The Southeast European power market is entering a new investment cycle following one defined mainly by adding renewable capacity. The next cycle will be defined by flexibility, including batteries, hydro optimisation, pumped storage, interconnectors, balancing markets, digital forecasting and demand-side response. Week 23 captured the transition.
In Week 23, regional demand rose 8.2%. Variable renewables fell 8.9%, with wind down 15.5%, while thermal generation increased 24.5% and hydro rose 10.1%. Imports climbed 9.1%. The combination of these changes was treated as a flexibility stress test.
Week 23 indicators highlight changing dispatch needs
The region balanced the period using hydro, thermal generation and cross-border flows. The outcome reflected shifting availability across generation types and changes in import levels. However, the balancing model based on these elements was described as insufficient for a decarbonising system.
Thermal generation introduces carbon and fuel risk, while hydro output depends on hydrology. Imports are linked to neighbouring availability and interconnector capacity. With these dependencies in place, an investment gap was identified around flexibility capabilities.
Batteries and pumped storage as core flexibility options
Batteries were identified as the most immediate opportunity in the flexibility cycle. The evening price ramp supports storage economics by enabling charging during lower-price solar hours and discharging during peaks. Two-hour and four-hour systems can support arbitrage, balancing and ancillary services.
Co-located BESS can also improve solar and wind project bankability. Pumped storage was positioned as the long-duration layer for the region. SEE’s hydro geography provides potential, but projects require long development timelines, permitting, grid coordination and public-private financing structures.
Interconnectors and digital tools for market efficiency
Interconnectors are another investment theme tied to persistent spreads between Italy, Greece, Hungary, Romania, Serbia, Bulgaria and Croatia. The spreads were linked to transmission constraints limiting market efficiency. Increasing cross-border capacity was described as a way to reduce price fragmentation and improve security while monetising regional surplus.
Digital infrastructure is also part of the flexibility build-out, covering forecasting systems and SCADA integration. Intraday trading platforms and balancing-market optimisation are expected to become essential components of operations. Flexibility was framed as both physical and informational through forecasting of wind, solar, demand and congestion with direct financial value.
Investment implications for portfolios and services
The shift in market needs expands opportunities beyond generation assets alone. The next energy assets in SEE were listed as storage portfolios, flexibility platforms, grid equipment, forecasting services, balancing aggregators and hybrid renewable projects. Utilities and developers that move early were associated with potential premium margins.
Week 23 was also used to characterise the direction of change for the region’s power system needs. Demand volatility, renewable volatility and fuel-price risk were described as increasing the value of flexibility in dispatch planning. The next investment cycle was defined around assets that can respond, shift, store and optimise power rather than only produce it.
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