Congestion Management

Congestion management, also called constraint management, is central to Europe’s energy transition. Germany, the UK and the Netherlands are using a mix of regulation, flexibility markets and smart technologies to keep overloaded grids stable. With EMS optimizing charging hubs and HEMS empowering households, grid operators can integrate more renewables while keeping costs and risks in check.

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What is congestion management?

Congestion management, otherwise known as constraint management, in the energy sector refers to techniques used to prevent the electricity grid from becoming overloaded when demand or supply approaches the network’s capacity limits.

In simple terms, congestion management is about keeping the grid stable when too many participants act in the same way at the same time. Grid capacity is usually sufficient, but problems arise when everyone feeds in or consumes electricity simultaneously. Since wind and solar generation can’t be controlled, they often produce similar output patterns. On the other side, prosumers and consumers react to market prices in similar ways, which can also create spikes. The role of congestion management is to smooth out these overlaps and prevent stress on power lines, transformers and grid connection points (GCPs).

Understanding congestion management and grid constraints

Grid congestion can occur in two ways: transmission constraints, where high-voltage highways of electricity get bottlenecked, and distribution constraints, which affect local medium- and low-voltage networks (for example, in a neighborhood). In both cases, if too much power tries to flow through a limited-capacity line or substation, operators must step in to prevent damage and blackouts.

What makes today’s situation even tougher is the regional imbalance: renewable production depends on weather in specific areas, while demand peaks often happen somewhere else entirely. That means the grid has to shuttle huge amounts of energy across long distances, adding stress on the system.

Traditionally, the only fixes were costly infrastructure upgrades (new lines or transformers) or curtailing electricity generation/consumption in the affected area. But with western Europe’s rapid push for renewable energy and electrification of transport and heating, these mismatches are happening more often, and smarter, faster solutions are needed beyond just laying more wires.

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Importantly, “constraint management” is often used interchangeably with congestion management, especially in the UK context, to describe the same challenge of resolving grid bottlenecks. Across Europe, regulators and grid operators are actively seeking innovative ways to manage these constraints.

The urgency is clear: without effective congestion management, the energy transition (high solar and wind uptake, plus new heavy loads like electric vehicles and heat pumps) could be slowed by local network overloads. The following sections outline western Europe’s congestion challenges and the modern strategies – from market reforms to digital energy management systems – being deployed to address them.

Western Europe’s grid congestion landscape

Western European countries are facing grid congestion in varying forms, but all share the imperative to balance decarbonization ambitions with infrastructure limits. Below we highlight examples in Germany, the United Kingdom and the Netherlands – three markets grappling with grid constraints in different ways:

Germany: Renewable surges and new DSO controls

Germany’s massive growth in renewable generation has strained both transmission and distribution grids. On the transmission side, wind power from the north often exceeds the capacity of lines to the industrial south, forcing redispatch and curtailment that cost billions of euros each year. At the local level, the rapid uptake of rooftop solar, electric vehicle (EV) chargers and heat pumps is pushing low-voltage grids to their limits, creating similar challenges to those seen in the UK market.

Two major regulatory tools address these challenges. First, §9 of the Renewable Energy Sources Act (§9 EEG) allows grid operators to temporarily reduce grid feed-in from renewable generators when local or regional grid capacity is exceeded. This targeted curtailment – usually applied to photovoltaic (PV) and wind – prevents overloads and stabilizes voltage without shutting down the entire plant.

Second, §14a of the Energy Industry Act (§14a  EnWG) empowers distribution system operators (DSOs) to dim or throttle flexible energy-consuming devices such as EV chargers and electric heaters during grid stress. In force since 2024, this rule mandates that new high-power devices be capable of receiving and acting on utility control signals.

Implementation relies on intelligent metering systems and standardized interfaces, enabling, for example, a EV charger or heat pump to pause or reduce output automatically when the DSO sends a curtailment signal. Companies like gridX have demonstrated “behind-the-meter” solutions that process these signals in real time, adjusting household devices while preserving comfort and service. Homeowners who opt in under §14a receive lower grid tariffs, while helping avoid local overloads.

Together, §9 EEG and §14a EnWG form a regulation-backed congestion management framework that uses both supply-side and demand-side flexibility to integrate more renewables and electrification without waiting for lengthy grid upgrades.

