The electricity markets in South-East Europe (SEE) experienced significant volatility in January 2026, driven by winter stress conditions, increased heating demands, and structural limitations in regional interconnections. The month began with average day-ahead prices remaining relatively stable, ranging between €65 and €75/MWh during milder weather. However, as colder temperatures swept through Central and Eastern Europe, demand surged, leading to a sharp increase in prices that frequently exceeded €120/MWh, with peaks nearing €130/MWh in interconnected markets such as Serbia, Hungary, Romania, and Bulgaria.
By the second week of January, the trend escalated further, with average weekly prices across the SEE region surpassing €100/MWh—a notable increase of over 20% compared to the beginning of the month. During peak stress days, Hungary, Romania, and Bulgaria reported clearing prices between €125 and €136/MWh. In contrast, Greece and Türkiye maintained slightly lower averages due to variations in their generation mixes and gas supply situations. Despite these differences, nearly all hubs in the region reflected elevated price levels.
The primary factors influencing January’s pricing dynamics included heightened load due to cold weather and limited solar generation alongside inconsistent wind output. While some hydropower resources became available, they were insufficient to mitigate the upward pressure on marginal prices. Gas-fired generation emerged as a key determinant of market pricing, linking electricity costs directly to fluctuations in regional gas markets—a critical aspect of price formation during winter months.
Structural constraints also played a significant role in exacerbating price pressures. The limited capacity for cross-border transmission along vital north-south and east-west corridors hindered effective arbitrage opportunities with lower-priced Central European markets during peak demand periods. As a result, congestion premiums were evident in various border directions, which prevented sustained price convergence even when neighboring systems experienced more favorable supply conditions. This situation continues to set SEE apart from Western Europe and parts of Central Europe, where stronger interconnections and enhanced market liquidity typically reduce volatility.
The wholesale price dynamics observed in January have implications for retail pricing discussions across the Western Balkans. Several jurisdictions entered 2026 with plans for tariff adjustments due to rising wholesale procurement costs compounded by inflationary pressures and delayed cost recovery from previous years. While Serbia indicated that more substantial retail revisions are expected later in the year, other markets have already begun implementing changes that reflect the direct impact of volatile wholesale prices on end-user tariffs.
In a broader European context, South-East Europe consistently traded at a structural premium throughout January. Even when excluding extreme cold days, average wholesale prices remained anchored between €85 and €105/MWh—significantly higher than those seen in various parts of Western Europe during the same timeframe. This disparity highlights not only immediate weather influences but also deeper market characteristics such as a greater reliance on thermal generation at the margin and slower advancements in large-scale flexibility solutions like energy storage and demand response.
January 2026 has underscored a persistent reality for electricity markets in SEE: seasonal volatility is now an inherent characteristic rather than an exception. Without expedited investments aimed at enhancing grid infrastructure, increasing regional interconnectivity, and developing flexible generation options alongside energy storage capabilities, the region is likely to face ongoing sharp price fluctuations whenever demand spikes or renewable energy output declines. The patterns observed this January serve as a concentrated example of how structural limitations and winter-related factors continue to shape electricity market outcomes across South-East Europe.
