South-East Europe has entered a decisive phase of its energy transition, with renewable expansion described as irreversible while system adaptation remains incomplete. Wind and solar deployment is accelerating across Serbia, Montenegro, Albania, Bosnia and Herzegovina, North Macedonia and Croatia, outpacing the physical and institutional infrastructure needed to support it. The region’s electricity systems are moving toward high renewable penetration while still relying structurally on coal, constrained hydropower, long-inadequate transmission networks and balancing markets designed for earlier operating conditions.
In this setting, the key differentiator between countries is described as not being the scale of wind turbines or solar parks, but the amount of flexibility built alongside them. Flexibility is defined in the source as fast ramping, storage, system inertia, interconnection management and demand-side responsiveness. The article also notes that wind and solar do not displace baseload; they displace predictability by compressing operational dynamics into minute-by-minute imbalances.
The resulting volatility affects dispatch patterns, grid stability, cross-border flows and the economics of each megawatt-hour produced. The source states that countries that invest in flexibility can stabilise systems and monetise renewable surpluses through platforms such as electricity.trade. It also links failure to anticipate these changes with curtailment, rising balancing penalties, system instability and recurring dependence on expensive imports during seasonal stress.
Regional operating challenge: balancing availability and grid access
Between now and 2040, the source says the region’s evolution depends on how wind and solar interact with baseload resources, balancing availability and grid-access risk across SEE markets. It frames these elements as interdependent rather than separate national stories. In systems historically dominated by lignite and large hydropower, renewable-driven volatility is described as reverberating through multiple parts of power system operation.
Across the countries covered, wind and solar are described as increasing energy volume while undermining baseload predictability. The source links this shift to intensifying evening ramps, escalating imbalance costs and pushing grid infrastructure beyond design limits. It also connects the trend to greater exposure to cross-border dependencies where balancing resources are not available domestically.
Serbia: lignite reliability declines as wind and solar grow
Serbia is described as a central system in the Balkans, with a lignite fleet historically delivering stable output but showing increasing unreliability as mines degrade and maintenance cycles lengthen. Wind capacity in the Banat zone and accelerating solar deployment are said to add daily and seasonal variability that the thermal fleet cannot follow. Coal plants are described as not engineered for constant cycling, with even minimal ramping linked to mechanical and economic damage.
The source says hydropower previously compensated for thermal weaknesses, but climate volatility has reduced predictability. It describes winter deficits and summer surpluses producing a pattern of midday oversupply alongside evening structural shortages. It adds that each additional megawatt of wind or solar increases the mismatch between generation profiles and system needs.
Balancing responsibility in Serbia is described as exposing producers to volatility-driven financial risk because EPS often relies on expensive units for imbalance correction. As renewable penetration rises, imbalance costs are said to increase accordingly. Grid-access risk is also highlighted, including 110 kV nodes in Vojvodina and central Serbia that cannot absorb simultaneous injections from multiple new solar plants.
The source states that without large-scale storage Serbia could face a cycle where renewable growth drives curtailment faster than transmission upgrades can be executed. It concludes that wind and solar expansion would continue but would reduce in value unless flexibility investment accelerates.
Montenegro: hydropower flexibility constrained by transmission limits
Montenegro is described as having a small system with minimal thermal baseload but substantial hydropower and one strategic asset: a submarine cable to Italy. Hydropower is described as providing natural flexibility, though insufficient on its own to stabilise regional renewable volatility without pairing with new storage and upgraded transmission corridors. Wind and solar are described as modest in installed capacity but becoming more visible as they scale due to limited firm capacity.
The source describes Montenegro swinging between surplus and deficit as inflows change and regional flows shift. It says the hydropower fleet cannot always ramp to match wind and solar fluctuations, nor absorb deep midday solar surpluses if the Italy cable is constrained or under maintenance. This links operational variability to both generation profiles and cross-border transfer conditions.
Grid-access risk in Montenegro is described as less about internal congestion than regulatory clarity and investor visibility. While new legislation offers compensation for curtailment, the mechanisms are described as untested. Solar and wind investors are said to face connection queues, evolving auction schemes and uncertainty over how system operators prioritise renewable integration when voltage stability is at risk.
The source also describes potential for Montenegro to act as a regional balancing exporter if it builds storage, upgrades hydropower flexibility and maximises use of the Italy cable. It states that Montenegro’s role could grow due to flexibility capacity rather than renewable volume.
Albania: rainfall-driven baseload meets expanding non-hydro generation
Albania is described as having the highest hydropower share in Europe, creating both opportunity and structural risk. The source characterises baseload as essentially rainfall-dependent at a time when rainfall has become erratic. Solar and wind are said to enter conditions where baseload varies seasonally and unpredictably.
The source describes Albania experiencing deep surpluses in wet spring months that force water spilling and curtailment of added renewable output. It also describes near-emergency deficits during dry summers or cold winters. Solar is said to help offset summer deficits but not address winter peaks or provide firmness when hydro falters.
Grid design in Albania is described as not yet suited for multi-node renewable injection. Major upgrade needs are identified around western coastal areas, 110 kV reinforcement corridors and mountainous wind zones. Without these reinforcements, curtailment risk is said to rise alongside increased dependence on imports for balancing.
