South-East Europe is moving through a period of structural change, driven by accelerating renewable deployment, constrained transmission corridors, and a new continental price geography that increasingly radiates outward from the European Union’s core. The region stretching from Hungary through Croatia, Serbia, Romania, Bulgaria and Greece, and continuing across the Adriatic through Montenegro toward Italy, forms one of Europe’s most complex, strategically underestimated and politically significant electricity zones. What happens along these corridors influences the market equilibrium between EU member states and non-EU neighbours, determines the pace of renewable integration, shapes price spreads and redefines the long-term viability of national generation fleets. The story of SEE interconnections is not merely a story of wires and substations. It is the story of the region’s alignment with the evolving European market model – and the frictions that continue to delay that alignment.
Every major transmission operator in the region acknowledges the same structural reality: renewable energy is arriving faster than the grid can be reinforced, and the most congested borders today are becoming the defining bottlenecks of tomorrow’s energy transition. Hungary’s pivotal position in Central Europe, Croatia’s coastal interface toward Italy and Slovenia, Serbia’s central transit role, Romania’s wind-heavy Black Sea corridor, Bulgaria’s balancing position between the Balkans and Turkey, and Greece’s emerging status as a major RES exporter all intersect across a network that was never designed for such volatility or volume. Add to this the long-awaited but still insufficiently realised Adriatic interconnections, particularly the Montenegro–Italy HVDC link, and South-East Europe becomes a test case for what Europe’s wider grid must solve in the next decade.
The Hungarian system highlights the first of these tensions. Hungary sits at the crossroads of Central and South-East Europe, absorbing flows from Slovakia, Austria, Romania and Serbia. In theory, Hungary should be a conduit for balancing the region, but in practice it is often constrained by internal transmission bottlenecks and increasing dependence on imports during periods of high continental prices. Congestion rents on HU–RO and HU–SRB borders regularly illustrate that market participants perceive Hungary as a price-setting node where regional arbitrage opportunities are strongest but transmission availability is too limited to capture them fully. Solar expansion within Hungary, although significant, does little to offset the structural pressure because peak production still aligns with already saturated north–south corridors. When EU market volatility intensifies, Hungary often becomes a sink rather than a source of stabilisation, pushing additional flows southward to Serbia or eastward into Romania, depending on where the lowest-cost balancing energy is available.
Croatia, meanwhile, occupies a unique position shaped by its coastal geography and strong connection to the Italian system. Italy remains one of Europe’s highest-priced electricity markets due to a combination of ageing thermal capacity, renewable intermittency, and structural import reliance. Whenever Italian prices spike, the Adriatic becomes a conduit for upward price pressure, and Croatia’s interconnections with Slovenia and Hungary become essential transmission paths for flows attempting to arbitrage Italian scarcity. The problem is that Croatia’s internal network, though improving, is not designed to carry surging flows from inland Europe toward its coastal exit points. Thus, even when capacity exists on paper, practical transmission constraints limit the region’s ability to respond to Italian market signals. This mismatch between theoretical and real capacity repeatedly generates congestion, resulting in elevated price spreads between Croatia and its neighbours even when fundamentals would suggest more alignment.
Serbia occupies the most consequential transit position in the central Balkans. As a non-EU country heavily interconnected with EU member states, Serbia functions simultaneously inside and outside the EU electricity market. It sits on the pathways linking Hungary with North Macedonia and Greece, Romania with Bosnia and Herzegovina, and Bulgaria with Montenegro. Serbia’s cross-border capacities should, in theory, give it extraordinary potential to arbitrage price differentials across different bidding zones. Yet the increase in renewable capacities expected across the region, especially in Romania, Bulgaria and Greece, exposes Serbia to the risk of becoming the principal congestion zone between EU-integrated markets and Balkan systems still reforming their regulatory frameworks. The challenge for Serbia is compounded by internal investment delays, particularly in new transmission substations and north–south and east–west reinforcement lines that were meant to accommodate growing RES inflows from both domestic and neighbouring developments. As Europe increases its reliance on regional balancing markets, Serbia may find itself pushed into a role where its system must absorb excess flows from Romania and Bulgaria who are accelerating wind and solar deployment far faster than Serbia’s own grid upgrades are materialising.
Romania’s position has shifted dramatically over the last decade. Once a largely self-sufficient and occasionally export-positioned system, Romania is rapidly becoming a renewable powerhouse, especially as offshore wind prospects in the Black Sea develop and onshore solar accelerates. With rising RES availability, Romania increasingly seeks export opportunities through Hungary, Bulgaria and Serbia. Yet these interconnections are repeatedly congested, especially during high-wind periods in Dobrogea. The Romania–Hungary border, although reinforced through ongoing European projects of common interest, suffers from structural capacity constraints that limit Romania’s ability to push low-cost renewable energy westward. This not only suppresses Romania’s export potential but also limits the region’s ability to stabilise Central European prices during renewable surpluses. East–west flows through Romania therefore remain one of the most potent sources of unrealised market efficiency in South-East Europe.
