The electricity markets in South-East Europe (SEE) commenced January 2026 amidst significant winter stress, characterized by fluctuating prices largely influenced by demand driven by cold weather, gas-linked marginal costs, and ongoing structural limitations in regional interconnections. Throughout the month, day-ahead prices exhibited notable volatility, highlighting the precarious balance of power systems in the region during colder periods.
At the beginning of January, prices remained relatively stable on milder days, with average day-ahead clearing levels across key SEE markets ranging from €65 to €75 per megawatt-hour (MWh). However, this stability was short-lived as a drop in temperatures across Central and Eastern Europe led to increased heating demands and tightened system margins. Consequently, day-ahead prices surged past €120/MWh on several occasions, with peaks approaching €130/MWh observed particularly in interconnected markets such as Serbia, Hungary, Romania, and Bulgaria. This wide price range within a single month underscores the inherent volatility that characterizes the region’s electricity market.
By mid-January, the upward price trend had intensified significantly. Average weekly prices across the SEE region exceeded €100/MWh, reflecting an increase of over 20% week-on-week from early January figures. Countries like Hungary, Romania, and Bulgaria frequently recorded prices in the €125 to €136/MWh range during peak demand days. In contrast, Greece and Türkiye maintained slightly lower averages due to variations in generation mix and gas supply conditions. Despite these differences among countries, nearly all hubs experienced elevated clearing prices.
The primary factors driving January’s pricing dynamics adhered to typical winter patterns but were exacerbated by regional specifics. The cold weather substantially raised electricity loads while solar energy production remained low for the season and wind generation varied significantly. Although hydropower availability saw slight improvements in certain areas, it was insufficient to mitigate marginal pricing pressures. Consequently, gas-fired generation often dictated marginal costs, directly linking fluctuations in regional gas markets to electricity pricing.
Moreover, structural constraints further exacerbated price pressures within the market. Limited cross-border transmission capacity on critical north-south and east-west routes hindered opportunities for arbitrage with lower-priced Central European markets during peak demand periods. Congestion premiums became apparent across several border points, obstructing sustained price convergence even when neighboring systems enjoyed more favorable supply conditions. These infrastructural bottlenecks continue to set SEE apart from Western and parts of Central Europe where stronger interconnections typically help alleviate volatility.
The wholesale dynamics observed in January also influenced discussions around retail and regulated pricing across various jurisdictions in the Western Balkans. Many regions entered 2026 with planned or anticipated tariff adjustments reflecting heightened wholesale procurement costs alongside inflationary pressures and lagging cost recovery from prior years. While Serbia indicated that more substantial retail adjustments might occur later in the year, other markets acted sooner to align end-user tariffs with volatile wholesale trends.
In a broader European context, South-East Europe consistently operated at a structural premium during January. Even when excluding extreme cold days, average wholesale prices across much of the region remained between €85 and €105/MWh—significantly higher than those seen during similar periods in parts of Western Europe. This disparity not only reflects immediate weather impacts but also deeper market characteristics such as a greater reliance on thermal generation at peak times and slower development of large-scale flexibility solutions like storage and demand response mechanisms.
The events of January 2026 have underscored a persistent reality for SEE electricity markets: seasonal volatility is now an intrinsic characteristic rather than an exception. Without accelerated investments aimed at enhancing grid infrastructure, improving regional interconnections, and expanding flexible generation capacity along with storage solutions, sharp price fluctuations are likely to persist whenever demand surges or renewable output diminishes. The pricing patterns observed this January serve as a concentrated example of how both structural constraints and seasonal fundamentals continue to shape market outcomes throughout South-East Europe.
