Gas-fired power plants across South-East Europe are undergoing a structural shift from mid-merit generation toward a predominantly peaking and balancing role, despite improving short-term economic conditions.
In week 16, gas prices at the CEGH hub declined to €44.9/MWh, contributing to a significant improvement in clean spark spreads, which increased by approximately €24.6/MWh compared to the previous week. Under traditional market conditions, such an improvement would typically lead to higher gas-fired generation.
However, output remained subdued at around 3,144 MW, close to multi-month lows. This disconnect highlights the growing influence of renewable generation in displacing thermal units from the merit order.
Solar and wind generation are increasingly setting prices during large portions of the day, leaving gas plants to operate primarily during peak demand periods or when renewable output is insufficient. As a result, utilisation rates are declining, with many plants expected to operate at 10–20% capacity factors in the coming years.
Revenue models are also evolving. Instead of relying on consistent energy market participation, gas plants are becoming dependent on capturing value during limited high-price intervals. This concentration of revenues into a small number of hours increases both risk and volatility for asset operators.
In some markets, particularly Greece, gas remains more central due to the structure of the generation mix and LNG infrastructure. However, even there, increasing renewable penetration is gradually reducing its role.
The long-term outlook suggests that gas-fired generation will remain essential for system reliability, but its economic function will shift toward providing flexibility rather than baseload power. This raises important questions about future investment and the need for capacity remuneration mechanisms to ensure adequate supply during peak periods.