United Kingdom: Managing constraints with markets and flexibility

In the UK, grid congestion is evident at both national and local levels. Britain’s transmission network – especially the north-to-south corridors – often cannot carry all the wind power generated in Scotland to demand centers in the south. While interconnectors to Europe, such as the North Sea Link to Norway or the IFA to France, provide flexibility by enabling imports and exports, internal transmission bottlenecks mean this trading potential is not always fully used.

The result is costly constraint payments: National Grid ESO (Electricity System Operator) regularly pays wind farms to curtail output in order to maintain network stability. In 2022 alone, over £215 million was paid to wind generators for curtailment, on top of £806 million in the prior two years.

These congestion costs ultimately fall on consumers and have topped £1 billion in recent years, highlighting the need for new solutions beyond simply turning off renewables. The UK government and regulator are therefore exploring reforms like nodal (locational) pricing to better signal where generation should locate and accelerating grid expansion projects. In the near term, however, a key strategy is unlocking flexibility at the distribution level to manage constraints more dynamically.

British distribution network operators (DNOs) are transforming into DSOs by running local flexibility markets. For example, UK Power Networks (the DNO for London and Southeast England) has established over 40 “flexibility zones” where it contracts with businesses or aggregators who can adjust demand or supply on call. Across the country, DNOs have held hundreds of competitions for services like peak shaving or load shifting, paying participants to reduce consumption or start local generators when the grid is under strain. This market-based congestion management lets the DNO relieve specific bottlenecks at critical times, deferring the need for immediate physical upgrades.

Solar PV, batteries, and heat pumps are also becoming central to congestion management. Technical standards such as Engineering Recommendation G100 allow customers to connect PV and batteries with export limiters that cap grid feed-in, preventing overloads. In households, smart heat pumps and batteries paired with HEMS can shift demand or store renewable output for later use, turning homes into flexible assets. In effect, the UK is combining market mechanisms with technical standards and digital tools: flexibility is procured as a resource, and smart controllers ensure that both large-scale renewables and small-scale technologies support rather than strain the grid.

The Netherlands: Grid at capacity and innovative dynamic electricity contracts

Nowhere in Europe is grid congestion more immediately visible than in the Netherlands. With one of the highest solar PV densities in the world and a fast electrifying economy, Dutch grid infrastructure is struggling to keep up. By early 2025, over 12,000 businesses were on waiting lists for new or expanded electricity connections due to saturated network capacity.

This has become a national concern, threatening both climate targets and economic growth. The Dutch government, in partnership with grid operators and regulators, launched a Grid Congestion Action Programme in 2022 and is now enacting over 100 measures to ease the crunch. These measures span from speeding up construction of substations to cutting red tape, but a critical pillar is “Better Utilisation” of the existing grid.

One innovative tool is the introduction of flexible connection contracts. A new arrangement known as “ATR85” guarantees a business 85% of its requested grid capacity, but with up to a 50% lower network tariff – in exchange, the customer agrees that up to 15% of the time their supply can be curtailed if the grid is under stress.

Such contracts (suitable for sites that have backup generators or batteries on-site) essentially formalize constraint management: the utility can temporarily dial down a large user’s consumption in congested hours, and the user is compensated through a cheaper tariff. Alongside this, the Netherlands implemented time-of-use pricing for large consumers on the national grid in January 2025, encouraging load shifting to off-peak times.

Meanwhile, the Dutch DSOs and TSO have together developed a platform called GOPACS to trade flexibility and resolve congestion. Through GOPACS, grid operators can identify a looming overload a day ahead and then purchase corresponding reductions in demand or increases in local generation via a market mechanism. This coordinated approach, which links to an energy trading platform in Amsterdam, effectively creates a localized congestion market – a model now being watched by other EU countries.

Modern strategies for managing grid constraints

Energy management systems (EMS)

Energy management systems (EMS) combine software and hardware to coordinate distributed energy resources (DERs) – such as solar PV, batteries, EV chargers and controllable loads – in real time. At commercial facilities, charging hubs and fleet depots, an EMS monitors consumption, generation and storage, then dynamically controls devices to keep usage within contracted limits and prevent overloads.

For EV fleets, an EMS is critical to ensuring vehicles are charged when needed without exceeding site capacity. It can prioritize charging based on departure schedules, battery state-of-charge or route requirements, while delaying non-urgent charging to align with off-peak tariffs or high on-site renewable generation. When integrated with storage, the EMS can buffer peak demand by discharging the battery during high-load periods and recharging it when the grid is under less stress.

