As Southeast Europe approaches the end of 2025, the region has witnessed a remarkable transformation in its electricity trading landscape. Intraday trading volumes have soared to unprecedented levels, particularly in Bulgaria, Hungary, Romania, and Serbia. This surge has been hailed by market operators and policymakers as a sign of the maturation of power markets in the region. However, for many risk managers and industrial consumers, the reality is that despite this growth in intraday liquidity, long-term price risks remain significantly unaddressed.
The increase in intraday trading has led to a common misconception that operational liquidity equates to a greater capacity for managing risk. The primary function of intraday markets is to address short-term imbalances, allowing participants to adjust their positions based on fluctuating forecasts, varying renewable energy outputs, or unforeseen outages. In 2025, these markets showcased impressive performance metrics: monthly volumes exceeded 600 GWh on IBEX, surpassed 1 TWh on HUPX, and reached record levels on SEEPEX. This improvement led to reduced balancing costs and enhanced real-time system stability.
However, the core challenge for industrial buyers and utilities remains their exposure to multi-month and multi-year price volatility. Intraday liquidity does not accumulate open interest; rather, it facilitates rapid position adjustments that reset once delivery occurs. From a hedging standpoint, this transient liquidity offers little in terms of long-term risk management.
The limitations of intraday markets became glaringly evident during structural stress events in 2025. For instance, significant drops in hydro output across parts of the Balkans or unexpected thermal unit outages triggered swift market reactions but resulted in severe price adjustments. Although participants could rebalance their volumes effectively, the shockwaves from price level changes propagated forward through market expectations, leading to wider forward spreads and increased basis volatility. While intraday liquidity may have absorbed operational shocks efficiently, it inadvertently amplified informational shocks.
This scenario fostered a misleading sense of security among market participants who believed that enhanced intraday trading would diminish overall risk through constant adjustment capabilities. In truth, this dynamic merely shifted risk temporally rather than eliminating it altogether. The compression of volatility into shorter timeframes led to an uptick in the frequency of price spikes without mitigating their intensity over extended periods.
The impact on industrial consumers was substantial. Those optimizing their intraday positions still encountered annual cost deviations averaging ±10 €/MWh compared to planned hedge levels. For a consumer with a demand of 40 MW, this translated into potential variances reaching ±3.5 million €, despite optimal operational strategies being employed. While intraday optimization helped reduce imbalance penalties, it did not stabilize average power costs.
Utilities faced similar challenges as improved intraday trading reduced balancing costs and forecast error losses; however, they continued to experience volatile forward margins driven by sensitivity to weather patterns and cross-border congestion issues. The forward curve remained largely independent of intraday conditions and was influenced more by macro-level supply expectations than real-time liquidity dynamics.
By late 2025, astute market participants began to recognize that intraday markets function primarily as operational shock absorbers rather than comprehensive financial risk management tools. They acknowledged that while intraday liquidity enhances efficiency and alleviates system stress, it does not replace the need for robust forward markets capable of locking in prices over extended periods with minimal basis risk—thus leaving long-term exposure virtually unchanged.
The key takeaway from this evolving landscape is that market maturity should not be gauged solely by the speed at which electricity can be traded but rather by how effectively risks can be managed over time horizons extending beyond immediate operational needs. In Southeast Europe, while intraday liquidity has developed rapidly, long-term risk absorption mechanisms remain insufficiently addressed. This confusion between operational efficiency and financial resilience has led many stakeholders to overestimate their hedging capabilities while underestimating residual exposure risks.
