ENTSO-E’s 2026 Market and Electricity Balancing reports described rapid expansion of common platforms for automatically and manually activated frequency-restoration reserves. Follow-on steps have continued, including ESO joining MARI on 18 February 2026. Additional transmission operators are preparing connections to the same balancing arrangements.
MARI aggregates bids for manually activated frequency-restoration reserve, or mFRR, using a common European merit order. PICASSO performs a similar role for automatically activated frequency-restoration reserve, or aFRR. The platforms enable a transmission operator to activate an eligible reserve bid in another participating country when it is cheaper than the domestic option and cross-border capacity allows the exchange.
In Southeast Europe, Bulgaria’s participation is positioned as a link between a regional system with nuclear, thermal, hydro and emerging battery capacity and a larger balancing-energy pool. Greece’s IPTO has been preparing to participate, while Hungary has been advancing integration. Romania is expected to join on a later timetable.
The expansion is expected to affect reserve competition across borders and could reduce balancing costs through wider bid availability. It may also reduce extreme activation prices when a national system has limited reserve available. Participation also changes the bidding environment for domestic providers by placing them into a broader European merit order.
Cross-border coupling and reserve competition in Southeast Europe
A second effect of joining the common platforms is that domestic resources may be activated less frequently or at different marginal prices after coupling. Hydro plants, batteries or flexible generators that previously relied on a shallow local market can face reduced activation opportunities. The same change can shift how often specific technologies clear in reserve markets.
Recent trading conditions in the region have highlighted the relevance of integration to balancing outcomes. Southeast European markets saw steep intraday price movements during the summer and early September. In Romania, quarter-hourly day-ahead prices for one September delivery day moved from around €33/MWh in lower-priced intervals to more than €313/MWh during the evening.
The price swings reflect interactions among solar output, demand, conventional availability and border capacity constraints. They also increase the cost of forecasting errors for market participants. A renewable producer that overestimates evening output must buy back its shortfall or settle imbalance exposure, while suppliers underestimating demand face the opposite exposure.
As quarter-hourly trading and settlement spread, forecasting errors can carry sharper commercial consequences. More liquid intraday markets allow participants to correct positions before delivery. Common balancing platforms provide an additional layer when commercial trading cannot fully resolve deviations.
Uneven alignment between EU and Western Balkan flexibility markets
The regional transition remains incomplete across all systems connected to the European grid. EU markets including Hungary, Romania, Bulgaria, Croatia, Slovenia and Greece operate within increasingly integrated structures. Serbia, Montenegro, Bosnia, Albania, Kosovo and North Macedonia are at different stages of alignment.
This gap creates differences between physical interconnection and commercial flexibility access. Western Balkan systems are electrically connected to the EU but their flexibility cannot always enter the same European merit order used for reserves. The mismatch affects how reserve capability translates into cross-border balancing participation.
The expansion of MARI and PICASSO also changes how battery projects are evaluated for revenue streams. Many storage developments are modelled using combinations of energy arbitrage, capacity payments and balancing-market revenue. Integration can enlarge the addressable market but may compress balancing prices as more competing bids clear in common merit orders.
Batteries, hydropower and demand response under expanding reserve platforms
Evidence from already connected markets indicates that balancing-price spreads can decline after integration. In that setting, battery economics may rely less on occasional extreme activation prices and more on fast response, high availability and the ability to combine multiple services. For Southeast Europe specifically, this points toward projects with strong dispatch systems and accurate state-of-charge management.
Batteries developed primarily around historic imbalance-price spikes face greater revenue risk as market coupling changes activation patterns. Hydropower remains a competing resource because reservoir plants can provide upward and downward regulation without the same short-duration constraint faced by many batteries. Hydro availability is weather-dependent, however, and drought can limit how much energy operators are willing to allocate for balancing purposes.
Demand response is another potential source of competition where industrial consumers can reduce or shift demand. Participation may occur directly or through aggregators, although regulatory and metering frameworks remain underdeveloped across much of the region. These conditions affect how quickly demand-side flexibility can qualify for reserve services.
Reform steps in Montenegro and Serbia ahead of wider integration
Montenegro’s draft balancing-service rules illustrate how frameworks are being shaped for participation in frequency-related reserve products . The proposed framework covers frequency containment reserve, aFRR, mFRR and replacement reserve. It also explicitly permits aggregation of generation, consumption and storage facilities within the proposed structure.
The draft rules introduce prequalification, data requirements, activation procedures, settlement arrangements and performance requirements intended to align with a more European-style balancing market . Serbia has a more developed balancing structure than several neighbouring Western Balkan markets. Full integration would still require legal alignment, technical compatibility and reciprocal access to cross-border capacity.
A key risk described for the region is that EU members could gain access to deeper balancing liquidity while non-EU neighbours remain dependent on national arrangements . That would increase commercial disadvantage already associated with CBAM impacts alongside incomplete day-ahead coupling processes . The effect depends on whether cross-border capacity access supports comparable participation across borders.
Expected price dynamics: softer averages with continued scarcity events
As more transmission operators join MARI and PICASSO, average balancing-energy costs should become more competitive across connected areas over time . The deepest reductions are expected in smaller or concentrated national markets that previously depended on a narrow pool of providers. At the same time, volatility is not expected to disappear entirely.
Cross-border balancing exchanges can be blocked when transmission capacity is already used by day-ahead and intraday trading or reserved for operational security . During broad regional shortages, multiple countries may request upward reserve simultaneously, which can raise the common clearing price . These constraints influence how scarcity pricing propagates through coupled platforms.
The autumn and winter outlook is described as two-sided: under normal conditions wider integration should suppress some national price extremes . During periods such as nuclear outages combined with weak hydro or high gas-driven demand, scarcity prices may be transmitted across a larger area via the same platform . Battery developers are expected to plan for lower average spreads but continued tail-risk events.
Traders and balance-responsible parties are expected to face stronger incentives for accurate quarter-hourly forecasting rather than relying on balancing markets as routine energy sources . Overall integration is framed as replacing national reserve silos with a common market structure across participating systems . Southeast Europe’s ability to benefit depends on whether grids, control systems and market rules move at pace with electricity flows they are meant to balance.
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