South-East Europe’s power system is moving into a new operating pattern where gas-fired generation is increasingly valued for flexibility rather than steady output. Even with short-term market conditions improving, thermal dispatch is not reverting to a mid-merit profile. The change is being driven by the way solar and wind are shaping daily price formation and pushing conventional units down the merit order.
CEGH price signals improve, but dispatch stays weak
In week 16, gas prices at the CEGH hub fell to €44.9/MWh, lifting clean spark spreads by roughly €24.6/MWh versus the prior week. Under conventional dispatch logic, stronger spark spreads would normally support higher gas-fired generation volumes. Instead, output remained subdued at around 3,144 MW, close to multi-month lows.
This divergence between price incentives and actual generation highlights how renewable penetration is altering system economics in real time. As renewables take a larger share of daytime scheduling, gas plants face fewer hours where they are needed to clear the market. For developers and operators planning future assets or upgrades, the implication is that market-based energy revenues may not translate into higher running hours.
Solar and wind increasingly determine daytime pricing
Solar and wind generation are setting prices during large portions of the day, which reshapes the operational role of gas units. In this environment, gas plants tend to run mainly during peak demand periods or when renewable output is insufficient to meet load. The result is a structural reduction in utilisation across fleets as more generation capacity becomes available from variable renewables.
Market expectations point to declining capacity factors, with many plants forecast to operate at 10–20% in the coming years. That operational shift matters for engineering planning and asset management because it changes wear-and-tear profiles, maintenance scheduling assumptions, and performance guarantees tied to cycling rather than baseload operation.
Revenue models concentrate into fewer high-price intervals
The transition also affects how revenue risk is distributed across time. Instead of depending on consistent participation in energy markets, gas plants increasingly rely on capturing value during limited high-price intervals. Concentrating earnings into a small number of hours can raise volatility for asset operators and complicate financial modelling for future investment decisions.
For investors and utilities assessing system adequacy, this creates a stronger link between grid balancing needs and market design outcomes. It also increases the importance of complementary flexibility resources—such as storage and grid reinforcement—to ensure that peak periods can be covered reliably when renewables underperform.
Greece remains more gas-centric, but renewables still erode centrality
In some markets—particularly Greece—gas retains a more central position due to the generation mix structure and LNG infrastructure. However, rising renewable penetration is still gradually reducing its relative role in dispatch. This suggests that even where gas infrastructure is already established, its economic function can shift as variable generation grows.
Looking ahead, gas-fired generation is expected to remain important for system reliability while its economic purpose moves toward providing flexibility rather than baseload power. That shift raises questions about whether capacity remuneration mechanisms will be required to secure adequate supply during peak periods as utilisation declines.
Overall, the observed combination of improved CEGH pricing signals with persistently low output underscores a broader industry transition: renewable-led price setting is changing dispatch patterns across South-East Europe. For project developers, contractors preparing EPC packages, and grid operators planning modernisation, the operational reality points toward greater emphasis on flexibility planning, balancing capability, and investment frameworks that reflect peaking economics rather than mid-merit assumptions.