Week 26 confirmed that thermal generation remains the central price-setting layer in Southeast Europe during summer stress periods. Regional thermal output rose by 24.7% to 6.52 TWh, as gas, coal and lignite units were called on to cover higher demand and compensate for weaker hydro availability. Gas-fired generation increased by 25.5%, adding 803 GWh, while coal and lignite generation rose by 23.6%, adding 490 GWh.
This is a crucial market signal because the region often speaks about renewable expansion as the dominant investment story. Renewables are growing, but during a heatwave week the clearing price was still heavily influenced by dispatchable thermal capacity. Solar helped during daylight hours, wind improved in some markets, and hydro provided support in selected countries, but the system-wide balancing burden shifted to gas, coal and lignite.
Italy was the clearest example. Its gas-fired generation surged by 47.5%, while coal-fired generation more than tripled from the previous week. That pushed Italy’s total thermal generation up by 50.8% and helped explain why Italy remained one of the most expensive regional markets at €144.67/MWh. Italy’s role matters beyond its national borders because it anchors the southern European gas-power relationship and influences the Adriatic trading space.
Greece also increased thermal output, with gas generation up 12.6% and lignite returning to the generation mix after no production in Week 25. Serbia expanded lignite-fired generation by 17.9%, while Hungary, Croatia and Bulgaria also lifted thermal production. Romania was the exception, recording a slight decline in total thermal generation as lower gas-fired output offset higher coal generation. Türkiye increased thermal output modestly, with coal rising as gas declined.
The return of thermal generation does not mean the energy transition has paused. It means the region still lacks enough flexible low-carbon capacity to cover high-demand summer evenings without relying on conventional assets. Until battery storage, demand response, interconnectors and dispatchable clean capacity scale materially, thermal plants will continue to define scarcity pricing.
This has direct consequences for power buyers and project developers. A renewable project that produces mainly during low-price hours is exposed to cannibalisation risk. A flexible asset that can deliver during thermal price-setting periods captures higher value. A corporate PPA that does not address hourly matching and balancing costs may look attractive on paper but become more expensive in practice during heatwave weeks.
Week 26 demonstrated that SEE’s electricity transition is not just about installing more megawatts. It is about replacing the price-setting function of thermal generation during the hours when the system needs firm capacity most.
Elevated by Virtu.Energy
