able to explain:

why curtailment was necessary;

which network constraint caused it;

how much electricity was curtailed;

what alternatives were considered;

how the affected generator was selected; and

whether compensation is payable.

This is important because renewable generators should not be selected arbitrarily.

Under Regulation 2019/943, operators must report information about the reasons, volumes and measures associated with redispatching. This enables regulators to examine whether operators are taking sufficient action to reduce future curtailment.

6. Compensation Obligation

A curtailment-minimisation policy should also protect generators where legally required.

Under Article 13, certain forms of non-market-based downward redispatching require financial compensation. The calculation can include relevant additional operating costs and net revenues that the facility would otherwise have earned.

This creates two connected protections:

First: unnecessary curtailment should be minimised.

Second: where qualifying curtailment occurs, the affected generator should receive appropriate compensation.

The rules may differ where a generator has accepted a non-firm connection arrangement.

7. Regulatory Oversight

Energy regulators must ensure that operators comply with these obligations.

Regulators can examine:

curtailment levels;

frequency of congestion;

compensation payments;

network-investment plans;

redispatch decisions;

forecasting methods; and

flexibility measures.

If curtailment remains consistently high, regulators can investigate whether additional network investment or other corrective measures are required.

8. 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 case demonstrates that congestion-management costs have significant financial consequences and that regulatory methodologies must have a proper legal basis and adequate reasoning. (eur-lex.europa.eu)

TransnetBW GmbH v ACER, Case T-476/21

This case also concerned the EU methodology for allocating redispatching and countertrading costs between transmission-system operators.

It is relevant to curtailment policy because the allocation of congestion costs can influence decisions about network investment, system operation and renewable curtailment. (eur-lex.europa.eu)

9. Conclusion

Curtailment minimisation policy obligations create a structured responsibility for electricity-system operators to reduce unnecessary renewable-energy losses. These obligations include network planning, investment, flexibility development, transparent redispatch, accurate reporting and appropriate compensation.

The central principle is that renewable generators should not be unnecessarily curtailed simply because the grid has not developed sufficiently. At the same time, the law recognises that eliminating every unit of curtailment may be unnecessarily expensive.

A balanced legal framework therefore requires operators to justify curtailment, consider reasonable alternatives, invest in network capacity where appropriate, use transparent redispatch rules and remain subject to independent regulatory oversight. This approach supports both renewable-energy development and reliable electricity-system operation.