supagridCurtailment occurs when a generator produces less than it is capable of producing. It is common for renewable generators—wind and solar—whose output can be reduced quickly and at low cost. Understanding the difference between technical and economic curtailment is essential for interpreting dispatch outcomes, revenue impacts, and network constraints.
Technical curtailment is driven by physical limits of the network or system security. Economic curtailment is driven by market conditions—typically negative or low prices—where the generator chooses or is instructed to reduce output because selling would be uneconomic. Both reduce energy output, but the causes and remedies differ.
Technical curtailment
Technical curtailment arises when the physical power system cannot accept the generator's full output. Common causes include:
- Thermal limits: Transmission lines or transformers would exceed their thermal rating if the generator ran at full output. NEMDE constrains the generator to keep flows within safe limits.
- Voltage limits: High or low voltage at the connection point or elsewhere in the network can require generation to be reduced. Voltage constraints are common in weak parts of the network or during light-load conditions.
- System strength and inertia: Inverter-based renewables (solar, wind) do not provide inertia. When system strength or inertia is low, AEMO may constrain renewable output to maintain stability. System strength constraints have become more significant as coal retires and renewables grow.
- Transient and oscillatory stability: Limits that prevent instability after faults or contingencies can require generation to be reduced in certain areas.
Technical curtailment is enforced by NEMDE through constraint equations. The generator has no choice: it must reduce output to respect the limit. It typically receives the spot price for what it does produce, but loses revenue on the curtailed portion. Network upgrades, new transmission, or synchronous condensers can relieve technical curtailment over time.
Economic curtailment
Economic curtailment occurs when market conditions make it uneconomic to generate. The main driver is negative or very low spot prices. When prices are negative, a generator that sells energy pays rather than receives payment. Generators with low or zero marginal cost (e.g. wind, solar) may choose to reduce output—or bid to not be dispatched—to avoid negative prices. Alternatively, they may run if they have contracts or obligations that make it worthwhile.
Economic curtailment can also occur when demand is low and supply is high (e.g. midday solar oversupply). In merit order, the last unit dispatched sets the price; if many cheap units are available, the clearing price can be low or negative. Generators that would clear at a loss may bid high to avoid dispatch, effectively curtailing themselves.
Unlike technical curtailment, economic curtailment is a commercial or bidding decision. The network could physically accept the output, but the generator prefers not to sell at the prevailing price. Storage, demand response, and interconnector expansion can reduce the frequency of negative prices and thus economic curtailment.
Technical vs economic curtailment at a glance
The table below contrasts the two forms of curtailment. In practice, both can affect the same generator in different intervals—for example, technical curtailment during high solar output when the local network is congested, and economic curtailment during negative prices.
| Type | Description | Typical cause |
|---|---|---|
| Technical curtailment | Output reduced or stopped due to physical limits: network thermal limits, voltage constraints, system strength, stability, or other technical requirements. | Network, voltage, thermal, inertia, or stability limits |
| Economic curtailment | Output reduced or stopped due to market conditions: negative prices, low demand, or commercial decisions to avoid selling at a loss. | Negative prices, oversupply, or commercial optimisation |
Implications for renewable generators
Wind and solar are most affected by curtailment because they can reduce output quickly and have low variable costs. Thermal generators typically run when committed and are less frequently curtailed for economic reasons (though they can be constrained off by technical limits). For renewables, curtailment directly reduces energy revenue and can be a significant factor in project economics.
Regions with high renewable penetration and weak network connections—such as parts of Queensland, South Australia, and western Victoria—often experience both technical and economic curtailment. Analysing curtailment patterns (when, how much, and why) helps assess project performance and the value of transmission or storage investments.
Analysing curtailment in supagrid
supagrid provides dispatch and generation data that can be used to identify curtailment. When a generator's dispatch target or actual output is below its available capacity, the difference may indicate curtailment. Binding constraints in the same interval can help distinguish technical curtailment (constraint-driven) from economic curtailment (price-driven). Comparing output to available capacity and correlating with price and constraint data supports detailed curtailment analysis.
Related
Constraints explains how technical limits are enforced. Dispatch & Pricing covers price formation and negative prices. Bidding describes how generators can bid to avoid dispatch. For AEMO data, see AEMO variables.