The future of electricity markets in South-East Europe will not be determined by base energy alone. It will be determined by balancing energy: the real-time buffer that absorbs renewable volatility, stabilises system frequency and determines the value of each megawatt that crosses a border. As the region accelerates into a renewable era, balancing markets have begun to dictate not only price formation but also the feasibility and profitability of new renewable investments. Hungary, Croatia, Serbia, Romania, Bulgaria, Greece and Montenegro are entering a phase in which balancing capacity scarcity, cross-border congestion and the physics of renewable intermittency interact more tightly than at any time in the region’s energy history. The balancing layer has become the hidden architecture behind the visible market.
What stands out when examining this regional group is that each system possesses a structurally different balancing profile, yet they are deeply interdependent. Hungary’s chronically tight reserve margins, Croatia’s hydro-modulated flexibility, Serbia’s multi-directional transit role, Romania’s wind-driven balancing stress, Bulgaria’s unique nuclear-based baseload, Greece’s rapidly swelling solar surplus and Montenegro’s underutilised strategic flexibility each contribute to a mosaic where balancing energy is no longer a domestic question but a regional negotiation influenced strongly by the EU internal market. The more renewables enter the mix, the more balancing energy becomes the price-setter rather than the afterthought.
Hungary is often the first system to expose the region’s balancing vulnerabilities. Despite substantial solar deployment, Hungary has neither the pumped hydro nor the reservoir-based hydro assets that characterise more flexible systems. As a result, Hungary often relies on imports of balancing energy during periods of volatility. This places structural emphasis on the HU–RO and HU–SRB interconnections, which must supply both energy and balancing reserves. When Romanian wind surges, Hungary benefits, but when wind collapses or when congestion blocks the HU–RO corridor, Hungary must source balancing power from more distant markets. The pattern increasingly observed is one where Hungary experiences short, sharp price spikes driven not by base energy scarcity but by the absence of accessible balancing products. In this sense, Hungary’s balancing market has become a magnifier of regional constraints, illustrating how quickly renewable volatility propagates across borders when internal flexibility is insufficient.
Croatia presents a contrasting paradigm. Its hydro system provides valuable balancing flexibility, particularly through basin and run-of-river modulation. Yet Croatia’s balancing capabilities are limited by its internal grid, which cannot always transfer this flexibility north or east at the scale the region demands. When Italy’s system is tight or experiencing renewable deficits, the Italian pull for energy influences Croatian flows; when Italy experiences renewable surpluses, reverse flows try to move eastward but often encounter congestion in Slovenia or on the CRO–HU border. This external influence reshapes Croatia’s balancing behaviour, forcing local operators to allocate hydro flexibility not only for domestic stabilisation but also in response to Italian market signals. Croatia therefore becomes a case study in the dual exposure to EU market conditions and Balkan system volatility, where balancing energy must serve two masters: domestic operational integrity and continental arbitrage.
Serbia’s central location gives it a unique and often burdensome balancing responsibility. The system must respond not only to domestic renewable imbalances, which are rising as Serbian solar and wind installations expand, but also to fluctuations from Romania, Bulgaria and North Macedonia. This is most visible when Romanian wind ramps up faster than forecast, creating surges toward Hungary that, when blocked by congestion, spill into Serbia instead. Conversely, when Bulgaria exports surplus solar or imports balancing power during deficits, Serbia becomes part of the balancing solution irrespective of whether domestic conditions justify the role. Over time, this has positioned Serbia as the region’s involuntary balancing shock absorber. The system’s ageing thermal units, which were never designed for fast-ramping flexibility, are increasingly exposed to operational stress as they must modulate output to compensate for renewable volatility in neighbouring zones. The risk is that Serbia becomes a balancing-energy provider by default, absorbing costs and operational burdens without receiving commensurate market compensation unless the country completes deeper integration with EU balancing platforms.
Romania remains the region’s most complex balancing environment. Its Black Sea wind corridor produces frequent and sometimes extreme fluctuations, with output rising or falling several hundred megawatts in short intervals. While Romania’s hydropower fleet provides some balancing cushion, the growing magnitude of wind variability has begun to outpace internal flexibility. This results in high balancing prices during negative ramp events and surplus dumping during positive ramp events. When interconnections are uncongested, Romania can export its surpluses toward Hungary, Bulgaria or Serbia, reducing balancing stress. But when the Romania–Hungary border is congested or when Bulgaria’s northbound corridor is saturated with Greek flows, Romania’s system becomes trapped, forcing curtailment or expensive balancing activation. Renewable investors in Romania increasingly understand that their revenue profile is shaped as much by balancing availability as by power-purchase agreements or day-ahead prices. Each megawatt of new wind added in Dobrogea has a balancing cost that the current grid cannot yet internalise efficiently.
Bulgaria’s system behaves differently because it enjoys the stability of nuclear baseload and significant hydro flexibility, yet it is exposed to volatile flows from Greece and Romania. Greece’s midday solar surpluses often try to push north through Bulgaria into Romania and Hungary, overwhelming transmission corridors. When this happens, Bulgaria must absorb part of the surplus or activate redispatch, which affects its balancing markets. The system has become a balancing crossroads where the direction of stress changes daily. During solar peaks, Bulgaria must respond to downward regulation needs; during evening ramps, the system may face upward balancing demand both domestically and from Greece. This bidirectional balancing duty is exerting increasing pressure on Bulgaria’s ability to maintain low and stable balancing prices, particularly as more renewables enter the system without parallel large-scale flexibility assets such as pumped hydro or utility-scale batteries.