The source identifies cross-border capacity with Montenegro, Kosovo and Greece as a stabilisation tool while noting that connection to Greece exposes Albania to Greek price volatility shaped by gas-fired generation. It says this exposure becomes more pronounced as renewable penetration deepens while balancing resources remain hydro-dominated.
Bosnia & Herzegovina: coal-dominated operations struggle with renewable ramps
Bosnia and Herzegovina is described as remaining the most coal-dependent system in the Western Balkans. Coal provides most baseload output that stabilises supply but creates a technological mismatch with growing wind and solar generation profiles. The source says coal units operate best under steady output because they cannot ramp quickly or frequently without damaging equipment.
As wind projects along the Dinaric mountains and solar developments across Herzegovina grow, renewables are said to push down midday demand for coal output while coal cannot flex downward without start-up or stability issues. The result described in the source is minimum-load operation for thermal plants alongside curtailment of renewables even when they could be economically dispatched.
Balancing markets in Bosnia & Herzegovina are described as structurally complicated by political fragmentation. The balancing entity structure is characterised as functional but lacking liquidity and transparency needed for high renewable penetration. Grid-access risk is also highlighted with requested thousands of megawatts of solar and wind capacity exceeding transmission system integration ability.
The source links this situation to delays, curtailment risks and inability to export unless grid upgrades are made. It also states that by 2030 Bosnia & Herzegovina faces an option between remaining coal-centric at increasing cost or embracing flexibility development supported by storage and fast-ramping generation.
North Macedonia: aging coal baseload faces evening deficits
North Macedonia’s system is described as fragile because its baseload—Bitola and Oslomej coal plants—approaches end-of-life while renewable capacity grows rapidly. Without immediate thermal replacement, the source says vulnerability increases for evening deficits, winter shortages and balancing spikes. Solar expansion around Štip and Sveti Nikole, combined with growing wind capacity, is said to create midday surpluses while deepening evening ramps coal units cannot support.
The source says North Macedonia relies heavily on cross-border imports for balancing, especially from Greece where gas-fired marginal pricing determines cost outcomes. It adds that if Macedonian renewables underperform while Greece experiences simultaneous scarcity, extreme balancing price volatility can result.
Grid-access risk is attributed to congested corridors connecting eastern solar zones with load centers. Hybrid renewable projects combining solar + storage or wind + solar + storage are identified by the source as among the most promising solutions for addressing these constraints. By 2040 it suggests North Macedonia could become flexibility-centered if storage deployment accelerates; otherwise it risks chronic mismatch with dependence on expensive imports plus curtailment vulnerability.
Croatia: EU coupling increases pressure on coastal grid constraints
Croatia is described as structurally advanced within SEE due to EU integration, diversified generation and deeper market coupling. However, the source says Croatia faces the same fundamental issue found elsewhere: renewable expansion outruns flexibility deployment. It points to Dalmatian wind ramps challenging southern grid stability alongside solar growth across Slavonia and inland regions creating midday price flattening that spreads into coupled markets including Slovenia and Hungary.
The source identifies Croatia’s baseload anchor as the Krško nuclear plant, together with domestic gas units. Nuclear is characterised as providing stability but not flexibility; gas provides flexibility at high marginal cost. Hydropower contributes both energy and ramping but is increasingly constrained by seasonal variability.
As renewables increase further, Croatia is said to need more gas flexibility unless battery storage or pumped hydro expansions materialise. Grid-access risk is linked to coastal areas where transmission lines are already heavily loaded; curtailment becomes more likely when multiple wind farms push power northward along constrained routes despite strong interconnections.
Flexibility requirements across SEE markets up to 2040
The source describes a regional principle governing outcomes across Western Balkans power systems: flexibility is more valuable than capacity during high renewable penetration periods. It states that systems built around coal or hydro dominance struggle when renewables introduce volatility because baseload resources operate on different time scales while renewables require rapid response capabilities from other assets.
It attributes common progression across countries to rising wind-and-solar volumes undermining baseload predictability while intensifying evening ramps, escalating imbalance costs, stressing grid infrastructure limits and increasing cross-border dependency exposure. Baseload shrinking in this account is linked not only to policy changes but also to operational inefficiency in renewable-heavy environments where existing balancing mechanisms cannot handle uncertainty without overcompensating.
The source assigns country-specific flexibility needs: Serbia requires storage to reduce imbalance exposure; Montenegro needs hydropower modernisation alongside maximising use of the Italy cable; Albania must diversify beyond hydro due to seasonal risk; Bosnia & Herzegovina must build a flexibility architecture before curtailment becomes systemic; North Macedonia must replace thermal capacity using hybrid renewable portfolios; Croatia must develop storage plus grid reinforcement aligned with EU-coupled flows.
The article states that wind and solar will dominate SEE energy volumes by 2035 while by 2040 systems will be renewable-heavy by necessity rather than policy alone. It adds that which countries become exporters versus curtailment zones will depend on pairing renewables with flexibility such as battery storage, pumped hydro, fast-ramping engines, hybrid plants plus digital balancing tools supported by cross-border trading strategies using platforms such as electricity.trade.