Bulgaria presents another intriguing duality. It hosts one of the region’s most diverse energy mixes, including significant baseload nuclear generation at Kozloduy, growing solar capacity and important cross-border transmission corridors with Greece, Turkey, Romania and Serbia. Bulgaria’s system, while relatively robust, faces increasing congestion challenges as bidirectional flows between Greece and Romania intensify. The Greek market often becomes a strong price driver during periods of high renewable generation, especially from its rapidly growing solar fleet and new interconnection with Cyprus and Israel under development. But when Greece exports, much of that energy must pass through Bulgaria toward Romania and Hungary, placing upward strain on the northbound corridors. Conversely, when Greece imports, especially during periods of low renewable production or high thermal outages, southbound flows through Bulgaria can overwhelm available capacity. Bulgaria thus represents a pivotal balancing zone that is increasingly exposed to both surplus and deficit shocks from its neighbours. The more Greece develops its export capacity, the more Bulgaria will face structural transmission stress unless reinforcements accelerate.
Greece itself has transformed from a relatively isolated system into a major participant in regional and Mediterranean power flows. With its new and planned interconnections to Bulgaria, North Macedonia, Albania and Turkey, as well as the strategic EuroAsia and EuroAfrica projects linking Greece to Cyprus, Israel and potentially Egypt, the country is positioning itself as a southern gateway to Europe’s energy transition. But Greece’s ambitions depend on whether the northern corridors can handle higher export volumes. This is where Bulgaria and Romania become indispensable parts of Greece’s integration strategy. For Greece to emerge as a reliable exporter of renewable energy into Central Europe, the bottlenecks in Bulgaria and the Romania–Hungary linkage must be eased. Otherwise, Greece’s surpluses will be trapped within the domestic system, risking increased curtailment during high-solar periods and limiting the economic returns of its expanding RES capacity.
On the western side of the Balkan Peninsula, Montenegro plays a quieter but strategically critical role. The 400 kV backbone connecting Montenegro to Serbia and Bosnia and Herzegovina provides essential redundancy and flexibility, but the true transformative infrastructure is the undersea HVDC link between Montenegro and Italy. This interconnection, while technically operational, has not yet reached the level of utilisation envisioned at its inception. Italy’s market would greatly benefit from stable Balkan imports, especially during dry years when Italian hydro output falls. Montenegro and the wider region would likewise benefit from access to Italy’s high price environment, which could anchor investment in new renewable generation. Yet administrative constraints, regulatory complexities and periodic mismatches between available generation and transmission rights keep the link underused. Its full activation could fundamentally alter the market dynamics not only of Montenegro but of Serbia, Bosnia, Albania and even Greece, given the region’s increasingly interconnected flows. The HVDC corridor could eventually become a stabilising anchor for the entire western Balkans, allowing surplus RES from inland SEE to find a reliable offtake route into Italy’s structurally tight market.
Across all these borders, the defining characteristic of South-East Europe is interdependence layered upon structural imbalance. These systems rely on each other for balancing energy, frequency support and seasonal complementarity, yet they are constrained by infrastructure that lags far behind the pace of generation change. EU member states within the region increasingly adopt the market-based allocation frameworks and integration standards expected under European regulation, while neighbouring non-EU countries struggle to match the speed of regulatory harmonisation. This mismatch introduces additional congestion risk because cross-border capacity allocation, redispatch methodologies and transparency platforms do not always align. Whenever markets operate under different rules, the physical grid becomes the battleground for resolving incompatibilities, and flows concentrate along the borders where discrepancies are largest.
The influence of the European market on the SEE region is profound and intensifying. Price formation is increasingly dictated by EU bidding zones, especially Italy, Greece and Hungary. When Italy’s prices climb, the entire northern Adriatic corridor feels the pull. When Greece’s solar fleet floods the system at midday, the export pressure pushes northward through Bulgaria and Romania, attempting to access Central European demand. When Hungarian prices diverge from Germany or Austria, traders seek arbitrage through Romania and Serbia, even when capacity is insufficient. The region thus acts as a pressure map showing where European market forces meet South-East Europe’s infrastructural limits.
At the same time, SEE exerts a growing influence on Europe by becoming an increasingly meaningful source of renewable energy. The combined potential of Romanian onshore and offshore wind, Greek solar and wind, Serbian and Bulgarian renewable expansions, and the prospective Adriatic RES projects across Montenegro and Albania could turn the Balkans into a supply base that complements Europe’s decarbonisation goals. But this vision depends on grid reinforcement that is still too slow, too fragmented and too politically complicated. Without ambitious cross-border investment, the region risks moving from congestion-driven inefficiency to curtailment-driven waste, undermining both local and continental energy strategies.
The next decade will test whether SEE can shift from reactive reinforcement to proactive integration. The necessary investments are substantial, including new 400 kV lines between Hungary and Romania, expanded north–south corridors through Serbia, upgraded Bulgarian interconnections, a strengthened Greek northbound export path and a fully utilised Montenegro–Italy HVDC link. If successfully delivered, these upgrades would not only reduce congestion and stabilise prices but would redefine the region’s role from peripheral balancing zone to essential contributor to Europe’s renewable supply strategy.
South-East Europe stands at an inflection point. Its interconnections, congestions and capacities are no longer mere technical parameters; they are determinants of political alignment, economic opportunity and industrial competitiveness. As the EU electricity market continues to evolve, SEE will increasingly feel the pull of continental dynamics while simultaneously shaping them. The region’s ability to integrate, reinforce and coordinate its cross-border infrastructure will determine whether it becomes a bottleneck in Europe’s decarbonisation journey or a strategic corridor through which the continent’s energy transition flows.
The future of these interconnections is therefore not simply about capacity. It is about the ability of countries to recognise that the grid is now a geopolitical asset, a commercial opportunity and a strategic lever of European energy security. If SEE can navigate this transformation, the region will emerge not as Europe’s edge, but as one of its essential engines.
Powered by electricity.trade
