Recent analysis of electricity markets in Southeast Europe during January and February 2026 highlights the persistent influence of gas in setting marginal prices, despite significant advancements in renewable energy sources. The findings indicate that rather than diminishing the role of gas, the coupling between gas and power markets has re-emerged in an intensified and more volatile form. Countries such as Hungary have witnessed record solar penetration, while Greece and Romania are ramping up wind generation. Nevertheless, gas remains the primary determinant of pricing during times of system stress.
A common misconception is that the growth of renewables will linearly reduce the dependence on gas. However, market data reveals that while renewables may decrease the frequency of gas dispatch, they simultaneously heighten the intensity of gas price formation when it is required. This dynamic results in a reduction of hours dominated by gas but leads to more extreme pricing during those hours when gas is needed.
Italy exemplifies this trend, with approximately 61.91% of its electricity generation sourced from gas. It acts as a critical anchor for gas-to-power coupling within the Adriatic region and beyond. Even amidst robust solar or wind generation from neighboring countries, Italian power prices remain closely aligned with TTF gas benchmarks. This relationship ensures that fluctuations in gas prices directly influence Italian power costs, which then ripple through interconnected regional systems.
The cases of Hungary and Romania further illustrate how reliance on imports can reinforce this coupling effect. Hungary imports about one-third of its peak demand, thereby integrating marginal pricing from upstream gas markets into its electricity costs. In January 2026, Romania experienced a scenario where despite having a diversified energy mix—including nuclear, wind, and solar—adverse hydro conditions necessitated increased reliance on gas imports, resulting in prices soaring above €150/MWh.
Hydro-rich nations like Serbia and Greece may initially appear to disrupt this coupling due to significant increases in hydro output—over +150% during the reporting period—which temporarily alleviated price pressures and reduced reliance on gas. However, this decoupling is precarious; hydro generation is highly dependent on weather conditions and can quickly revert to a state where gas becomes marginally necessary once reservoirs deplete or inflows diminish.
The integration of solar and wind energy introduces another layer to this dynamic by altering intraday price patterns. These renewables tend to suppress midday prices while shifting scarcity into evening and early morning hours when gas units must ramp up production. Consequently, the growth of renewable sources concentrates gas dispatch into fewer hours but amplifies its marginal value during those critical periods.
While battery storage technologies are beginning to mitigate some effects of this coupling, their current scale remains inadequate for long-duration challenges. For instance, large systems like the 202 MW / 500 MWh Maritsa East 3 battery provide flexibility over hours rather than days. They can assist with peak shaving but are insufficient for extended cold spells or prolonged low wind scenarios; thus, gas continues to be a vital resource for stability.
This structural reality is increasingly reflected in forward market curves across Southeast Europe. Power forwards continue to embed risks associated with natural gas even amid announcements regarding renewable capacity expansions. The forward market focuses not on average renewable output but rather on tail risks that remain fundamentally tied to natural gas dynamics.
The resurgence of gas-to-power coupling should not be interpreted as a failure of renewable energy initiatives; rather, it stems from inherent system characteristics. While intermittent generation may lessen energy scarcity overall, it simultaneously amplifies scarcity concerning flexibility resources. Until flexibility solutions capable of spanning multiple days become available, natural gas will remain an essential component for meeting demand peaks.
The evolving landscape confirms that while renewable expansion has modified price structures within these markets, it has not diminished the authority exerted by marginal pricing mechanisms dominated by natural gas resources.
