South East Europe’s electricity market is entering a new phase in which the region’s aftershocks from the 2021–2022 energy crisis, imported gas costs and coal availability remain relevant. A structural issue highlighted in recent analysis is flexibility. The focus is shifting from whether there is enough electricity to whether the system has the right supply at the right hour. This change is linked to how prices move, how investment decisions are made and how security of supply is assessed.
The clearest signal cited for this shift came from summer 2024 price spikes. ACER found that most Southeast European bidding zones saw significant price increases during that period, particularly in evening hours. In some cases, prices reached up to €1,000/MWh. ACER also concluded that the spikes were not only tied to fuel prices.
ACER connected the summer 2024 spikes to a lack of flexible resources able to replace solar generation after sunset. The regulator also pointed to limited cross-border capacity for importing cheaper power from other regions. The combination affected how quickly supply could respond when solar output fell. This placed hourly adequacy and operational capability at the center of market outcomes.
Hourly balance replaces annual adequacy as a key market signal
The region’s renewable-resource potential includes solar, alongside legacy hydro, coal and gas assets that can provide firm supply under certain conditions. However, the system is increasingly exposed to the gap between daytime renewable output and evening demand. The issue is described as one of hourly balance rather than total annual generation alone. That distinction affects how market stress appears across time.
Average baseload prices are therefore described as becoming less useful as an indicator. A market can appear adequately supplied on an annual basis while still experiencing severe price pressure during a limited number of evening hours. During high solar output periods, very low or negative midday prices can occur, with scarcity pricing appearing a few hours later. For utilities, traders, renewable developers and industrial consumers, the value of electricity is increasingly tied to the timestamp rather than only the megawatt-hour.
ACER reported that while 2025 prices did not reach the extreme levels seen in summer 2024, a price gap between Southeast and Central Europe persisted throughout 2025 and into early 2026. The persistence is presented as evidence that volatility is structural rather than accidental. The regional separation in pricing continues to shape expectations for supply adequacy across markets.
Drivers of structural volatility: flexibility, grids and integration
Three factors are cited to explain structural volatility in South East Europe power markets. First, solar growth is described as outpacing system flexibility. Solar reduces prices during daylight hours, especially at midday, but it does not address evening peak demand by itself. Without batteries, pumped hydro, flexible gas, demand response or stronger interconnectors, conditions can shift from surplus during the day to tightness after sunset.
Second, grid constraints are described as affecting outcomes as much as generation mix. If lower-cost electricity cannot move into the region when needed, local prices separate from those elsewhere. This makes cross-border capacity, market coupling and transmission investment central issues for market functioning. They are treated as core components rather than secondary technical topics.
Third, integration levels across the region are described as uneven. EU member states in South East Europe operate within the EU electricity-market framework, while Western Balkan markets are still progressing toward full integration. Serbia’s market is described as moving closer to EU practice, but wider Western Balkan market coupling remains unfinished.
15-minute day-ahead trading and implications for balancing intervals
The transition toward more granular scheduling includes a move to 15-minute day-ahead trading in the EU from 30 September 2025. The European Commission says shifting from hourly to 15-minute pricing helps markets reflect expected generation and demand more accurately. This matters in systems with high wind and solar shares because imbalances can emerge within shorter time intervals than those captured by traditional hourly markets.
For South East Europe’s market design context, this creates a revised hierarchy of value across resources available at different times. Pure generation remains important while flexible generation becomes more valuable under conditions where evening replacement needs arise after solar output declines. Solar continues to be attractive, but solar paired with storage or flexible offtake is described as more valuable in this framework.
Hydro remains strategic but availability depends on weather conditions. Coal remains relevant for security of supply while its economics face weakening under carbon and pollution pressure described in the analysis. Grid capacity is also characterized as moving from background infrastructure toward an asset that can influence pricing outcomes when constraints limit imports.
Investment focus shifts toward controllable megawatts
The investment implications described for South East Europe emphasize resources that can provide controllable output when needed by the system. The next wave of value creation is expected to come from batteries and pumped hydro alongside grid upgrades and participation in balancing markets. Demand response is also included among the listed areas shaping future value capture.
The analysis also points to shaped PPAs and smarter trading capabilities as part of how market participants may respond to changing price formation patterns. It frames requirements as extending beyond additional megawatts toward controllable megawatts. In this view, flexibility scarcity becomes central to how shortages are experienced across time rather than only across total annual volumes.
The central thesis presented for South East Europe’s electricity markets in 2026–2028 is that the crisis has changed shape from shortage toward flexibility scarcity . This framing links operational constraints during specific hours to broader investment priorities across generation types and grid development . It also ties market outcomes to cross-border capacity limits and integration progress within EU and Western Balkan frameworks .
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