Greece illustrates more clearly than any other regional market how renewable penetration reshapes balancing structures. The explosive growth of solar, combined with ambitious wind targets and new interconnectors, creates a system that swings between surplus and deficit faster than traditional infrastructure can respond. Midday surpluses often outstrip domestic absorption capability, forcing exports north at a scale that Bulgaria and Romania cannot always accommodate. When export capacity is unavailable, Greece faces curtailment or must activate downward balancing markets at depressed prices, eroding renewable investor returns. In the evenings, when solar disappears from the system, Greece frequently requires upward balancing imports, drawing power from Bulgaria, North Macedonia or Albania. These balancing swings are beginning to define Greek market behaviour more sharply than day-ahead fundamentals. For investors, this means that balancing energy has become a core part of the value equation, making project economics increasingly dependent on whether Greece can develop internal storage, flexible thermal units or regional balancing integration at a pace that matches renewable growth.
Montenegro completes the regional picture by highlighting the underutilised potential of balancing energy as a strategic export. Its hydro facilities and the undersea link to Italy should, in principle, allow Montenegro to position itself as a flexible contributor to the Italian system during balancing shortages. Italy’s structurally tight evening ramps create premium conditions for upward balancing energy, and Montenegro could capture meaningful value. Yet the reality is that administrative restrictions, market-design misalignment and intermittent availability of domestic surpluses have limited Montenegro’s participation in cross-border balancing trade. Its flexibility is real but remains largely dormant. If fully activated, Montenegro could become a balancing supplier not only for Italy but also for Serbia and Albania, helping stabilise a region increasingly dominated by renewable intermittency.
Across all these systems, balancing energy is now the principal mediator between renewable penetration and cross-border infrastructure. As renewables grow, the amplitude of balancing requirements increases. Markets are discovering that congestion on interconnectors does not only hinder energy trade; it directly amplifies balancing costs. When a country cannot export renewables during surpluses, it must curtail or activate costly downward regulation. When it cannot import balancing energy during deficits, it suffers price spikes or frequency deviations. These effects cascade across the region because renewable volatility does not respect borders, and balancing markets are still too fragmented to respond as a single pool.
The EU internal market exerts powerful influence on these dynamics. Countries that are fully integrated into European balancing platforms benefit from shared reserves and cross-border activation that reduces volatility. Countries outside the EU, such as Serbia and Montenegro, face operational exposure without full access to the tools that mitigate balancing stress. The gravitational pull of EU market behaviour means that balancing energy in SEE is priced not only by local conditions but also by the scarcity signals coming from Italy, Greece or Central Europe. When Italy experiences high evening balancing demand, energy and reserves from Slovenia, Croatia and even Hungary or Romania may be directed toward Italian needs, tightening local availability. When Greece dumps midday surpluses at low balancing prices, Bulgaria and Romania absorb part of the impact. These interactions reveal that balancing markets are now regional, even when market rules remain national.
Renewable investors increasingly recognise that the profitability of new solar and wind in SEE depends on three conditions: access to cross-border capacity during surpluses, availability of affordable balancing energy during deficits, and the presence of internal flexibility that can smooth intraday volatility. In markets where one or more of these conditions is weak, renewable economics become more fragile. Romania and Greece illustrate this most clearly: rapid renewable growth without matching balancing and interconnection upgrades leads to price cannibalisation, curtailment and volatile balancing premiums. Investors are already recalibrating models to include balancing penalties, redispatch risks and curtailment ceilings. Banks financing new projects are asking for more conservative assumptions regarding balancing exposure, particularly in Romania and Greece where wind and solar output can swing sharply and where congestion is frequent.
The future of balancing energy in South-East Europe will depend on the region’s ability to build or integrate flexibility at scale. Storage, pumped hydro, hybrid RES-plus-storage plants, fast-ramping gas units and digitalised dispatch systems will shape the next decade. But even these solutions will be insufficient without structural reinforcement of cross-border infrastructure. Interconnectors are not only channels for energy but also the arteries through which balancing resources must flow. The HU–RO corridor, the BG–RO and BG–GR pathways, and the Serbia-centred north–south axes must evolve from congested bottlenecks into balancing highways if the region is to support the renewable wave that is already arriving.
Europe’s energy transition is accelerating faster than many expected, and South-East Europe is no exception. The region is moving from a landscape defined by thermal power and seasonal hydro to one shaped by solar variability, wind ramp events and cross-border balancing dependency. Balancing markets will increasingly determine which countries attract renewable investment, which become net exporters of flexibility, and which face rising operational stress. The question is no longer whether SEE must reform its balancing structures, but how quickly and through which combination of domestic reforms, regional coordination and EU integration the transition can be stabilised.
For now, balancing energy remains the silent but decisive force shaping the region’s renewable future. It is the pressure valve through which market efficiency, investment confidence and grid reliability must all pass. Whether the region becomes a renewable success story or a congestion-driven cautionary tale will depend on how effectively balancing mechanisms evolve to match the new electricity geography of South-East Europe.
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