Curtailment

Curtailment happens when the grid operator instructs a plant to generate less than it could. There are two common causes. A network constraint means the lines near the plant cannot carry all the power available. A system-wide surplus means supply exceeds demand plus exports and storage, often around midday on sunny, windy days with low demand. The instruction reaches the plant's control system as a set-point in MW or as a cap on active power.

Afterwards, the lost energy is estimated by comparing what the plant could have produced, given the weather and its availability, with what it did produce. Whether the owner is paid for that energy depends on the rules and the contract. Some regimes compensate curtailment caused by the network, others pay only beyond a threshold of hours, and some pay nothing. Separately, a plant may choose to cut its own output when market prices go negative. That is economic curtailment, and the owner bears it.

Curtailment is lost revenue, and it tends to rise as more renewables connect in the same area. A developer who models a project at full output overstates its energy, its revenue and the debt it can carry. Lenders ask for a curtailment estimate backed by evidence, such as studies of the local grid. For an IPP, the compensation terms in the PPA decide whether a curtailed hour is a lost sale or a paid one.

In India, wind and solar have must-run status, and rules provide compensation for curtailment ordered for reasons other than grid security, though claims are often contested. In Europe, network curtailment is usually handled as redispatch, and several countries, such as Germany, compensate it. In the US, much curtailment is economic, with plants cutting output when nodal prices go negative, as happens often in Texas and California.