The rapid expansion of solar energy generation in Southeast Europe is encountering significant challenges due to outdated transmission infrastructure. As photovoltaic technology has become increasingly cost-effective, large-scale solar projects are proliferating across the Balkans and adjacent EU markets. However, the existing electricity networks, primarily designed for centralized thermal and hydropower generation, are struggling to accommodate this surge in decentralized solar capacity.
Historically, the region’s electricity transmission corridors were optimized for transporting power from large baseload plants to urban consumption hubs. This design is proving inadequate as thousands of megawatts of new solar capacity come online. As a result, grid congestion has emerged as a critical barrier to the growth of renewable energy sources.
Romania’s photovoltaic project pipeline has seen substantial growth, now exceeding 15 GW of proposed or under-construction capacity. Bulgaria has similarly connected several gigawatts of solar installations since 2022 and has additional projects pending grid approval. Meanwhile, Serbia is poised to add between 1–2 GW of solar capacity over the next few years through its renewable auctions and private initiatives. North Macedonia and Albania are also drawing interest from solar developers.
Solar generation typically follows a concentrated production profile, with output peaking around midday when sunlight is most intense. This timing creates substantial surges in electricity supply that can overwhelm transmission systems if they lack the capacity to distribute this power to demand centers or export markets. In extreme cases, system operators may be forced to curtail renewable generation to maintain grid stability.
Curtailment not only represents a loss of potential revenue for renewable investors but also complicates project economics as solar capacity increases throughout the region. Developers must carefully evaluate whether existing grid infrastructure can handle their output during peak production hours.
Transmission limitations also have significant implications for cross-border electricity trading within Southeast Europe, which is interconnected with Central European markets via high-voltage transmission lines. Surpluses in countries like Romania and Bulgaria can affect electricity prices in neighboring markets such as Serbia, Hungary, and Greece. However, limited interconnector capacity often leads to price discrepancies and hinders efficient surplus electricity exports.
This situation presents a paradox: while renewable energy reduces overall generation costs and lowers wholesale prices during peak production periods, inadequate transmission infrastructure can prevent these benefits from reaching consumers across different markets.
In response to these challenges, transmission system operators across Southeast Europe are planning substantial upgrades. Romania’s Transelectrica has put forth proposals for high-voltage corridor expansions that would link regions rich in renewables with major demand centers. Bulgaria’s ESO is working on reinforcing transmission lines that connect solar-heavy areas with cross-border interconnectors, while Serbia’s EMS is involved in regional initiatives aimed at enhancing electricity flows between the Western Balkans and the EU.
A strategically vital interconnection in this context is the Italy-Montenegro submarine HVDC cable, which facilitates direct electricity flow from the Balkans into the Italian market. With a capacity of around 1 GW, this cable serves as a crucial conduit for renewable exports from Southeast Europe into Western Europe—a role that will become increasingly important as regional solar and wind generation rises.
Another emerging factor impacting solar economics is the occurrence of negative electricity prices during oversupply situations. When solar output exceeds demand amid constrained transmission capacity, wholesale prices can plummet or even turn negative—a trend already observed in markets like Germany and Spain that is starting to surface more frequently in Central and Southeast European contexts.
Negative pricing indicates an excess of electricity that cannot be efficiently absorbed by the system. In such scenarios, renewable generators may struggle to secure adequate revenue unless they have established long-term power purchase agreements or similar support mechanisms like contracts for difference. As solar penetration intensifies in Southeast Europe, price volatility during midday hours is expected to escalate.
Battery storage technology presents a viable solution to some of these challenges by allowing excess electricity generated during peak production times to be stored and released during periods of higher demand later in the day. This capability not only smooths out price fluctuations but also enhances project profitability by enabling developers to sell stored energy when market prices are more favorable.
The integration of solar generation with battery storage systems is gaining traction as a key trend within the sector. Hybrid projects combining both technologies are becoming more common in Western Europe and are beginning to emerge within Southeast Europe as well—capable of tapping into various revenue streams by participating in both energy markets and ancillary services markets.
Moreover, enhancing regional electricity market integration through market coupling could improve price convergence across Southeast European countries while facilitating smoother cross-border flows of electricity. By better coordinating transmission capacity allocation alongside market clearing mechanisms, countries can alleviate congestion issues while improving overall efficiency regarding renewable energy integration.
The ongoing solar boom across Southeast Europe embodies both significant opportunities and formidable challenges. Solar technology provides an effective pathway toward decarbonizing energy systems while reducing reliance on imported fossil fuels; however, without concurrent investments in necessary transmission infrastructure and storage capabilities, this rapid expansion risks generating congestion issues, curtailment losses, and heightened price volatility.
The next stage of the region’s energy transition will hinge not only on advancing renewable deployment but also on modernizing electrical networks. To fully harness the economic and environmental advantages presented by its burgeoning renewable energy sector, Southeast Europe must expand its transmission corridors, interconnectors, and storage systems alongside growing solar capacities.
