South East Europe is emerging as one of Europe’s more important electricity-market laboratories, combining fast solar growth with legacy coal and hydro volatility. The region also faces constrained grids, incomplete market coupling, rising storage needs and carbon-border pressure. The mix is associated with risk while also shaping investment priorities across the 2026–2028 period.
The base-case outlook for 2026–2028 is continued volatility rather than a single direction for wholesale prices. Average prices may stay below the extreme levels recorded during the energy-crisis years, but the internal pattern of prices is expected to be more consequential. ACER’s analysis of 2024 price spikes and the persistent 2025–early 2026 SEE–Central Europe price gap supports the expectation that market conditions will remain unsettled.
Price profiles are expected to change as solar expands across the region. Midday prices are likely to weaken with higher solar output, while evening prices are expected to remain exposed to scarcity when demand is high and flexible capacity is limited. This shift in timing affects how generators, storage and flexible resources value their output.
Storage expansion and flexibility investment signals
Storage is identified as the first major investment signal for South East Europe’s power system. Batteries are described as moving from optional enhancement to core infrastructure as flexibility requirements rise. Bulgaria’s RESTORE-backed storage push is cited as an example of acceleration in deployment.
The Bulgarian programme includes official support for 3,000 MWh of usable storage capacity. Wider project approvals are referenced at around 9.7 GWh. The figures are presented as evidence of how quickly flexibility-focused investment is progressing in the region.
Transmission capacity, interconnectors and congestion management
Grid value is highlighted as a second investment signal, covering transmission capacity, interconnectors, congestion management and cross-border allocation. ACER recommendations include better use of available network capacity and implementation of a 70% cross-zonal capacity requirement. The analysis also points to expanded flow-based capacity calculation and extending market coupling to non-EU neighbours.
These measures are linked to how electricity can be traded across borders under constrained conditions. With incomplete coupling already present in parts of South East Europe, network constraints can shape both price outcomes and investment needs.
15-minute trading requirements and balancing capabilities
Market sophistication is identified as a third signal affecting how value is captured within the day. The EU’s shift to 15-minute day-ahead trading reflects a system where electricity value changes quickly during intraday periods. South East Europe is described as needing trading, forecasting and balancing capabilities aligned with this more granular structure.
The move toward shorter products is presented alongside expectations for more volatile intraday conditions. As markets evolve toward negative prices in some periods, forecasting and flexibility management become more central to commercial performance.
Carbon exposure through CBAM and EU–Western Balkans trade
Carbon exposure is described as a fourth signal shaping commercial relationships between the EU and Western Balkans. The Carbon Border Adjustment Mechanism (CBAM) is reported as already affecting trade dynamics. The Energy Community reported a 25% fall in commercially scheduled exchanges between the EU and Western Balkans in Q1 2026.
The same reporting period also shows day-ahead prices in Contracting Parties averaging €30/MWh lower than neighbouring EU markets. These figures are used to illustrate how carbon-related policy can influence both volumes and pricing patterns across borders.
Who benefits: flexible assets, traders, renewables with storage
A map of likely winners is laid out across multiple categories tied to price spreads and system stress. Flexible assets listed include batteries, pumped hydro, flexible hydro operation, demand response and fast-ramping plants. These resources are described as benefiting from scarcity conditions and time-varying prices.
Sophisticated traders and optimizers are identified as another group positioned to benefit from changing market structures. With movement toward negative prices, 15-minute products and more volatile intraday conditions are described as shifting value toward forecasting and flexibility management.
Renewable projects with storage or hybrid profiles are also cited among winners. Strong offtake structures are mentioned alongside these configurations, while standalone merchant solar is described as still being built but facing a more challenging risk profile due to evolving price capture dynamics.
Industrial flexibility and grid investors in market integration
Industrial buyers with flexible demand are identified as another winner category. Companies able to shift consumption into low-price hours can use volatility to reduce costs rather than absorb it without mitigation.
The fifth group of winners comprises grid and infrastructure investors focused on transmission reinforcement and related assets. Transmission upgrades are paired with references to substations, digital grid technologies and interconnectors as central components for market integration across the region.
Main losers: unhedged demand, unsupported solar and aging coal
The likely losers include unhedged consumers who remain exposed to price spikes under volatile conditions. Standalone solar projects without storage or shape protection are described as facing declining capture prices when price patterns change over the day.
Aging coal assets are also flagged for increased pressure linked to carbon exposure, pollution concerns and financing challenges. Utilities that delay transition planning are described as risking loss of export revenue and market position if market design changes outpace their strategies.
The analysis also points to policymakers who slow market coupling, indicating that consumers may end up paying for inefficient fragmentation when cross-border integration does not progress. In parallel, carbon-border effects tied to CBAM-related trade friction are noted among factors that can intensify stress during adverse conditions.
Upside versus downside scenarios for 2026–2028 conditions
An upside case for South East Europe is outlined around faster storage deployment, stronger grids, market coupling improvements, better balancing markets and industrial demand response. These elements are linked to reducing scarcity events and improving renewable integration within the region’s power system.
A downside case is also presented as plausible if multiple stressors coincide, including a hot and dry summer with weak hydro output alongside gas-price volatility. Grid outages combined with CBAM-related trade friction are cited as potential contributors to severe price stress during the period.
The outlook concludes that South East Europe has energy potential but remains short of flexibility, integration and investable market design elements needed for stable operation across time-specific delivery conditions. It frames electricity value as time-specific, location-specific and carbon-sensitive within this evolving regional market environment.
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