Quick summary

As renewables grow in places far from demand, Europe's grid increasingly cannot carry the flows the market wants, so operators intervene through redispatch and curtailment. These remedial actions are expensive and rising fast. This article explains what congestion management involves, why its cost keeps climbing, and the software and data capability that increasingly sits behind it.

Introduction

Electricity markets clear on the assumption that power can flow wherever it is needed. The physical grid does not always agree. When generation and demand sit far apart, or when the network cannot carry the flows a market outcome implies, the system becomes congested, and operators have to step in to keep it stable.

These interventions, broadly called remedial actions, include redispatch, where a transmission system operator asks power plants to raise or lower output to relieve a bottleneck, and curtailment, where generation is cut back. They are routine, necessary, and increasingly costly. For grid operators and energy companies across the DACH region and the Nordics, congestion management has become one of the defining operational challenges of the energy transition.

What congestion and redispatch actually mean

A wholesale market matches the cheapest available generation with demand without fully accounting for the physical limits of every line between them. When the resulting schedule would overload part of the network, the operator adjusts it. That adjustment is redispatch: increasing output behind the bottleneck and reducing it in front, so the physical grid stays within safe limits while demand is still met.

Curtailment is the blunter version, where output, often from wind or solar, is simply reduced because the grid cannot absorb it. Both actions cost money, because plants are paid to deviate from what the market chose, and both are becoming more frequent as renewable generation grows faster than the lines needed to move it.

Congestion is the gap between what the market schedules and what the physical grid can actually carry, and closing that gap is neither free nor automatic.

Takeaway: Redispatch and curtailment are the tools operators use when the market's preferred outcome exceeds the grid's physical limits.

The rising cost of a congested grid

The numbers show how serious this has become. According to ACER, the cost of managing congestion in the EU reached around €4 billion in 2023, and remedial actions such as redispatch rose by 14.5 percent that year (ACER, 2024). The burden is concentrated: some operators in heavily meshed parts of the grid made available, on average, only 30 to 50 percent of the physical capacity of certain network elements in 2023, well short of cross-border targets (ACER, 2024).

The environmental cost is real too. ACER (2024) reported that more than 12 TWh of generation was curtailed because of congestion in 2023, with redispatch of renewables reaching a record share, and that this displacement added several million tonnes of carbon dioxide that better grid use could have avoided.

The reason this matters is that congestion does not only raise bills, it actively works against decarbonisation by forcing clean generation offline and clean schedules to be overridden.

Takeaway: Congestion costs are not just financial, they push clean generation off the grid and raise emissions at the same time.

Why it is getting worse before it gets better

Grid reinforcement is slow, and demand for cross-border capacity is rising faster than the network can expand. The European Commission's Joint Research Centre projects that, if grid expansion continues only at historic rates, redispatched volumes could reach 374 TWh in 2030 and as much as 809 TWh in 2040, against a much smaller baseline earlier this decade (Joint Research Centre, 2024).

The associated costs scale with those volumes. The same analysis estimates remedial-action costs of roughly €11 billion to €26 billion a year by 2030 and €34 billion to €103 billion by 2040 in that scenario, with renewable curtailment potentially reaching hundreds of terawatt-hours (Joint Research Centre, 2024). The implication is that without faster grid build-out and smarter operation, congestion management shifts from a manageable cost to a structural drain on the system.

The trajectory of congestion costs makes a clear case that operating the existing grid more intelligently has to advance in parallel with building new lines.

Takeaway: On current trends, congestion management costs grow steeply, so smarter operation is not optional while grids catch up.

The software dimension of congestion management

Much of the answer to congestion is physical, but a large and growing part is computational. Deciding which plants to redispatch, by how much, and at what cost requires accurate forecasts of generation and demand, a detailed real-time model of the network, and optimisation that respects every physical constraint.

