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Glossary · Energy industry & energy transition

Curtailment

Curtailment Feed-in Management congestion management PPA renewable energies negative electricity prices

Curtailment refers to the deliberate reduction or shutdown of electricity generation even though a plant could technically generate more electricity. Internationally, the term is used mainly for wind and solar plants. It does not mean a technical failure, maintenance, or low generation due to weather. It concerns a deliberate limitation of feed-in for grid, market, or operational reasons.

Curtailment is usually measured as an amount of energy in kilowatt hours, megawatt hours, or gigawatt hours. This amount indicates how much additional electricity could have been generated with unthrottled operation. Because this amount is not measured but has to be estimated from weather and plant data, it depends on the calculation method chosen. In the German redispatch regime, this unproduced amount is called lost energy (Ausfallarbeit). A curtailment rate is often also stated, i.e. the share of curtailed generation in possible generation. Economically, it also matters what revenues were lost and whether anyone pays compensation for them.

Curtailment must be distinguished from installed capacity. A wind turbine with a rated capacity of five megawatts can temporarily be limited to three megawatts, one megawatt, or zero. Installed capacity describes what the plant can technically generate. Curtailment describes how strongly this possibility is restricted in actual operation. High capacity alone therefore says little about how much energy is actually usable at a given time at a given grid point.

Distinction from Abregelung, Redispatch, and Feed-in Management

In German, curtailment largely corresponds to Abregelung (curtailment). The English term appears more frequently in international contracts, market analyses, and project financing. There it often has a contractual meaning, because power purchase agreements and financing models expressly define what counts as curtailment and who bears the consequences.

Redispatch is the broader term. It refers to the grid-related adjustment of power plant dispatch: before a bottleneck, generation is reduced; behind the bottleneck, it is increased. Curtailment, by contrast, usually describes only the reduction at a particular plant, without considering the replacement measure. In practice, the two processes are linked. For example, when wind farms in the north are curtailed, conventional power plants in the south often have to generate more.

Correction to older accounts: In Germany, grid-related curtailment of renewable energy and CHP plants was governed until the end of September 2021 as feed-in management (Einspeisemanagement) under the EEG. Since 1 October 2021, the uniform regime of Redispatch 2.0 under Sections 13, 13a, and 14 EnWG has applied. This reorganisation goes back to the 2019 Act to Accelerate the Expansion of Energy Transmission Lines (Gesetz zur Beschleunigung des Energieleitungsausbaus). Under Section 13a(1) EnWG, operators of generation and storage plants with a rated capacity of 100 kilowatts or more, as well as plants that can be remotely controlled at all times, must adjust their feed-in at the grid operator's request or tolerate the adjustment. EU law must be observed here, under which renewable generation is in principle to be curtailed only with lower priority.

Grid-related Curtailment

Grid-related curtailment arises when electricity is generated at a location but the grid cannot fully absorb it there or transport it away. Limiting factors can include lines, transformers, substations, grid connection points, or operational safety limits. A grid bottleneck does not mean that there is too much electricity in the entire system. It is first of all a spatial limit: in one region more is generated than can be safely transmitted, while elsewhere generation is still needed. Anyone who describes such cases across the board as a power surplus overlooks that the grid node, voltage level, and point in time are decisive.

Under Section 13a(2) EnWG, the plant operator receives appropriate financial compensation for such a measure. It is appropriate if the operator is economically neither better nor worse off than without the measure. For renewable energy and CHP plants, the compensation covers the lost revenues plus additional expenses. The operator must reimburse saved expenses. In addition, the curtailed amount is settled in the balancing group through balancing-account (bilanziell) compensation. These payments are often referred to as curtailment compensation (Abregelungsentschädigung). With Section 13k EnWG (“Nutzen statt Abregeln”, i.e. “use instead of curtail”), there is now also a provision under which electricity that would otherwise be curtailed is to be used in certain cases.

On the order of magnitude in Germany: According to the Federal Government, total grid congestion management cost around 3.1 billion euros in 2025. Of this, 435 million euros were accounted for by financial compensation for curtailed renewable energy plants. In 2024 it was 554 million euros. The larger part of the costs arises from redispatch with conventional power plants, from the grid reserve, and from countertrading. The total costs of congestion management should therefore not be equated with the costs of curtailment.

