In February 2026, coal-fired generation continued to be a cornerstone of electricity systems across Southeast Europe, despite notable price declines and an increase in renewable energy output. As markets grappled with fluctuations in solar and wind production, lignite and coal plants provided essential stability, underscoring their ongoing importance in the region’s energy landscape.
Serbia exemplifies coal’s persistent significance, with lignite comprising 53.01% of the country’s generation mix. This dominance persists even amid a 23.10% rise in renewable energy generation, indicating that coal remains integral to the operational framework of Serbia’s electricity system. The reliance on coal highlights a structural reality where limited flexible capacity necessitates its role as the primary balancing mechanism.
However, February also highlighted the increasing vulnerability of coal in terms of price dynamics. Serbia recorded a sharp drop in spot prices, plummeting 41.92% to €68.61/MWh. This decline was not primarily due to rising coal costs but rather the marginal displacement of coal during periods characterized by increased renewable output and lower demand. Consequently, coal is increasingly establishing a lower threshold for pricing rather than dictating peak prices.
Regionally, coal continues to play a significant role in power generation, with Bulgaria sourcing 22.91% of its electricity from coal and lignite, while Türkiye maintains a heavy reliance at 34.89%. These figures illustrate the ongoing dependence on thermal generation within markets that have limited nuclear or large-scale gas resources. Nevertheless, as renewable energy sources gain traction, coal plants are frequently being relegated out of the merit order, resulting in reduced operational hours and diminished load factors.
The transition away from dominant baseload roles is not uniform across the region. In Bulgaria, where nuclear power offers consistent baseload support, coal functions more as a mid-merit source or balancing resource. Conversely, Türkiye’s diversified system includes hydroelectricity at 31.70% and renewables at 23.12%, reflecting varying structural dependencies on coal based on local conditions.
A common challenge for coal generation is the pressure exerted by declining wholesale prices that compress profit margins while introducing operational uncertainties due to fluctuating renewable outputs. Coal facilities designed for stable output are increasingly required to adopt flexible operating strategies, which can lead to higher maintenance costs and reduced efficiency.
Despite these challenges, coal remains crucial for ensuring system adequacy during periods of low solar production and increased wind variability across southern markets in February. This situation underscores a significant tension within the energy transition: while economically challenged, coal continues to serve as an operationally essential component in many Southeast European markets.
The dynamics of cross-border electricity flow further complicate the position of coal generation. As renewable surpluses from neighboring countries enter through interconnectors, domestic coal output faces heightened competition from imports—especially during times of strong wind generation from Romania and Hungary. This scenario creates a regional merit order where domestic coal competes not just with local renewables but also with imported renewable electricity.
Looking forward, while it is improbable that coal will vanish from Southeast Europe’s energy landscape in the near term—due to its critical role in maintaining system stability and energy security—its function is clearly evolving from being a dominant baseload source to serving more as residual balancing capacity. The developments observed in February reflect this transition: although still central to electricity systems, the influence of coal on pricing and market trading continues to wane as renewables increasingly reshape the regional energy market.
