Curtailment
Curtailment refers to the intentional reduction of electricity generation from renewable energy assets due to system constraints, market conditions, or grid reliability requirements, rather than equipment failure or maintenance. This occurs when supply exceeds demand, transmission capacity is insufficient, or system stability necessitates output reduction.
In modern electricity markets with high renewable penetration, curtailment has become increasingly common, particularly in regions with oversupply conditions or constrained transmission infrastructure. Wind and solar projects are most frequently curtailed, though any dispatchable generation can be affected.
The economic impact on project owners can be significant, as curtailed energy typically receives no compensation or reduced payments, directly affecting revenue projections and investment returns. Grid operators implement curtailment through automated generation control systems, while market designs increasingly incorporate curtailment risk into pricing mechanisms and interconnection agreements.
Technical Details
- •Measured in MWh or as percentage of potential generation
- •Causes: system congestion, oversupply, negative pricing, voltage constraints, or frequency control
- •Most prevalent in high renewable penetration regions (California, Texas, Germany, China)
- •Economic impact: lost revenue estimated at $1-3 billion annually in major markets
- •Managed through automated dispatch systems and market-based compensation mechanisms
Why It Matters
Curtailment risk is a critical consideration in renewable energy project development and financing. In Tera Intelligence Platform's Asset Intelligence module, curtailment data helps investors quantify revenue risk and compare project performance across different grid regions. Developers use curtailment analysis to optimize technology selection and site development strategies, while lenders incorporate historical curtailment patterns into underwriting models. Grid operators monitor curtailment trends to assess transmission adequacy and plan infrastructure investments. The platform's comprehensive database spanning 130+ countries enables stakeholders to understand regional curtailment patterns and make informed decisions about renewable energy investments.
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