Grid-related curtailment can be reduced through grid expansion, but not only through it. Storage, flexible consumers, regionally placed electrolysers, better forecasts, dynamic grid operation management, and suitable connection rules can also help. Which measure makes sense depends on how often the bottleneck occurs, how much energy is affected, what grid reinforcement costs, and how reliably flexible alternatives are available.

Market-related and System-related Curtailment

Market-related curtailment exists when a plant could feed in but it is not economically worthwhile. This is typical with negative electricity prices. They arise when supply exceeds demand and some plants keep running anyway, for example because of technical minimum output, heat obligations, or fixed remuneration. For direct marketers it is then often cheaper to reduce generation. Unlike with redispatch, there is in principle no compensation from the grid operator for this.

In Germany, Section 51 EEG 2023 reinforces this incentive. When spot market prices are negative, the applicable value (anzulegender Wert), i.e. the basis of the support, falls to zero. Which threshold applies depends on the commissioning date or award. For plants under EEG 2023 commissioned before 25 February 2025, support initially lapsed only after several consecutive negative hours. This number falls in stages: in 2026 it is at least two hours, from 2027 at least one hour. Since the new rules of 25 February 2025, support for new plants lapses for every period with a negative price. Under Section 51a EEG, the support period can be extended accordingly, for solar plants only proportionally. Transitional and exemption rules apply to older plants and small plants.

System-related curtailment concerns situations in which the safe operation of the entire electricity system requires a reduction. Generation and consumption must be in balance at all times. Frequency, voltage, and reserve requirements must be met. If flexible demand, storage, or controllable generation do not respond sufficiently, curtailing renewable feed-in is a measure that is available at short notice.

These causes must not be mixed up. Grid-related curtailment points to missing transport and connection capacity, market-related curtailment to prices, revenues, and support rules, and system-related curtailment to operational security. The same plant can be throttled in different hours for different reasons. Reliable conclusions for grid planning or market design are only possible if the causes are recorded separately.

Economic Significance in PPAs and Project Financing

In a power purchase agreement, curtailment is a central risk term. The contract must specify whether the offtaker still pays in the event of curtailment (often called deemed generation), whether the operator bears the volume risk, and how compensation from the grid operator is credited. Grid-related and market-related curtailment are usually treated differently here, because statutory compensation claims can exist only in the grid-related case.

Banks and investors therefore assess not only the expected annual yield but also how likely it is that part of it cannot be marketed or remunerated. A wind farm at a windy but weakly connected grid point can be economically less attractive than a site with somewhat weaker wind and a more reliable grid connection. For operations management, maintenance contracts, and availability guarantees, a distinction must be made between technical unavailability, weather-related underproduction, and curtailment. A plant that is throttled on instruction was technically available. It was merely not permitted, or not supposed, to feed in.

Typical Misunderstandings

  • Curtailment proves that additional renewable generation is useless: Every electricity system has bottlenecks and, at times, unused capacity. Conventional power plants do not constantly run at full output either. What matters are frequency, location, cause, and cost. Moderate amounts can be cheaper than expanding the grid for every rare generation peak.

  • Curtailed electricity is free surplus: Curtailed electricity was never generated and cannot be used retroactively. It becomes usable only if storage, electrolysers, heat pumps, or other flexible consumers are available at the right place, at the right time, and with sufficient connection capacity.

  • Curtailment is always a planning error: A certain share can make economic sense. Curtailment becomes a problem only when permanently high amounts are affected, investment signals are distorted, or costs are distributed non-transparently.

  • The costs of grid congestion management are the costs of curtailment: Compensation for curtailed renewable plants is only one part of it. In Germany in 2025 it was around 435 million euros out of about 3.1 billion euros.

What Curtailment Shows About the Electricity System

Curtailment shows that renewable generation cannot be described by installed capacity and annual yield alone. Its effect in the system depends on whether consumption, grid capacity, storage, and market rules can absorb weather-dependent feed-in. As the shares of renewable energy rise, flexibility therefore moves to the centre: loads can be shifted, energy stored, bottlenecks removed through grid expansion, and price signals designed so that flexible plants respond. Whether a limitation originates from the grid, the market, or safe operation determines which countermeasure is appropriate. Used correctly, curtailment measures not the value of renewable energy but how well it is integrated into the grid, the market, and operations.

Sources

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Edited by eCMS on 11.11.2026 18:22

© 2026 Erik Schmidt. All rights reserved. Quotations with a link to the source are welcome.