The fall in European gas prices during Week 25 should, in theory, have reduced pressure on SEE electricity markets. TTF averaged around €41.76/MWh, down almost 15% week-on-week. Yet power prices moved higher in several markets, including Italy, Hungary, Croatia, Romania and Serbia. That disconnect is now one of the central features of SEE energy trading.
The reason is that the gas-to-power relationship is no longer linear. Gas still matters because it sets the marginal cost in many hours. But electricity prices are also being shaped by renewable output, hydro availability, import dependence and peak-hour balancing. When these physical factors tighten, lower gas can soften the upside but not remove it.
Italy showed the strongest version of this dynamic. Gas-fired generation increased sharply because the system needed flexible thermal output to cover higher demand and weaker renewable conditions. Even with lower gas prices, Italy remained the regional premium market. The gas price fell, but the need for gas-fired power increased.
Croatia and Hungary followed a similar logic. Both markets moved higher because regional tightness and cross-border price transmission outweighed the bearish fuel signal. Serbia also rose despite a stronger domestic balance, showing that regional prices can lift SEEPEX even when local hydro improves.
This matters for power buyers. Many industrial procurement strategies still assume that lower gas should quickly reduce electricity costs. That assumption is becoming weaker. In a renewable-heavy system, the marginal price is increasingly determined by the hour in which flexible supply is needed. Gas may be cheaper, but if the system needs more of it during scarce evening hours, power prices can still rise.
For generators, lower gas creates a mixed outcome. It can reduce operating costs for gas-fired plants, but it can also reduce the ceiling for merchant power prices during normal hours. The highest-value periods will increasingly be those where flexibility is scarce, not simply those where fuel is expensive.
For policy-makers and grid operators, the message is equally clear. More renewables without flexibility will not automatically deliver lower prices across all hours. Solar expansion can suppress midday prices, but evening ramps need hydro, storage, demand response, interconnectors and dispatchable generation. Without that flexibility, fuel prices will remain only one part of the story.
SEE gas prices are softer, but SEE power markets are still volatile. That is the new trading environment.
