The electricity markets in Southeast Europe (SEE) are experiencing significant shifts as the expansion of solar generation alters trading dynamics and price fluctuations. Recent developments indicate a marked widening of intraday spreads across various SEE markets, particularly during calendar week 13, where typical price ranges reached €20–40/MWh and spikes soared to €50–90/MWh amid system imbalances.
This phenomenon is largely driven by the discrepancies between forecasted and actual solar generation, which have become more pronounced as solar capacity increases in the region. While solar production is generally predictable over longer periods, it is highly susceptible to short-term weather variations, such as cloud cover, leading to significant deviations from day-ahead forecasts. These discrepancies necessitate adjustments through intraday trading mechanisms.
The impact of this dynamic is especially visible during midday hours when robust solar output can lead to substantial drops in prices, often falling below day-ahead levels. Conversely, as solar generation diminishes in the late afternoon and evening, prices typically surge due to the reliance on higher-cost generation sources, predominantly gas-fired plants.
This pricing pattern—characterized by low midday rates and elevated evening peaks—has increasingly emerged in SEE markets. While similar trends have been documented in Western Europe, particularly in countries like Germany and Spain, their occurrence in SEE highlights the region’s ongoing energy transition.
However, the flexibility of SEE markets is notably limited compared to their Western European counterparts. Factors such as insufficient battery storage capabilities, limited interconnections, and a continued dependence on thermal generation contribute to a heightened risk of price volatility rather than allowing for effective absorption of imbalances within the system.
From a trading perspective, this evolving landscape presents lucrative opportunities. Intraday markets are becoming essential for value creation as traders shift their focus towards short-term positioning instead of long-term strategies. The capacity to accurately predict renewable output and identify potential system imbalances has emerged as a crucial competitive edge.
The widening intraday spreads also carry implications for asset valuation. Assets that offer flexibility—such as battery storage systems, fast-ramping gas plants, and demand response technologies—are increasingly positioned to capitalize on these price differentials, thereby enhancing their revenue potential.
Moreover, the growing significance of intraday markets underscores the need for improved liquidity and market design. Although progress has been made in developing intraday trading platforms across SEE exchanges, liquidity remains inconsistent throughout the region, with larger markets like Hungary and Romania setting the pace.
Looking forward, the trend of expanding intraday spreads is anticipated to persist. As solar capacity continues to grow and wind generation remains unpredictable, the gap between forecasted and actual supply is expected to widen further, reinforcing the critical role of intraday trading in managing supply-demand dynamics.
