In February 2026, coal-fired generation continued to play a pivotal role in the electricity systems of Southeast Europe, despite a notable decline in prices and an increase in renewable energy output. Lignite and coal plants have proven resilient, serving as the backbone of several regional markets during a month characterized by fluctuations in solar and wind energy production.
Serbia exemplifies coal’s enduring significance, with lignite comprising 53.01% of its generation mix. This dominance persists even as renewable energy sources saw a 23.10% increase in output. The reliance on coal underscores a structural reality within the region: in systems where flexible capacity is limited and renewable penetration remains modest, coal is not merely an outdated asset; it acts as the primary balancing mechanism for electricity supply.
However, February also highlighted the increasing vulnerability of coal in terms of price dynamics. Serbia recorded the sharpest price drop in the region, with spot prices plummeting -41.92% to €68.61/MWh. This decline was attributed not to rising coal costs but rather to the marginal displacement of coal generation during periods of heightened renewable output and lower demand. Consequently, coal is increasingly establishing the lower threshold for pricing rather than leading it.
Across Southeast Europe, coal remains a significant part of the energy mix. Bulgaria reported that 22.91% of its electricity generation came from coal and lignite, while Türkiye’s reliance on coal stood at 34.89%. These figures reflect ongoing dependence on thermal generation, particularly in regions lacking substantial nuclear or large-scale gas resources. Nevertheless, the economic landscape for coal is shifting as renewable energy sources gain traction, leading to more frequent displacements of coal from the merit order and resulting in reduced operational hours and lower load factors.
The transition towards renewables is not uniform across the region. In Bulgaria, where nuclear power provides a reliable baseload, coal serves more as a mid-merit or balancing source. Conversely, Türkiye’s diversified energy system includes hydroelectric power (31.70%) and renewables (23.12%), indicating a different structural balance that influences coal’s role—from being a baseload anchor to functioning as flexible backup.
The pressure on coal economics continues to mount due to lower wholesale prices that compress profit margins and the variability introduced by renewable energy sources, which creates operational uncertainties. Coal plants designed for consistent output are increasingly required to adopt more flexible operating modes, potentially leading to higher maintenance costs and diminished efficiency.
Despite these challenges, coal remains essential for providing critical system services. In February, when solar output diminished in southern markets and wind variability increased elsewhere, coal plants played a vital role in ensuring system adequacy. This situation highlights a crucial tension within the energy transition: while economically disadvantaged, coal remains operationally indispensable across numerous markets in Southeast Europe.
The dynamics of cross-border electricity trade further complicate the position of coal generation. As renewable surpluses flow through interconnectors, domestic coal output faces increased competition from imports originating from high-renewable markets. This scenario creates a regional merit order where domestic coal competes not only with local renewables but also with imported renewable electricity.
Looking ahead, the role of coal in Southeast Europe is set to evolve further. Although it is unlikely to be phased out imminently due to its importance for system stability and energy security, its function is transitioning from being a dominant baseload source to serving primarily as residual balancing capacity. The data from February illustrates this shift: while coal remains integral to regional electricity systems, its influence over pricing and trading dynamics is gradually diminishing as renewable energy reshapes market structures.
