The Southeast European electricity market moved decisively lower during the second half of May as stronger hydro conditions, accelerating solar generation, and improving wind output outweighed the bullish impact of higher gas and carbon prices. Across the region, the market increasingly behaved like a renewable-driven system rather than a fuel-driven system, creating widening price differences between flexible assets and inflexible generation.
Average regional demand excluding Greece eased from 22,578 MW in the first half of May to 21,927 MW in the second half, despite warmer weather. At the same time, hydro generation increased to 6,580 MW, solar output reached 5,632 MW, and wind generation climbed to 2,833 MW. Together, renewables supplied the majority of electricity in Southeast Europe, while coal and nuclear output both declined.
The result was visible across all major power exchanges.
Albania recorded the largest price correction in the region. Average ALPEX prices fell from €98.60/MWh to €81.16/MWh, a drop of more than 17%. Strong hydrology once again turned Albania into one of the region’s lowest-cost systems and reinforced its role as a net exporter during wet periods.
Montenegro followed a similar trend. BELEN prices dropped from €98.76/MWh to €83.92/MWh, placing the market among the cheapest in Southeast Europe. Pricing increasingly aligned with Albania and North Macedonia, rather than Croatia or Hungary, highlighting the growing influence of southern Balkan renewable supply.
North Macedonia also saw significant downward pressure. MEMO prices declined from €97.17/MWh to €82.66/MWh, driven by lower import dependence, stronger regional renewables, and deeper market integration.
Larger regional markets also corrected, but to a lesser extent.
Serbia’s SEEPEX averaged €91.95/MWh, down from €101.61/MWh. Despite the decline, Serbia remained more expensive than its southern neighbors, reflecting its role as a central balancing and trading hub in regional flows.
Bulgaria’s IBEX fell from €104.98/MWh to €97.41/MWh, while Romania’s OPCOM dropped from €115.88/MWh to €103.64/MWh. Romania remained one of the highest-priced markets due to transmission constraints and balancing demand within the region.
Greece continued its downward trend as renewable penetration increased. HENEX prices averaged €85.81/MWh, down from €92.36/MWh, reinforcing concerns among solar investors about merchant revenue compression and rising negative-price exposure.
Further north, Croatia and Slovenia remained relatively resilient. CROPEX averaged €101.52/MWh, while Slovenia’s BSP averaged €101.15/MWh, supported by stronger coupling with Central European price dynamics.
The most important structural shift was not the decline in average prices, but the expansion of the day-night price gap.
Across the region, solar generation increasingly compressed midday prices, displacing thermal units from the merit order. Once solar output faded in the evening, gas, hydro, and flexible thermal plants regained pricing power, creating sharp evening price spikes.
This environment strongly favors assets that can shift energy across time. Battery storage, pumped hydro, flexible gas plants, and dispatchable hydro assets all gained value during May.
Cross-border flows also shifted notably.
Net exports improved in the second half of the month as Southeast Europe increasingly exported electricity toward Italy, while reducing reliance on imports from Central Europe. Flows toward Italy moved from net imports to net exports, reflecting the rising competitiveness of Balkan renewable generation.
At the same time, Romania strengthened its role as a key exporter toward Hungary, while Bulgaria remained a critical transit corridor linking Romania, Greece, Serbia, and Türkiye. Serbia continued to function as a major regional trading and balancing hub.
Interestingly, commodity markets moved in the opposite direction.
Austrian gas prices rose to €49.85/MWh, Greek gas increased to €46.09/MWh, and EU carbon allowances climbed to €77.18/t. Despite this, electricity prices fell sharply, showing that renewables—not fuels—are now the dominant price driver in Southeast Europe.
For investors, May confirmed a clear structural shift.
Rapid expansion of solar capacity in Romania, Bulgaria, Greece, and the Western Balkans is intensifying midday price suppression. This is creating revenue compression for standalone solar assets, while wind projects remain relatively better positioned due to their stronger alignment with evening demand peaks.
Hydropower remains a decisive factor. Improved hydrology in May strengthened export capacity in Albania, Montenegro, and Bosnia and Herzegovina, while simultaneously pushing regional prices lower. Weather conditions are therefore becoming one of the most important trading variables heading into summer.
Looking ahead, the market is increasingly splitting into three zones.
The first is the renewable-discount zone (Albania, Montenegro, North Macedonia, and parts of Greece), where abundant hydro and solar keep prices structurally low.
The second is the balancing and transit zone (Serbia, Bulgaria, Romania), where congestion and cross-border flows maintain higher and more volatile pricing.
The third is the Central European convergence zone (Croatia, Slovenia, Hungary), where stronger integration with Western Europe provides greater price support.
May 2026 confirmed that Southeast Europe is no longer a coal-and-gas dominated power market. Instead, price formation is increasingly driven by renewable output, transmission constraints, system flexibility, and storage availability. The result is lower average prices, higher intraday volatility, and a growing premium for flexible generation and sophisticated trading strategies.
