The expansion of solar generation across Southeast Europe is unfolding at a pace that few transmission systems were originally designed to accommodate. Photovoltaic technology has experienced dramatic cost reductions over the past decade, making large-scale solar parks one of the most competitive sources of electricity generation. As investment capital flows into the sector, solar capacity is expanding rapidly across the Balkans and neighboring EU markets. However, this surge in generation is increasingly colliding with structural limitations in transmission infrastructure.
Electricity networks in Southeast Europe were historically built around centralized thermal generation plants and hydropower facilities. Transmission corridors were designed to transport electricity from large baseload plants to urban consumption centers rather than to integrate thousands of megawatts of decentralized solar capacity. As a result, grid bottlenecks are becoming one of the most significant barriers to renewable expansion.
The scale of solar deployment illustrates the magnitude of the transformation underway. Romania’s photovoltaic project pipeline has expanded dramatically in recent years, exceeding 15 GW of proposed or under-construction capacity. Bulgaria has connected several gigawatts of solar installations since 2022, with additional projects awaiting grid approval. Serbia’s renewable auctions and private project pipelines indicate solar capacity additions approaching 1–2 GW within the next several years, while North Macedonia and Albania are also attracting solar developers.
Solar generation follows a highly concentrated production profile. Output peaks around midday when sunlight intensity is highest, creating large surges in electricity supply during a relatively narrow time window. If transmission infrastructure cannot transport this electricity to demand centers or export markets, the system experiences congestion. In extreme cases system operators must curtail renewable output to maintain grid stability.
Curtailment represents a direct economic loss for renewable investors because electricity that could have been produced is effectively wasted. As solar capacity increases across the region, curtailment risks are becoming an increasingly important factor in project economics. Developers must assess whether grid capacity in the relevant transmission corridor can absorb their production during peak solar hours.
Transmission constraints are particularly relevant in cross-border electricity trading. Southeast Europe is deeply interconnected with Central European electricity markets through a network of high-voltage transmission lines. Solar surpluses in Romania or Bulgaria can influence electricity prices in neighboring markets including Serbia, Hungary, and Greece. However, when interconnector capacity is limited, price divergences emerge between markets and surplus electricity cannot be exported efficiently.
This dynamic creates a paradox. On one hand, renewable energy reduces generation costs and lowers wholesale electricity prices during periods of high production. On the other hand, insufficient transmission capacity can prevent that low-cost electricity from reaching consumers in other markets, limiting the economic benefits of renewable generation.
Transmission system operators across the region are therefore planning significant infrastructure upgrades. Romania’s Transelectrica has proposed several high-voltage corridor expansions linking renewable-rich regions with major demand centers. Bulgaria’s ESO is reinforcing transmission lines connecting solar-intensive areas to cross-border interconnectors. Serbia’s EMS is participating in regional projects aimed at strengthening electricity flows between the Western Balkans and the European Union.
One of the most strategically important interconnections in the region is the Italy–Montenegro submarine HVDC cable, which allows electricity generated in the Balkans to flow directly into the Italian market. With a capacity of approximately 1 GW, the cable serves as a gateway for renewable exports from Southeast Europe into Western Europe. As solar and wind generation increase across the region, this interconnector becomes increasingly valuable.
Another key factor shaping solar economics is the emergence of negative electricity prices during periods of oversupply. When solar output exceeds demand and transmission capacity is constrained, wholesale electricity prices can fall to extremely low or even negative levels. This phenomenon has become common in markets such as Germany and Spain and is beginning to appear more frequently in Central and Southeast European markets.
Negative prices signal that the system has more electricity than it can efficiently absorb. In such situations renewable generators may receive little or no revenue for their output unless they have secured long-term power purchase agreements or support mechanisms such as contracts for difference. As solar penetration increases in Southeast Europe, price volatility during midday hours is expected to intensify.
Battery storage offers a potential solution to these challenges. By storing excess electricity during periods of high solar production and releasing it during evening demand peaks, batteries can smooth price fluctuations and reduce curtailment. Storage also allows solar developers to shift electricity sales to periods when prices are higher, improving project profitability.
The integration of solar generation with storage systems is therefore emerging as a key investment trend. Hybrid solar-plus-battery projects are increasingly common in Western Europe and are beginning to appear in Southeast Europe as well. These projects can participate in both energy markets and ancillary services markets, capturing multiple revenue streams.
Another strategic solution involves expanding regional electricity market integration. Market coupling between Southeast European countries and the broader European electricity market can improve price convergence and facilitate cross-border electricity flows. By coordinating transmission capacity allocation and market clearing mechanisms, countries can reduce congestion and improve the efficiency of renewable integration.
The solar boom across Southeast Europe thus presents both opportunity and challenge. Solar technology offers a low-cost pathway for decarbonizing electricity systems and reducing dependence on imported fossil fuels. However, without corresponding investment in transmission infrastructure and storage capacity, the rapid expansion of solar generation risks creating congestion, curtailment, and price volatility.
The next phase of the region’s energy transition will therefore be defined not only by renewable deployment but also by the modernization of electricity networks. Transmission corridors, interconnectors, and storage systems must expand alongside solar capacity if Southeast Europe is to fully capture the economic and environmental benefits of its renewable energy boom.
Elevated by virtu.energy