Renewable Energy Curtailment in Greece: From Grid Constraint to Legal and Financial Risk

The article was drafted by Andreas Papastathis,Partner & Ioanna Toufexi, Associate for Lexology on October 19,2026

How the rising curtailment is reshaping project economics, compensation claims and the investability of renewable projects

Introduction

Curtailment, which involves the deliberate reduction or temporary shutdown of renewable energy generation when the electricity grid is unable to accommodate the available output, has evolved in Greece from a primarily technical grid-management measure into a significant legal, commercial and financing risk for renewable energy producers. The central question is no longer simply how much generation is being curtailed, but how each restriction is legally classified. Not every curtailment is “redispatching” under EU law, and not every loss of injection gives rise to compensation. Where a measure does qualify as non-market redispatch requested by a system operator, Article 13(7) of Regulation (EU) 2019/943 may provide an autonomous right to economic compensation, subject in particular to the contractual status of the connection and the specific non-firm delivery exception.

The Scale of the Problem in Greece

Curtailment in Greece is escalating faster than most forecasts anticipated. In the first four months of 2026 it reached 876.5 GWh, up 49% year-on-year, while the number of hours with zero or negative prices jumped from 13 to 239.5. In April 2026 alone, revenue losses for small and medium-sized solar producers touched 65% compared with the previous year. This is a structural deterioration rather than a one-off event: the peaks systematically occur during the hours of maximum solar output, precisely when the market value of that energy falls to zero or turns negative.

A technical study presented to the Ministry of Environment and Energy (YPEN) estimates that solar plants under Greece’s Feed-in Premium contracts will lose, on average, 41-42% of their theoretical revenue over 2026-2031, peaking at almost 50% in 2027. Wind plants, with a more balanced generation profile across the day, are affected less severely (around 21% on average), making the problem particularly acute for the large pool of small and medium-sized solar investors.

Consequences for Businesses

The economic fallout is now tangible and multi-layered. Loans for solar projects, traditionally regarded as among the most reliable in the Greek banking system because of predictable support revenues, are showing signs of credit stress. Curtailment is therefore no longer confined to producers’ balance sheets: it can affect projected cash flows, debt-service coverage ratios and, ultimately, project bankability and the exposure of lenders that financed the renewables investment wave of the past decade. For project-finance purposes, curtailment assumptions can no longer be treated as a peripheral consideration in financial modelling and risk assessment. They increasingly affect base-case revenue forecasts, covenant headroom and refinancing risk.

At the same time, a clear trend toward market concentration is emerging. Small and medium-sized producers, often with limited access to storage, business diversification or bargaining power, are more exposed to prolonged revenue pressure and may be pushed toward project disposals at depressed valuations. Larger, diversified groups are better able to absorb that risk and may strengthen their position through acquisitions and strategic partnerships. If persistent, this dynamic may work against the original policy objective of energy decentralisation that underpinned support for smaller renewable producers.

A further asymmetry is deepening the debate: while producers face lost output and periods of zero or negative prices, suppliers may benefit from low-price hours without an equivalent benefit necessarily flowing through to affected generators. This has prompted discussion of exceptional redistributive measures. The more fundamental legal question, however, is whether the existing framework already allocates part of the curtailment loss to the system operator in defined cases.

Curtailment also exposes a gap in conventional insurance architecture. The generating asset may remain fully operational and undamaged while revenue is lost because injection is restricted by an operator instruction. Traditional business-interruption cover, which is commonly triggered by insured physical damage, may therefore not respond. This creates scope for non-damage business-interruption or parametric solutions, but any such product would need to distinguish carefully between losses recoverable from the system operator under Article 13(7), losses excluded by a non-firm connection, market-based redispatch and restrictions that do not qualify as redispatching at all. Policy design would also need to address double recovery and, where appropriate, subrogation or assignment of the producer’s claim.

