Southeast Europe entered July with elevated wholesale electricity prices, tighter supply margins, and a more fragile balance between gas and power markets after a challenging final week of June. Week 26 showed pressure building across regional systems, with power demand rising 12.7% to 18.41 TWh. Thermal generation increased 24.7%, while hydropower output fell 2.8%. Weekly average prices across most markets were above €100/MWh, and day-ahead prices on 1 July ranged from €169.11/MWh in Greece to €235.17/MWh in Hungary.
The month began after a prolonged heatwave that lifted wholesale prices in Hungary, Romania, Italy and Croatia. In Serbia, market conditions tightened and the country moved from a net electricity exporter to a marginal importer. Greece kept comparatively lower prices even as electricity demand rose and import requirements increased. Bulgaria continued to support regional supply as a net exporter, though declining hydropower generation reduced flexibility.
Cooling-driven demand and short-term temperature risk
Temperature is identified as the most immediate market risk for the region’s power balance. Electricity demand for cooling has become the dominant short-term factor behind wholesale price moves across Southeast Europe. Additional heatwaves could raise consumption quickly in markets including Italy, Greece, Croatia, Serbia, Hungary and Romania. Week 26 also showed that regional demand can increase by double-digit percentages within a single week, requiring higher thermal output and pushing peak prices upward.
Generation availability, hydropower output and fuel-linked pricing
The regional generation mix adds further uncertainty to July price formation. During the final week of June, thermal plants provided much of the additional balancing capacity, with both gas-fired units and coal or lignite generation increasing substantially. Prices during July are therefore expected to remain sensitive to power plant availability, fuel costs, carbon allowance prices, and operational constraints. Hydropower availability is also highlighted as a key driver of local supply conditions.
The direction of hydro output can affect regional tightness depending on where generation falls or rises. Lower hydropower production in Bulgaria or Türkiye could tighten supply further across the region. Stronger hydro generation in Serbia, Croatia or Greece could help moderate electricity prices in those markets.
Gas market tightness and storage levels feeding power balancing needs
Natural gas is another central risk for Southeast European power markets. TTF natural gas prices eased slightly during Week 26, but European gas storage remained below seasonal averages at 48.3% on 27 June. This level is described as maintaining an underlying risk premium across both gas and electricity markets. Prolonged high temperatures would increase gas use for electricity generation while also making storage refilling more difficult ahead of winter.
The linkage between gas and power is framed through balancing requirements rather than only through spot gas price changes. Under these conditions, wholesale electricity prices may rise even if gas prices do not increase significantly. The reason given is that gas-fired plants would be needed more frequently to balance electricity demand during periods of elevated consumption.
Evening price spikes and flexibility constraints across hours
An hourly shift in pricing patterns is also emphasized for July trading conditions. Evening electricity price spikes have become a defining feature of current market dynamics in the region. Solar generation reduces prices during daylight hours but cannot cover demand after sunset without sufficient battery storage or other flexible resources. As a result, the highest volatility is expected to remain concentrated around evening peak periods.
The timing of volatility is linked to system conditions such as wind output and cross-border transfer capability. Price swings are expected to be most pronounced when wind generation weakens or when cross-border transmission capacity becomes constrained. These factors influence how quickly supply can adjust during evening hours when solar output declines.
Shift toward flexibility tools rather than fixed procurement exposure
The market environment is described as favoring active risk management over passive procurement approaches. Traditional baseload purchasing strategies and full exposure to spot market pricing are presented as becoming less effective amid increasing volatility. Commercial value is described as moving toward flexible generation options including battery energy storage and demand response measures. Cross-border optimization and verified renewable electricity procurement are also cited among areas gaining importance.
The opening weeks of summer are used to illustrate how temperatures interact with flexibility availability in setting regional prices. Electricity pricing across Southeast Europe is described as being driven not only by rising temperatures but also by the cost of maintaining supply-demand balance on an hour-by-hour basis.
Elevated by Virtu.Energy