Blog
Gas-led tightening lifts South-East Europe power prices, but forward outlook cools
On 31 March, South-East Europe’s power market jumped back into a firmer pricing regime as tightening system conditions met stronger demand and higher gas-related input costs. The surge in day-ahead prices, reflected across major exchanges, underscores how quickly marginal-cost pressures can reassert themselves when the region’s balance tightens.
Pricing gains were among the most coordinated seen in recent weeks, with day-ahead prices contributing to the focus on how regional fundamentals—rather than isolated national factors—are increasingly driving outcomes. Market coupling and cross-border flows also played a larger role in shaping price formation during the session.
Day-ahead baseload: broad increases across SEE exchanges
Baseload quotes rose throughout South-East Europe. Serbia’s SEEPEX cleared at €157.8/MWh, up €51.8 day-on-day—the steepest increase reported across the region. Hungary’s HUPX climbed to €148.4/MWh (+€9.7), while Romania and Bulgaria converged around ~€141.2/MWh, each gaining roughly €6–8/MWh.
Greece reached €133.8/MWh (+€15.8). Albania recorded the highest level in the region at €188.1/MWh (+€45.8). Montenegro remained lowest priced at €119.9/MWh, though it still posted a notable daily rise of €18.2/MWh.
Tightening shows up in demand and imports
The rally mirrored synchronized balance-sheet pressure across the SEE system rather than idiosyncratic movements within individual markets. Regional consumption increased to 35.7 GW, up by +584 MW day-on-day, while net imports rose to 2,009 MW (+408 MW). Together, those changes point to growing reliance on external supply to meet demand.
Inflows from Central Europe—especially Austria and Slovakia—totaled 4,133 MW, highlighting how northern sources are helping stabilize SEE demand when domestic flexibility is constrained.
Marginal cost pressure: more gas generation despite hydro gains
The generation mix reinforced the cost picture behind higher prices. Gas-fired output increased by +558 MW, supporting its role as the marginal price-setting technology during the session. Hydro generation rose by +670 MW, which offered partial relief but was not enough to counteract broader tightening.
Solar generation expanded by +459 MW, yet it remained structurally unable to suppress evening peak pricing patterns described for the market day. Coal output declined by -521 MW, consistent with both economic forces and structural displacement amid high carbon costs.
Evening peaks signal stress—and raise flexibility value
The intraday profile showed pronounced evening peaks, with hourly prices exceeding €230–270/MWh. Minimum levels stayed above €100/MWh, suggesting sustained system strain rather than short-lived volatility.
This widening spread continues to strengthen the economic case for flexible resources and storage assets, since greater differences between low and high-price hours typically improve capture opportunities for technologies able to respond quickly.
Spreads narrow as integration deepens—but volatility risk remains
A key cross-border signal came through tighter inter-market spreads alongside continued import dependency. The Hungary–Germany spread narrowed sharply to €30.6/MWh, collapsing by around €50/MWh day-on-day
This compression reduces arbitrage headroom and indicates that SEE pricing is increasingly entangled with wider continental dynamics. Still, rapid convergence phases are often followed by renewed volatility if underlying fundamentals diverge again.
Fuel markets support spot strength, but forwards point elsewhere
Austrian gas traded at about €56.9/MWh, posting a modest increase alongside an upward trajectory in EU carbon allowances (as described). While coal prices remained under pressure, the combination of gas and carbon costs continued to define the marginal cost stack underpinning regional spot moves.
Forward curves offered a more mixed message: week-ahead power contracts fell by -10% in Hungaryand nearly-20% in Germany. Gas forwards softened by roughly6–8%. The divergence suggests that today’s tightness may not fully translate into sustained forward expectations over coming months.
Serbia introduces negative pricing from May 2026—raising trading complexity
The structure of trading is also set to change further after Serbia’s exchange confirmed negative pricing will be introduced from May 2026 on SEEPEX. A day-ahead floor of <-€500/MWh will apply, with intraday limits extending down to -€9,999/MWh .
The development aligns Serbia more closely with European market standards and is expected to materially increase price volatility—particularly during periods when renewable output is high.
A market defined by real-time stress—and shifting expectations ahead
Taken together, near-term conditions remain driven by demand recovery alongside limited baseload flexibility and elevated marginal costs tied to gas inputs—even as hydro conditions have improved without fully relieving system pressure. With renewables continuing to vary through time, intraday swings are likely to persist.
The current phase reflects an interplay between tightening spot fundamentals and softer forward expectations: prices appear increasingly shaped by real-time system stress rather than long-term scarcity signals. For participants operating across borders—or managing exposures sensitive to weather and cross-border flows—that means adapting strategies for sharper daily movements, narrowing spreads at times of convergence, and heightened sensitivity as negative pricing becomes part of Serbia’s market design.