As grids become more complex, these decisions increasingly have to be coordinated across regions rather than made operator by operator. That coordination depends on shared data, common models and software that can compute remedial actions quickly enough to be useful. The harder the congestion, the more value sits in the quality of the data and the algorithms, because small improvements in forecasting or in optimisation translate directly into lower remedial-action costs.

Better congestion management is increasingly a data and software problem, where the quality of forecasting and optimisation directly shapes the cost.

Takeaway: The accuracy of the data and the optimisation behind redispatch decisions has a direct effect on how much congestion costs.

Flexibility and locational signals as part of the answer

Beyond building lines and computing redispatch, operators are turning to flexibility. Distributed resources such as batteries, flexible demand and aggregated assets can relieve congestion locally if they can be seen, valued and controlled, which again depends on software that connects markets, operators and field assets.

Locational measures matter as well. ACER has highlighted that improving how cross-zonal capacity is calculated, and reviewing bidding zones to give clearer locational price signals, would reduce congestion by steering generation and demand to where the grid can support them (ACER, 2024). These are difficult, partly political changes, but they share a common enabler with redispatch and flexibility: the data and systems needed to model the grid accurately and act on it in time.

Takeaway: Flexibility and clearer locational signals can ease congestion, but only when the underlying data and control systems make those resources visible and usable.

Conclusion

Congestion management has moved from a background operational task to one of the most expensive and consequential parts of running Europe's grid. With remedial-action costs already in the billions and projected to climb sharply, the gap between what markets schedule and what the grid can carry is widening rather than closing.

Building new lines is essential but slow, which puts a premium on operating the existing grid more intelligently. For operators and energy companies across the EU, that means investing in the forecasting, network modelling and coordination software that turns congestion management from a costly reaction into a controlled, data-led process.

FAQ

What is redispatch in an electricity grid?

Redispatch is when a transmission system operator asks generators to change their output to relieve a congested part of the network. Plants behind the bottleneck are turned up and plants in front of it are turned down, so the physical grid stays within safe limits while demand is still served. Because plants are paid to deviate from the market schedule, redispatch has a direct cost.

How is redispatch different from curtailment?

Redispatch rebalances generation across the network to manage a constraint, often involving both increases and decreases. Curtailment specifically reduces output, frequently from wind or solar, because the grid cannot absorb it at that moment. Curtailment is one possible component of redispatch and is a visible sign that the grid cannot carry all the clean power available.

Why are congestion costs rising in Europe?

Renewable generation is growing faster than the transmission lines needed to move it, and much of it is located far from demand centres. This mismatch forces operators to intervene more often. Grid reinforcement is slow and many projects are delayed, so reliance on costly remedial actions has been increasing rather than falling.

What role does software play in congestion management?

Software underpins almost every step: forecasting generation and demand, maintaining a real-time model of the network, and computing which remedial actions to take while respecting physical constraints. As operators coordinate across regions and integrate flexible resources, the quality of the data and the optimisation directly affects how much congestion costs.

Can flexibility reduce the need for redispatch?

Yes, to a degree. Batteries, flexible demand and aggregated distributed resources can relieve local congestion if they can be observed, valued and controlled in time. Combined with clearer locational price signals and better capacity calculation, flexibility can reduce remedial actions, though it depends heavily on the systems that connect markets, operators and field assets.

Sources

• Capacities for cross-zonal electricity trade and congestion management, 2024 Market Monitoring Report - ACER - 2024 - https://acer.europa.eu/monitoring/MMR/crosszonal_electricity_trade_capacities_2024
• ACER points to pressing need for operators to maximise transmission capacity - ACER - 2024 - https://www.acer.europa.eu/news/acer-points-pressing-need-electricity-system-operators-maximise-electricity-transmission-capacity-trading-neighbours
• Redispatch and congestion management - Joint Research Centre, European Commission - 2024 - https://publications.jrc.ec.europa.eu/repository/bitstream/JRC137685/JRC137685_01.pdf