Coal-fired generation continued to anchor Southeast Europe’s electricity systems in February 2026, even as prices declined sharply and renewable output gained momentum. Far from being displaced, lignite and coal plants remained the structural backbone of several markets, providing stability in a month defined by volatility in solar and wind production.
Serbia stands as the clearest example of coal’s enduring role. The country’s generation mix remained dominated by lignite at 53.01%, far exceeding any other source . Even with a +23.10% increase in renewable output, coal continued to set the baseline for system operation. This reflects a structural reality: in systems with limited flexible capacity and modest renewable penetration, coal is not simply a legacy asset—it is the primary balancing mechanism.
Yet February also demonstrated coal’s growing vulnerability in price formation. Serbia experienced the steepest price decline in the region, with spot prices falling -41.92% to €68.61/MWh . This drop was not driven by coal costs, but by the marginal displacement of coal generation during periods of increased renewable output and reduced demand. In effect, coal is increasingly setting the floor rather than the peak of the price curve.
Across the region, coal retained a significant presence. Bulgaria’s electricity mix included 22.91% coal/lignite, while Türkiye’s system remained heavily coal-reliant at 34.89% . These shares underscore the continued dependence on thermal generation, particularly in systems where nuclear or large-scale gas capacity is limited. However, the economic position of coal is shifting. As renewable penetration rises, coal plants are being pushed out of the merit order more frequently, operating fewer hours and at lower load factors.
This transition is not uniform. In Bulgaria, where nuclear power provides a stable baseload, coal operates more as a mid-merit or balancing source. In Türkiye, coal remains part of a diversified system alongside hydro (31.70%) and renewables (23.12%), reflecting a different structural balance. The diversity of these systems means that coal’s role varies—from baseload anchor to flexible backup—depending on local conditions.
What is consistent, however, is the increasing pressure on coal economics. Lower wholesale prices compress margins, while variability in renewable output introduces operational uncertainty. Coal plants, designed for steady output, are being forced into more flexible operating modes, which can increase maintenance costs and reduce efficiency.
At the same time, coal continues to provide critical system services. In February, when solar output declined in southern markets and wind variability increased elsewhere, coal plants ensured system adequacy. This highlights a key tension in the energy transition: while coal is being economically displaced, it remains operationally indispensable in many SEE markets.
Cross-border dynamics further complicate coal’s position. As renewable surpluses flow across interconnectors, coal generation is increasingly exposed to external competition. Imports from high-renewable markets can displace domestic coal output, particularly during periods of strong wind generation in Romania and Hungary. This creates a regional merit order where coal competes not only with domestic renewables but with imported renewable electricity.
Looking ahead, coal’s role in Southeast Europe will continue to evolve. It is unlikely to disappear in the near term, given its importance for system stability and energy security. However, its function is shifting from dominant baseload to residual balancing capacity. The February data captures this transition in real time: coal remains central to the system, but its influence on prices and trading is steadily diminishing as renewables reshape the market.
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