“FLEXIBLE” GRID-CONNECTION CONTRACTS AND THE LONG-TERM SUSTAINABILITY OF THE EU POWER SYSTEM POLICY

Background: The rapid growth of renewable energy sources (RES) in Europe has intensified congestion on transmission networks that were neither dimensioned nor planned for such volumes of variable generation. Directive (EU) 2024/1711 (2024) introduces so-called "flexible" grid-connection contracts as one of the main legal tools to enable new RES projects to connect in structurally congested areas while accepting curtailment under predefined conditions. These arrangements interact with existing state-aid-supported business models, raising questions about how curtailed energy is valued and how long-term investment signals are preserved. Yet, above all, they raise questions about the sustainability of the EU regulatory policy in the area of energy system decarbonization.
Objectives: This paper examines how the emerging EU framework for flexible connections, redispatch, and curtailment compensation shapes incentives for transmission system operators (TSOs) and RES investors. It focuses on the legal and regulatory dimensions rather than on detailed quantitative modelling, and discusses whether a congestion-management strategy centred on redispatch and flexible contracts is sustainable in the long run.
Methodology: The analysis combines a doctrinal review of key EU legal acts and softlaw documents with a structured synthesis of recent technical and policy literature on redispatch, curtailment, and market design (Cheng et al., 2021; Kane & Ault, 2014; Thomassen et al., 2024). Particular attention is paid to the interaction between Directive (EU) 2024/1711, Regulation (EU) 2019/943, and regulatory guidance from European and national regulators. The paper adopts the perspective of a TSO operating in a zonal market without locational marginal pricing.
Findings: The findings suggest that flexible grid-connection contracts, while useful for accelerating RES deployment, may contribute to redispatch becoming a more structural feature of congestion management. Without accurate valuation of curtailed energy, robust governance of negative bidding by subsidised RES, and credible commitments to grid reinforcement, the framework risks undermining investment incentives and cost-reflectivity. In the absence of locational price signals, the accumulation of redispatch and compensation obligations financed via network tariffs raises doubts about the long-term economic and regulatory sustainability of this approach.