In January 2026, hydroelectric generation emerged as a critical factor in stabilizing electricity prices in Greece and Serbia amidst regional volatility. An analysis of power markets indicates that these two countries reported lower average prices compared to their gas-dependent counterparts, despite an increase in overall demand across Southeast Europe.
Greece recorded an average price of €108.67/MWh, significantly undercutting the prices seen in Romania and Hungary. This favorable outcome is attributed to a remarkable 155.37% surge in hydro generation, which effectively replaced gas-fired generation during peak demand periods. Consequently, Greece’s exposure to TTF-linked marginal pricing was diminished, particularly during high-demand evening hours.
Similarly, Serbia benefited from increased hydro output, which rose by 186.06%. This increase allowed Serbia to maintain an average price of €118.13/MWh, even as demand grew by 33.43% and imports accounted for 23.45% of total consumption. The availability of hydro resources enabled Serbia to postpone its reliance on imports during peak periods, thereby mitigating potential price hikes.
Despite these benefits, experts caution that the reliance on hydroelectric power for price stability is precarious. The seasonal and unpredictable nature of river flows means that favorable conditions can quickly change, leading to a decline in hydro output. In such scenarios, both Greece and Serbia would revert to gas and import dependency, making them vulnerable to fluctuations in regional pricing.
The developments in January highlight the role of hydro generation as a dampener of volatility rather than a long-term solution for energy pricing stability. Market participants must recognize that while hydro resources can provide temporary relief from high prices, the potential for sharp repricing remains a significant risk for future market positioning.
