Competition Law and Negotiated Settlements in Competition Proceedings

1. Introduction

Curtailment vs storage trade-off regulation concerns the legal and economic choice between reducing renewable electricity generation and using energy storage to absorb excess electricity.

Curtailment occurs when a solar or wind project can produce electricity but is required to reduce output because the electricity grid cannot safely accept all the available generation. Storage provides another option: excess electricity can be stored in batteries, pumped-hydro facilities or other technologies and released later.

The central regulatory question is therefore:

Should the system curtail renewable electricity, or should it use storage to manage the surplus?

The answer depends on cost, grid security, available storage, technical feasibility and market conditions.

2. Why the Trade-Off Matters

In renewable-heavy electricity systems, solar and wind production can sometimes exceed immediate demand or network capacity.

For example, during a period of high solar generation:

Renewable generation > demand + available grid capacity

The operator may either:

curtail some renewable generation; or

store the excess electricity and use it later.

Storage can reduce renewable energy losses, but storage itself requires investment and has technical limitations, including charging capacity, discharge capacity, efficiency losses and limited duration.

Therefore, regulation must compare the cost of storage with the cost and consequences of curtailment.

3. Legal Treatment of Storage

EU electricity law provides an important example.

Under Article 13 of Regulation (EU) 2019/943, redispatching must be based on objective, transparent and non-discriminatory criteria. Importantly, redispatching rules are open to energy storage, generation and demand response.

This means that storage should not automatically be excluded from congestion-management decisions.

Where market-based redispatch is used, resources can be selected from generating facilities, energy storage and demand response, with financial compensation according to the applicable rules.

4. Storage as an Alternative to Curtailment

Storage can reduce curtailment by absorbing electricity during periods of excess renewable production.

For example:

Solar generation → Battery charging → Evening electricity demand

Instead of switching off a solar plant during a midday surplus, the system may charge a battery and release electricity later.

However, storage should not automatically be required in every situation. A regulator may need to consider:

cost of storage;

available storage capacity;

duration of the congestion;

round-trip efficiency;

location of storage;

network constraints;

expected electricity prices; and

system-security requirements.

If storage is extremely expensive compared with limited occasional curtailment, curtailment may remain part of the system.

5. Legal Preference for Renewable Generation

EU law places important limits on unnecessary renewable curtailment.

Article 13(5) requires transmission and distribution networks to be capable of transmitting renewable electricity with minimum possible redispatching and requires appropriate grid and market measures to reduce downward renewable redispatch.

Where non-market-based downward redispatch is used, renewable generation should generally be curtailed only where no alternative exists or alternatives would create significantly disproportionate costs or serious risks to network security. The decision must be properly and transparently justified.

This creates an important regulatory connection between storage and curtailment: if suitable storage or another flexibility resource can reasonably solve the constraint, the operator may need to consider it before curtailing renewable generation.

6. Economic Trade-Off

The regulatory decision can be expressed simply as:

Cost of storage + operating cost < cost of continued curtailment

If storage provides a cheaper and technically suitable solution, investment in storage may be justified.

But regulators must also consider the long-term value of storage. A battery may provide several services, such as energy arbitrage, balancing, frequency services and congestion management.

Therefore, storage regulation should consider its multiple system benefits, rather than comparing it only with one curtailment event.

7. Reporting and Regulatory Oversight

Transparency is essential.

Article 13(4) requires system operators to report annually on the development and effectiveness of market-based redispatch involving energy storage, generation and demand response, together with reasons and volumes of redispatch and measures taken to reduce future renewable downward redispatch.

This allows regulators to examine whether repeated curtailment could reasonably be reduced through storage or other flexibility measures.

8. Relevant Case Law

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 considered ACER's methodology for allocating the costs of redispatching and countertrading in the Core electricity region.

Although the case was not directly about battery storage, it is relevant because it demonstrates the importance of lawful and clearly reasoned methodologies for allocating congestion-management costs. Such costs can influence whether grid operators use curtailment, storage, redispatch or network investment.

TransnetBW GmbH v ACER, Case T-476/21

This case concerned the allocation of redispatching and countertrading costs between transmission-system operators. It is relevant to the broader legal framework because cost allocation affects the economic incentives surrounding congestion management and flexibility resources.

9. Conclusion

Curtailment and storage represent two different ways of managing excess renewable electricity. Curtailment reduces generation, while storage shifts electricity from one time period to another.

A good regulatory framework should not automatically prefer one solution in every situation. Instead, it should require operators and regulators to consider cost, technical feasibility, network security, storage availability, flexibility and long-term system value.

The EU framework under Regulation 2019/943 is important because it expressly includes energy storage and demand response within redispatching, requires minimum possible renewable redispatch, and requires transparent reporting.

Thus, the legal objective is to achieve an efficient balance: use storage and other flexibility where they can reasonably reduce unnecessary renewable curtailment, while permitting limited curtailment where storage or alternative solutions would be technically unsuitable, excessively costly, or harmful to system security.