The Legal Framework: Redispatching, Article 13 and Greek Article 10C

The starting point is the EU concept of “redispatching”. Article 2(26) of Regulation (EU) 2019/943 expressly defines redispatching as a measure, including curtailment, activated by one or more transmission or distribution system operators through an alteration of generation, load patterns or both, in order to change physical flows in the electricity system, relieve physical congestion or otherwise ensure system security. Curtailment should therefore be understood within the broader legal concept of redispatching rather than as a distinct regulatory category. In other words, curtailment is one form of redispatching where the conditions laid down in Article 2(26) are met. The legal analysis must therefore focus not merely on whether output has been curtailed, but on whether the intervention constitutes redispatching within the meaning of Regulation 2019/943. Zero or negative prices, oversupply or a producer’s economic decision not to inject do not, by themselves, amount to redispatching. What matters is who activated the measure, why it was activated and whether the intervention was aimed at the physical operation or security of the grid.

Article 13 gives priority to market-based redispatch. Non-market-based downward redispatch is exceptional and, for renewable installations, may be used only under the conditions set out in the Regulation, with particular emphasis on necessity, the absence of a suitable market-based alternative, justification and transparency. This creates two distinct legal questions: whether the choice of a non-market measure was lawful and, separately, whether the producer is entitled to compensation. Even a lawful curtailment imposed as a necessary system-security measure may still trigger Article 13(7). Conversely, a restriction is not compensable merely because it reduces injection: the measure must qualify as non-market redispatch requested by the relevant system operator, and the specific exception for producers that have accepted non-firm delivery must also be considered.

The firm/non-firm distinction is therefore a critical contractual filter. A general clause allowing the operator to impose technical restrictions or emergency instructions should not automatically be equated with acceptance of a connection without guaranteed firm delivery. The actual connection offer and connection agreement, the regulatory basis of the restrictions and the scope of the access right granted to the producer all require examination. Equally, a producer’s position may be weaker where the restriction is attributable to its own technical non-compliance or missing mandatory monitoring or remote-control equipment.

Greek law adds a further layer. Article 10C of Law 4951/2022, introduced by Law 5188/2025, provides liability exclusions for the competent transmission and distribution operators in respect of specified curtailment orders imposed for the safe operation of the system or network. Crucially, however, Article 10C(4) expressly states that those national exclusions do not prejudice rights arising under Article 13(7) of Regulation 2019/943. The better reading is therefore one of delimitation rather than conflict: the national liability exclusions operate outside, but cannot extinguish, an autonomous EU right to compensation where the conditions of Article 13(7) are met. The use of national concepts such as force majeure cannot, by itself, determine whether a measure falls within the autonomous EU concept of redispatching.

That distinction is important procedurally as well as substantively. A claim under Article 13(7) is not simply an ordinary tort or contractual damages claim against the operator. The liability exclusions in Article 10C(1)-(3) may affect claims based on domestic civil-liability rules, whereas Article 13(7), where applicable, operates as a distinct EU-law entitlement to economic compensation and is expressly preserved by Article 10C(4). For future disputes, the cause of action and the legal characterisation of the restriction may therefore matter as much as the amount of the loss.

The calculation of compensation is equally case-specific. Article 13(7) uses prescribed economic benchmarks rather than a single flat payment per curtailed MWh. In the case of downward redispatch, the net revenues that the installation would have earned from the day-ahead market are relevant, and financial support linked to the volume of electricity generated or consumed may also form part of the calculation. The exercise is therefore not identical to a general claim for lost profits: it requires a counterfactual assessment of the economic position of the particular installation within the methodology laid down by the Regulation, while avoiding both unduly low and unduly high compensation.

This also makes transparency and evidence central. A producer should be able to establish the timing and duration of each instruction, the curtailed volume, the reason for activation and the basis on which restrictions were allocated among installations. Article 13(7) attributes compensation to the “system operator requesting the redispatching”, which may matter where one operator requests a measure and another technically implements it. Quantifying the counterfactual production, in turn, should be based on plant-specific technical evidence, such as recorded operator set-points, contemporaneous solar or wind resource data, power curves and actual technical availability, rather than generic performance assumptions. Without access to sufficiently granular operational data, both the legality of the intervention and the quantum of any claim become materially harder to test.

Any national compensation mechanism should therefore be understood as an implementation or allocation tool, not as a substitute for rights that may already arise directly under Article 13(7). Its design must also remain distinct from the rules governing operating support during periods of negative prices and must be tested against the EU State aid framework. A loss of support because market prices are negative is legally different from compensation for non-market redispatch, even if both phenomena can affect the same project during the same period.

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