This orchestration not only protects transformers and local feeders but also maximizes fleet availability, reduces operational costs and avoids penalties from exceeding grid connection limits. For charging point operators (CPOs) and fleet operators, EMS platforms can also enable participation in flexibility markets – offering demand reduction or stored energy to the grid – turning compliance into an additional revenue stream.

Home energy management systems (HEMS) for businesses and consumers

Home energy management systems (HEMS) apply EMS principles at the household or small business level. A HEMS gives consumers visibility and control over their energy usage, allowing them to schedule appliance operation and EV charging for optimal times to save on costs and reduce peak load. By integrating home devices – from heat pumps to solar PV and battery storage – HEMS can automatically adjust demand in response to price signals or grid conditions.

For instance, a HEMS might delay charging an electric vehicle or heating water until midday solar production peaks or nighttime off-peak hours. This coordination helps households avoid costly service upgrades when adding new electric loads (like EVs) by smoothing out their demand profile.

In aggregate, widespread HEMS adoption turns homes and small businesses into active grid participants, supporting local voltage stability and even providing flexibility services back to the grid (e.g. via demand response programs).

Demand response programs

Demand response programs incentivize or automate temporary changes in electricity use to relieve grid stress during peak periods. Through dynamic pricing or direct load control agreements, consumers shift flexible loads – such as EV charging, HVAC or industrial processes – to off-peak times or reduce them during critical peaks. These incentivization strategies flatten the overall demand curve, improving grid stability and reducing the risk of local congestion.

HEMS play a direct role in enabling residential demand response. By connecting to appliances, EV chargers, batteries and heating systems, a HEMS can automatically adjust or pause loads in response to price signals or DSO commands. For example, a HEMS might delay EV charging until late evening, pre-heat a home before a peak event or use stored battery energy instead of drawing from the grid during constrained hours.

By lowering peak demand and filling valleys, demand response avoids the need for utilities to run expensive (and often ‘dirty’) peaker plants and can delay upgrades to lines and substations. Whether at industrial scale through EMS or at household scale through HEMS, these measures keep the grid more efficient by using available capacity more evenly across the day.

Energy storage integration

Integrating energy storage into the grid is one of the most effective ways to manage congestion. Batteries – from large grid-scale units to residential battery energy storage systems (BESS) – can charge when there is excess generation or low demand, then discharge when the grid is nearing capacity limit. This buffers the network, smoothing out spikes and preventing overloads on lines and transformers.

When coordinated by an EMS at commercial sites or a HEMS in homes, batteries can be charged during off-peak hours or when on-site renewables are producing and discharged during peak demand to reduce grid draw. In homes, a HEMS can also combine BESS with rooftop solar to maximize self-consumption, provide backup during outages and participate in demand response events by supplying stored energy instead of pulling from the grid.

This flexibility not only mitigates congestion but also makes better use of renewable energy that might otherwise be curtailed. For example, co-locating batteries with solar farms in constrained areas allows excess output to be stored at midday and injected into the grid later, enabling more clean generation on a limited connection. At e-mobility sites, virtual grid expansion allows charge point operators to go above physical grid limitations by intelligently integrating and leveraging BESS and local PV. In distribution networks, community batteries and aggregated home BESS can absorb evening peaks – when many appliances and EVs run simultaneously – relieving stress on neighborhood circuits. Strategic deployment of storage under EMS and HEMS control increases the effective capacity of existing infrastructure while supporting decarbonization by firming renewable supply.

Expert insights on congestion management

To conclude, industry experts stress that effective congestion management transforms a challenge into an opportunity for the energy transition. “Smart energy management solutions let us turn grid constraints into win–wins for all sides,” says Carsten Schäfer, Senior Product Manager Innovation, at gridX.

“By dynamically controlling assets like EV chargers, heat pumps and batteries, we can prevent local overloads and costly upgrades while actually lowering energy costs for consumers. In other words, what starts as a grid compliance measure ends up driving innovation – engaging customers as active participants and opening new revenue streams in flexibility markets.”

Schäfer’s insight underscores a key theme of this guide: digital, flexible approaches to congestion management can both safeguard grid reliability and deliver value to businesses and households. Western Europe’s experience shows that with the right mix of regulation, technology and market incentives, congestion (or constraint) management is not just about avoiding problems – it’s about enabling a cleaner, smarter energy future.

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