Serbia’s power market turns to negative prices, forcing a rethink of renewable project economics

Serbia’s electricity market is entering a more volatile, Europe-style phase from 5 May, when negative prices will become applicable on SEEPEX for the first time. For investors and corporate buyers, the change matters because it turns what has often been treated as a theoretical market feature into an operational reality—hours when renewable output exceeds demand and system flexibility cannot absorb the surplus.

From planning to operational pricing signals

SEEPEX data show that the market is already moving in that direction. In the first quarter of 2026, SEEPEX recorded 69 hours of zero prices on the day-ahead market, compared with just 8 hours in the same period last year, according to Miloš Mladenović, SEEPEX executive director. He said the introduction of negative prices is part of Serbia’s alignment with the pan-European market model and a precondition for market coupling.

What negative prices mean for financing and contracts

The practical implication is that future renewable project economics can no longer be built only on installed capacity and average annual price assumptions. As negative-price hours become part of normal trading outcomes, hourly volatility—and exposure to curtailment, balancing costs and deviations—will increasingly influence whether projects remain bankable.

Davor Pupavac, director for market analysis and risk management in electricity trading at EPS, stressed that negative prices themselves are not inherently a problem. Instead, they signal that surplus electricity will appear more often in specific hours. He pointed to the need for updated business models, particularly around PPA structures covering fixed prices and how deviations are treated. EPS has already signed PPA arrangements, meaning how those contracts handle negative-price periods will become a concrete commercial issue rather than a clause left untested.

CBAM risk raises the stakes for cross-border revenue

Among the most sensitive issues is CBAM. SEEPEX has linked the widening spread between Serbian and Hungarian spot prices to market distortion created by full application of CBAM from 1 January 2026. If Serbia cannot secure a workable solution or exemption for electricity under CBAM treatment, the investment environment for new renewable projects could become materially harder—especially for projects dependent on cross-border offtake or merchant revenues tied to EU-linked pricing logic.

Next steps: risk allocation, storage and faster flexibility

The immediate response is expected to be both contractual and technical. Developers will need PPAs that clearly allocate negative-price risk among producers, buyers, traders and lenders. Banks are likely to increase scrutiny by requesting downside scenarios that include both zero-price and negative-price hours. Industrial offtakers may also gain leverage if they can shift demand toward low-price periods.

Battery storage is also set to move from optional add-on toward core infrastructure in markets where solar output creates midday oversupply followed by evening price recovery.

NALED’s Sustainable Energy Council described the shift as progress toward a more liberalised and Europeanised electricity market while warning that Serbia must prepare faster for system flexibility. It highlighted battery storage, demand-side management, financial-sector participation and closer public-private coordination as key tools for stabilising the next phase of the transition.

Negative prices will not automatically halt renewable investment in Serbia—but they will change its financial architecture. Projects that succeed are likely to be those designed around flexible offtake arrangements, storage integration, stronger balancing discipline and contracts that treat cheap surplus-hour electricity not as a failure of transition planning, but as evidence that Serbia’s power system now needs an additional layer of market design.