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Curtailment
Practical Law Glossary Item 0-517-5985 (Approx. 3 pages)
Glossary
Curtailment
In the context of electricity generation, a reduction for a specified period by the operator of an electric grid of the electricity that one or more generating stations (also known as power plants) operating within the grid are scheduled to produce or deliver because either:
- There is a lack of transmission capacity during that period. Transmission lines are limited in the amount of electricity they can carry and transport at any given time. If the electricity being produced exceeds this amount, the electricity being produced must be reduced.
- The amount of energy produced by the generating stations within the electric grid's area is greater than the demand for electricity during that period and the excess energy cannot be exported to other balancing areas due to transmission constraints.
Curtailment can have an adverse effect on a power plant's profitability. Many renewable energy projects rely on the production tax credit (PTC). For plants that qualify for the PTC, curtailment reduces the amount of electricity produced per kilowatt-hour and, therefore, the amount of credit the owner of the plant can claim.
For more information on these issues, see Practice Notes, Understanding Renewable Energy: Wind and Understanding Renewable Energy: Wind.