South East Europe is emerging as one of Europe’s key electricity-market testbeds, combining fast solar expansion with legacy coal generation and hydro output that can vary. The region also faces constrained grids and incomplete market coupling, alongside growing storage needs and carbon-border pressure. The mix is associated with risk, while also creating investment opportunities.
For 2026–2028, the base-case outlook points to continued volatility rather than a single direction for wholesale prices. Average prices may stay below the extreme levels recorded during the energy-crisis years, but the distribution of prices across the day is expected to be more important. ACER’s work on 2024 price spikes and the persistent 2025–early 2026 SEE–Central Europe price gap is cited in support of this view.
Midday pricing is expected to weaken as solar penetration increases. Evening prices are expected to remain exposed to scarcity conditions when demand is high and flexible capacity is limited. This pattern links daily price shape to both renewable output and the availability of balancing resources.
Storage investment shifts toward core flexibility
Storage is identified as the first major investment signal for the period. Batteries are described as moving from optional additions toward core infrastructure for system operation. The regional focus on flexibility is reflected in Bulgaria’s storage pipeline supported through the RESTORE programme.
Bulgaria’s RESTORE-backed push includes official support for 3,000 MWh of usable battery capacity. Wider project approvals are noted at around 9.7 GWh. The figures are presented as evidence of how quickly flexibility investment is progressing in the region.
Transmission capacity and cross-border allocation remain decisive
The second investment signal concerns grid value, spanning transmission capacity, interconnectors, congestion management and cross-border allocation. ACER recommendations include better use of available network capacity and implementation of a 70% cross-zonal capacity requirement. The regulator also points to expanded flow-based capacity calculation.
ACER further recommends extending market coupling to non-EU neighbors, alongside changes intended to improve how cross-border flows translate into market outcomes. These measures are positioned as central to reducing constraints that affect trading and price formation across borders.
15-minute trading raises requirements for forecasting and balancing
The third signal relates to market sophistication as trading products evolve. The EU’s move toward 15-minute day-ahead trading is described as reflecting a system where electricity value changes within the day. South East Europe is expected to require trading, forecasting and balancing capabilities aligned with this more granular structure.
The shift toward shorter intervals is linked in the analysis to intraday variability and changing conditions for system operators and market participants. This affects how flexibility needs are managed across the day rather than only at hourly granularity.
CBAM effects alter EU–Western Balkans commercial flows
The fourth signal concerns carbon exposure through CBAM-related impacts on trade relationships between the EU and Western Balkans. The Energy Community reports a 25% fall in commercially scheduled exchanges between the EU and Western Balkans in Q1 2026. It also reports that day-ahead prices in Contracting Parties averaged €30/MWh lower than neighboring EU markets.
This carbon-linked effect is used to frame how commercial volumes and price differentials may change across borders during the outlook period. It also feeds into expectations about which market segments benefit or face headwinds.
Likely winners include flexible assets, traders and grid investors
The analysis identifies flexible assets as first among likely winners: batteries, pumped hydro, flexible hydro operation, demand response and fast-ramping plants. These resources are described as benefiting from price spreads and periods of system stress. Their value is tied to how often scarcity conditions occur relative to flexible supply availability.
Sophisticated traders and optimizers are also highlighted as beneficiaries as markets move toward negative prices and more volatile intraday conditions. With 15-minute products, value shifts toward forecasting capability and flexibility management rather than only volume-based trading approaches.
Renewable projects with storage, hybrid configurations or strong offtake structures are listed as another winner category. Standalone merchant solar remains part of expected build activity, but its risk profile is described as becoming more challenging under the evolving market conditions.
Industrial buyers with flexible demand are identified next, particularly companies able to shift consumption into low-price hours. Grid and infrastructure investors form a fifth winner group, covering transmission reinforcement, substations, digital grid technologies and interconnectors needed for market integration.
Likely losers include unhedged consumers and unsupported solar
The likely losers include unhedged consumers who remain exposed to price spikes under volatile conditions. Standalone solar projects without storage or shape protection are described as facing declining capture prices as intraday patterns change.
Aging coal assets are also flagged for pressure from rising carbon costs, pollution considerations and financing constraints. Utilities that delay transition planning are described as potentially losing export revenue and market position if they do not adjust their generation portfolios.
The analysis also points to policymakers who slow market coupling as a factor that could leave consumers paying for inefficient fragmentation across markets. In this framing, delays in integration can worsen outcomes tied to cross-border constraints.
Upside scenario depends on storage rollout, grids and balancing markets
The upside case for South East Europe is presented around faster storage deployment, stronger grids, market coupling progress, improved balancing markets and industrial demand response. These elements are associated with fewer scarcity events and improved renewable integration within the outlook horizon.
In that scenario, the region is described as becoming a competitive clean-power corridor linking the EU with Western Balkans through improved operational coordination and trading access across borders.
Downside scenario combines weather risk with outages and CBAM friction
The downside case is described as equally plausible if multiple stress factors coincide during 2026–2028. It includes a hot and dry summer leading to weak hydro output alongside gas-price volatility affecting generation costs across the system.
The downside scenario also includes grid outages plus CBAM-related trade friction that could combine into another period of severe price stress in regional power markets.
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