Thermal generation regained a more prominent role across Southeast European electricity markets during Week 25, highlighting the continuing importance of dispatchable power in an increasingly renewable-based energy system. Regional thermal output increased by 19.4% to 5.31 TWh, driven by a 32.3% rise in gas-fired generation and a 4.5% increase in lignite and coal production. Importantly, this was not a return to traditional baseload generation economics. Instead, it reflected the growing value of thermal assets as providers of flexibility during periods of tighter hourly system balances.
The increase in thermal generation occurred despite a significant decline in natural gas prices. TTF gas futures fell by 14.8%, which would traditionally be expected to ease electricity market pressures. However, power systems across the region still required additional dispatchable generation as electricity demand increased, wind output weakened, and hydro production declined in several key markets. Thermal plants were therefore called upon to bridge the gap during periods when renewable generation alone could not fully satisfy demand requirements.
Italy provided the clearest example of this trend. Total thermal generation increased by 66.7%, while gas-fired output rose by more than 61% and coal-fired generation nearly quadrupled. The increase was largely driven by lower hydro availability, weaker wind conditions, and persistent electricity demand. Despite the additional generation, Italy remained the highest-priced market in the region at €127.69/MWh, demonstrating that thermal units were responding to scarcity conditions rather than creating surplus supply capable of significantly reducing prices.
Other regional markets displayed similar patterns. Hungary and Croatia both expanded thermal generation, primarily through increased gas-fired production. In Greece, lignite generation remained absent, yet gas-fired output increased by 16.4%, resulting in a 5.4% rise in overall thermal generation. Meanwhile, Türkiye adjusted its generation mix by shifting output from gas toward coal while maintaining relatively stable overall thermal production levels.
For policymakers, Week 25 serves as a reminder that thermal generation continues to provide critical system services during the energy transition. The debate is no longer centered on whether thermal plants should operate continuously. Instead, the key question is whether sufficient dispatchable capacity remains available when solar production declines, wind generation weakens, and hydro resources become constrained. Reliability increasingly depends on having flexible assets capable of responding quickly to changing system conditions.
For investors, this evolving market structure is reshaping the economics of thermal assets. Future revenue streams are likely to depend less on continuous energy production and more on participation in scarcity pricing events, capacity mechanisms, balancing markets, and other flexibility-related services. This creates a fundamentally different investment profile, particularly for gas-fired power plants that must navigate fuel price volatility, carbon costs, and uncertainty regarding annual operating hours.
For Southeast European power markets, Week 25 reinforced an important reality: renewable and thermal generation are not yet interchangeable during every hour of the day. Renewable resources continue to provide large volumes of low-cost energy, while thermal plants remain essential for delivering firm and flexible generation when renewable output falls short. Until battery storage, demand-side flexibility, and transmission infrastructure expand significantly, regional electricity prices will continue to be shaped by the interaction between these two pillars of the power system.
