How congestion rents from cross-border auctions are quietly funding South-East Europe’s grid build-out

South-East Europe’s electricity price signals may grab headlines, but the system’s real financial engine often sits one layer deeper: the auctioning of scarce cross-border capacity and the resulting congestion rents. These payments convert physical limits on power flows into monetisable cashflows—supporting both trading strategies and transmission investment.

At the core is a parallel market administered through coordinated allocation platforms and transmission system operators including EMS Serbia, MAVIR Hungary, Transelectrica Romania, ESO Bulgaria, IPTO Greece and CGES Montenegro. In this setup, grid constraints become tradable rights, producing an infrastructure-like stream of revenue that now totals €0.8–1.2 billion annually across the broader SEE region, depending on market volatility. cross-border capacity auctions

Auction capacity rights: where spreads become cash

The logic is direct but financially consequential. Interconnection capacity—defined as Net Transfer Capacity (NTC) and allocated as Available Transfer Capacity (ATC)—is sold through yearly, monthly, daily and intraday auctions. Traders such as MET Group, Axpo, GEN-I, EFT and PPC Trading bid for the right to move electricity across borders.

The auction price reflects expectations about spread outcomes between markets. When those spreads materialise in practice, the value of the capacity right is realised; when they do not, the capacity right effectively becomes a sunk cost for holders.

Corridor-by-corridor: where congestion rents show up

The size and volatility of congestion revenues vary sharply by interface—mirroring differences in liquidity, structural pricing drivers and how constrained each corridor tends to be.

Serbia–Hungary, described as one of the most liquid borders in the region, reaches physical capacity of 1,200–1,500 MW, with ATC typically in the 600–1,000 MW range. Annual flows run above 8–10 TWh. Auction prices for yearly capacity often imply forward spreads of €8–20/MWh, translating into annual congestion revenues of roughly €70–120 million, shared between the two system operators. For participants holding long-term rights, these revenues can function like an embedded component within trading portfolios.

Bulgaria–Greece, by contrast, operates at larger scale with higher variability. Capacity also sits around 1,200–1,500 MW, while flows exceed 10–12 TWh annually. Congestion rents have reached €150–200 million per year. The underlying driver is a persistent structural differential between Greece’s gas-influenced market—where average prices range from €100–140/MWh—and Bulgaria’s more diversified system at typically €80–110/MWh. Securing capacity here amounts to positioning against that enduring spread.

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Romania’s links add further layers to regional arbitrage economics

The regional picture extends beyond single corridors. Romania’s interconnections with Hungary and Bulgaria create additional opportunities where price divergence drives congestion rent outcomes.

• Romania–Hungary: With capacity around 1,500–2,000 MW, it supports flows toward Central Europe; annual traded volumes exceed 12–15 TWh. Congestion revenues can reach €100–150 million, particularly when Romanian prices diverge from Hungarian benchmarks.
• Romania–Bulgaria: Though smaller than other interfaces discussed here, it still generates about €50–80 million annually, reflecting both north–south and east–west flow dynamics.

An HVDC link changes how constraints are managed—and monetised differently

The Montenegro–Italy connection illustrates that not all interconnectors behave alike. The link uses HVDC technology with capacity of 600 MW and annual flows of 4–5 TWh. Because it is controllable as a DC channel rather than purely alternating-current transfer capability, it enables more precise management of flows—effectively acting as a dedicated arbitrage route between Balkan and Italian markets.

The estimated congestion revenues associated with this corridor are put at about €70–150 million annually, depending on spreads that can range from roughly €20–50/MWh. Access is described as highly strategic given exposure to one of Europe’s largest and most liquid electricity markets.

Cashing out bottlenecks for grid expansion under European rules

The importance of these payments goes beyond trading desks. Under European regulatory frameworks referenced in the source material, congestion rents are typically reinvested into grid expansion or used to reduce network tariffs. In effect they provide quasi-stable funding support for multi-billion-euro CAPEX programmes across the region.

The article points to specific examples where corridor revenues contribute to projects such as the Trans-Balkan Corridor (€300–400 million)and Bulgaria–Greece reinforcements exceeding €500 million .

A financial asset emerging from long-term allocations—and evolving market coupling mechanics

The way traders use these rights has shifted toward treating them like structured exposures to spread outcomes over time. Annual and multi-year allocations allow firms to lock in exposure to expected differences between markets—turning volatile opportunities into positions that resemble financial assets rather than purely operational bets.

An example provided in the source describes a trader holding 200 MW </bof yearly capacity on Bulgaria–Greece capturing €20–40/MWh spreads </bacross 1.5–2 TWh </bof annual flow—generating gross margins estimated at €30–80 million </bdepending on utilisation and conditions. Such positions are often hedged using forward contracts or balanced with physical assets like generation or storage.

This sits alongside another development affecting short-term monetisation. As day-ahead markets become increasingly integrated via European coupling mechanisms, explicit auctions for short-term capacity are gradually replaced by implicit allocation where capacity is bundled with energy trades. Still, long-term auctions—yearly and monthly—remain critical for managing exposure and securing access to constrained corridors. The result is a layered structure in which different time horizons are monetised differently.

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