Serbia’s power market entered 2025 with forward trading volumes increasing sharply and institutional participation broadening. Futures contracts were increasingly used in hedging practice, alongside continued reliance on bilateral contracting. Despite the momentum, growth had not yet reached critical mass, and SEEPEX futures were still not able to carry Serbia’s power risk on their own.
2025 volume growth and product coverage
Futures traded for delivery year 2025 reached approximately 2.26 TWh, more than 2.5 times the volume recorded for the previous delivery year. The increase reflected a shift in behaviour among Serbian utilities, traders, and some industrial buyers toward exchange-cleared forwards. Even with the higher traded volume, Serbia’s annual electricity consumption remained several multiples larger than what was traded on the exchange.
Coverage of underlying physical exposure therefore remained limited despite the growth in volumes. Liquidity also varied across products, affecting how participants could structure hedges. The market’s ability to support broader risk management depended on which contract types were most actively traded.
Annual baseload dominates trading; monthly liquidity stays thin
In 2025, annual baseload contracts accounted for most of the traded volume and became the default hedging instrument. Quarterly contracts traded intermittently and were often concentrated around specific calendar windows. Monthly products remained thin compared with annual and quarterly activity.
This trading pattern enabled participants to lock in headline price levels while limiting day-to-day portfolio adjustments. For hedgers taking an annual position, execution was described as reasonable up to 10–20 MW. Above that range, market impact became visible, leading participants to slow execution or add hedges elsewhere.
Execution limits shape hedge layering and basis exposure
After positions were established, adjusting them was difficult without incurring slippage, particularly outside peak liquidity periods. As a result, many participants used SEEPEX futures as an anchor hedge for part of their exposure within Serbia. They then relied on HUPX or German-linked futures to complete coverage.
The approach reduced outright price risk but introduced basis exposure and added execution complexity across venues. Hedgers also faced constraints tied to how liquidity developed across tenors and trading windows. These factors influenced how exchange-traded forwards were combined with other regional instruments.
Cross-border flow sensitivity and congestion premia
SEEPEX’s development did not remove congestion-driven volatility from Serbian pricing dynamics in 2025. Prices remained sensitive to cross-border flows, particularly toward Hungary and Romania. Forward markets do not hedge transmission risk, so SEEPEX futures reflected implicit congestion premia that changed over time.
Hedgers could not isolate or neutralise that congestion component using SEEPEX alone. This meant that even where price hedging was implemented through futures, transmission-related effects remained embedded in observed forward pricing.
Clearing improvements broaden participation but autonomy remains limited
Institutional developments around SEEPEX included improved clearing arrangements that supported counterparty confidence. Reporting transparency increased, and participation broadened beyond a narrow utility core. These changes were described as laying groundwork for deeper market development.
By the close of 2025, SEEPEX futures were characterised as progress without autonomy because they did not eliminate reliance on external hedge venues. For portfolios exceeding 30–40 MW, SEEPEX alone remained insufficient to cover exposure effectively. The Serbian forward curve existed but lacked density needed to internalise national power risk across multiple tenors.
Until open interest expands across multiple tenors and execution capacity increases materially, SEEPEX futures are expected to function as a supporting pillar rather than a standalone hedging foundation for Serbian power risk.
Elevated by virtu.energy