Southeast Europe entered July with elevated wholesale electricity prices, tighter supply margins and a more fragile balance between gas and power markets after the final week of June. Week 26 showed rising pressure on regional systems, with power demand increasing 12.7% to 18.41 TWh. Thermal generation rose 24.7%, while hydropower production fell 2.8%. Most regional wholesale markets recorded weekly average prices above €100/MWh, and day-ahead prices at the start of July ranged from €169.11/MWh in Greece to €235.17/MWh in Hungary on 1 July.
The month began after a prolonged heatwave that lifted wholesale prices across several markets, including Hungary, Romania, Italy and Croatia. Serbia faced tighter conditions and moved from a net electricity exporter to a marginal importer. Greece kept comparatively lower prices despite higher electricity demand and increased import needs. Bulgaria continued to support regional supply as a net exporter, though declining hydropower output reduced some flexibility.
Heat-driven demand risk for cooling loads
Temperature is identified as the most immediate market risk for the region’s power balance. Electricity demand for cooling has become a dominant short-term driver of wholesale prices across Southeast Europe. Additional heatwaves could quickly raise consumption in Italy, Greece, Croatia, Serbia, Hungary and Romania. Week 26 also indicated that regional demand can increase by double-digit percentages within a single week.
That pace of demand growth requires higher thermal generation to cover the system’s balancing needs. It also contributes to upward pressure on peak electricity prices during high-demand periods. The same pattern is expected to influence short-term price levels if temperatures remain elevated through the opening weeks of summer.
Generation availability and hydropower uncertainty
The regional generation mix is another factor affecting price sensitivity during July. During the final week of June, thermal plants provided much of the additional balancing capacity, with both gas-fired generation and coal/lignite output increasing substantially. Prices during July are therefore likely to remain sensitive to power plant availability, fuel costs, carbon allowance prices and operational constraints.
Hydropower availability is also highlighted as a key variable for supply tightness. Lower hydro output in Bulgaria or Türkiye could tighten regional supply further. Conversely, stronger hydropower generation in Serbia, Croatia or Greece could help moderate local electricity prices.
Gas storage levels keep a risk premium
Natural gas remains central to the region’s market risk profile. TTF natural gas prices eased slightly during Week 26, but European gas storage was still below seasonal averages at 48.3% on 27 June. That level is described as maintaining an underlying risk premium across both gas and electricity markets.
A sustained period of high temperatures would increase gas consumption for electricity generation while also making it harder to refill storage ahead of winter. Under these conditions, wholesale electricity prices may rise even without a significant increase in gas prices because gas-fired units are needed more frequently to balance demand.
Evening price spikes and flexibility constraints
The hourly price pattern is also presented as an important feature of current market conditions. Evening electricity price spikes have emerged as a defining characteristic of the period leading into July. Solar generation reduces prices during daylight hours, but it cannot cover post-sunset demand without sufficient battery storage or other flexible resources.
This setup concentrates volatility during evening peak periods, particularly when wind generation weakens or cross-border transmission capacity becomes constrained . Traders, electricity suppliers and industrial consumers are expected to see the largest price swings in these hours .
Shift toward flexibility tools in summer trading
The market outlook for July is described as favoring active risk management rather than passive procurement approaches. Traditional baseload purchasing and full exposure to spot pricing are described as becoming less effective under increasingly volatile conditions. Commercial value is shifting toward flexible generation options alongside battery energy storage and demand response measures.
The same emphasis extends to cross-border optimization and verified renewable electricity procurement as summer progresses . The opening weeks of summer are already shown to reflect not only temperature-driven demand changes but also variations in system flexibility and the cost of maintaining supply-demand balance hour by hour .
Elevated by Virtu.Energy
