The electricity markets in South-East Europe (SEE) are characterized by complex dynamics that hinge on trader influence and cross-border capacity. As liquidity increases, the critical question becomes which entities control the marginal flows of electricity, particularly during peak hours. This control varies significantly across different corridors, influenced by both the depth of the market and the timing of trades.
In Slovenia-centric corridors, such as those connecting Slovenia with Italy, Austria, and Hungary, trader-driven dominance is evident. The company GEN-I stands out as a key player, leveraging its access to interconnectors and portfolio flexibility rather than direct generation control. These corridors benefit from high coupling quality and sufficient capacity, facilitating effective arbitrage when price discrepancies arise.
GEN-I’s influence is most pronounced during intraday trading and shoulder hours. When Italian prices surge relative to Central Europe or Austrian renewable output exceeds demand, GEN-I is quick to adjust its positions. This agility results in rapid convergence of price spreads, often within one or two trading intervals, thereby reducing peak congestion rents and ultimately benefiting industrial consumers in Slovenia and northern Croatia through lower average prices.
Conversely, Hungary-centric corridors exhibit a more distributed form of dominance led by various traders. The Hungary-Romania and Hungary-Serbia borders feature a dense participation from multiple entities including Axpo, MET Group, Statkraft, RWE Supply & Trading, and Engie Trading. In these markets, no single trader holds structural dominance; instead, leadership shifts based on portfolio strengths during specific hours. For instance, during periods of Romanian surplus, traders with nuclear-backed positions dominate exports into Hungary.
This multiplicity of traders contributes to price stabilization in these corridors. Price spreads typically remain within €5–10/MWh unless physical capacity constraints arise. For industrial players in the region, this scenario represents an optimal environment where congestion is swiftly addressed through arbitrage activities.
In contrast, the Western Balkans present a landscape dominated by generation-anchored players like EFT. This company exerts significant influence over borders involving Bosnia and Herzegovina, Montenegro, and parts of Serbia—especially during peak demand seasons when hydrological conditions limit supply. EFT’s strength arises not from trading speed but from its control over substantial exportable volumes. In thin markets, this leads to sharp price spikes that can reach over €200/MWh during constrained periods.
Croatia occupies an intermediate position between these extremes. On the Croatia-Slovenia and Croatia-Hungary borders, HEP plays a stabilizing role through hydroelectric optimization while regional traders exploit short-term price differences. During wet seasons with high hydro availability, Croatian exports can help lower regional prices; however, in drier times, Croatia becomes a net importer.
The Serbia-Hungary corridor illustrates a dynamic interplay between EPS and international traders. EPS has evolved from being solely a domestic supplier to actively engaging in cross-border optimization during surplus hydro conditions. However, during peak demand periods in Serbia, traders controlling imports from Hungary take precedence.
Bulgaria-centered corridors demonstrate volume-driven dominance due to significant baseload nuclear output. On the Bulgaria-Romania and Bulgaria-Serbia borders, no single trader can easily dictate prices due to the deep market pool provided by IBEX. Here, dominance shifts rapidly among traders based on factors like fuel spreads and carbon pricing.
In contrast, the Bulgaria-Greece corridor showcases persistent directional dominance influenced by Greece’s reliance on gas for marginal pricing and variable renewable outputs. Traders with secured cross-border capacity into Greece often capture sustained congestion rents during peak hours.
Albania and Kosovo operate under an importer-dominated model via ALPEX where dominance is sporadic and heavily reliant on hydrological conditions. During wet periods, local players may dominate exports; however, during dry spells, control shifts to traders managing imports from Greece or Bulgaria.
Montenegro exemplifies extreme thin-market dominance where marginal import or export decisions can drastically affect local pricing due to low trading volumes often below 1 GWh per day.
When analyzing time blocks across SEE markets, it becomes clear that baseload hours are increasingly competitive while peak hours remain concentrated with dominant players exerting significant pricing power. The operational implications are stark: corridors with multiple agile traders typically see lower risk premiums on electricity prices compared to those dominated by singular physical portfolios.
The variance in electricity costs driven by market structure alone can amount to €4.4–13.1 million annually for a 100 MW industrial consumer due to differing trader compositions across regions.
This analysis underscores the importance of trader diversity alongside effective exchange design in shaping market outcomes. In regions where active participation exists alongside open access and intraday depth, structural advantages emerge that translate into more favorable pricing for consumers. Conversely, areas where physical control prevails over market depth will likely continue to see higher costs embedded in electricity prices across the region.
