The European Union’s renewed political focus on reducing electricity price discrepancies between member states is often framed as a corrective to market fragmentation. In Southeast Europe (SEE), however, this agenda requires caution. While average prices may converge over time, the structural drivers of volatility and spreads across Serbia, Hungary, Romania, Bulgaria, Greece, and the Western Balkans remain firmly in place—and in some cases, are intensifying.
Price discrepancies in Europe are not simply the result of poor market design. They reflect differences in generation mix, grid strength, flexibility, and weather exposure. SEE exhibits all these differences in concentrated form. Serbia and Bosnia and Herzegovina rely heavily on coal and hydro, Hungary and Romania combine nuclear with rising renewables, Greece and Croatia are increasingly solar- and wind-driven, and Montenegro and Albania remain hydro-dominated. No regulatory reform can flatten these fundamentals without massive and uneven investment.
EU initiatives to stabilise prices largely aim to shield consumers from extreme outcomes rather than eliminate volatility. Instruments such as long-term contracts, capacity mechanisms, and revenue stabilisation schemes dampen investment risk but do not remove scarcity. In fact, by stabilising returns in core EU markets, these measures may shift volatility outward toward the periphery—including non-EU and partially integrated SEE systems.
Hungary provides a clear illustration. As its generation fleet secures more predictable revenue streams, the volume of flexible power available for spot export declines during stress periods. This tightens supply to Serbia and Croatia precisely when prices rise, widening short-term spreads even as long-term averages converge. Traders observing only annual price levels may miss this intra-period divergence.
Romania reinforces this pattern. Nuclear stability anchors average prices, but renewable volatility and limited grid reinforcement produce sharp intraday spreads. When Romania restricts exports to manage internal imbalances, Bulgaria and Serbia feel the impact immediately. Policy-driven convergence does not prevent these episodes; it merely reshapes their timing.
Bulgaria sits at a crossroads. Coal constraints and nuclear baseload interact with Greek renewable volatility to create pronounced price swings. Even if EU policy compresses annual averages, Bulgaria’s hourly and quarter-hourly spreads with Greece and Romania remain substantial. These spreads are not policy failures—they are signals reflecting real system stress.
For Greece, price discrepancy debates often overlook the country’s unique solar-driven profile. Deep midday price troughs coexist with evening scarcity, producing some of the widest intraday ranges in Europe. These fluctuations propagate northward into North Macedonia, Bulgaria, and Albania regardless of policy intent. Price alignment initiatives cannot erase a system that produces both abundance and scarcity within the same day.
Serbia, Montenegro, and Bosnia and Herzegovina experience price discrepancies primarily through import exposure. When neighbouring markets stabilise internally, SEE systems absorb residual volatility. This creates a paradox: policy success in the EU core can increase relative volatility at the edges. For SEE traders, spreads are likely to become more episodic rather than smaller.
The strategic implication is clear. Price discrepancy reduction does not eliminate opportunity; it changes where and when value appears. SEE markets will remain defined by timing, congestion, and flexibility gaps—and these gaps will continue to generate spreads that reward active trading and penalise passive exposure.
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