Hydropower, one of Southeast Europe’s most valuable sources of flexibility during periods of high electricity demand, lost some of its balancing strength during Week 26 (22–28 June 2026). Regional hydroelectric generation declined 2.8% week on week to 3.51 TWh, as lower output in Türkiye and Bulgaria outweighed stronger production in Serbia, Croatia, Greece, Romania and Italy. The decline came at a critical moment, as rising temperatures and increased cooling demand were already putting additional pressure on regional power systems.
The reduction in hydro production was uneven across markets, but the overall impact on price formation was significant. Türkiye, the largest hydro producer in Southeast Europe, recorded a 5.9% weekly decline, reducing regional hydro availability by 142 GWh. Bulgaria experienced the sharpest decrease, with hydro generation falling 44.6% compared with the previous week. During a period when electricity consumption increased strongly across the region, reduced hydro output meant that less low-cost and flexible generation capacity was available to support the system and limit wholesale price increases.
Several countries moved against the regional trend. Serbia’s hydro generation increased by 121.5%, while Croatia recorded a 93.8% rise. However, these large percentage gains reflected recovery from relatively low previous production levels and were not sufficient to fully compensate for declines elsewhere. Greece increased hydro output by 12.1%, while Romania and Italy also recorded moderate improvements, but the broader regional picture remained one of weaker hydro contribution during a period of elevated market stress.
The importance of hydropower extends far beyond energy volumes. Hydro assets provide critical dispatchable flexibility, allowing power systems to respond quickly when solar generation declines in the evening while electricity demand remains elevated. When hydro resources are limited, unevenly distributed or strategically conserved, the region becomes more dependent on gas-fired generation, coal and lignite plants, as well as cross-border imports, increasing exposure to higher marginal electricity prices.
The situation in Bulgaria was particularly relevant for regional trading flows. Despite lower hydro production, Bulgaria remained an important net electricity exporter, meaning other generation sources had to compensate for reduced hydro availability while supporting both domestic demand and export commitments. In neighboring markets such as Greece, Romania and Serbia, hydro conditions influenced the ability of each system to manage rising demand without increasing reliance on imports or higher-cost thermal generation.
Hydropower availability also plays a major role in market expectations and trading strategies. During periods of strong water availability, Balkan electricity markets can quickly experience lower prices, especially during off-peak hours and periods of high renewable production. However, during dry conditions or periods of constrained hydro availability, the same markets can tighten rapidly, particularly when heatwaves increase consumption. Week 26 demonstrated that even a relatively small regional hydro decline can have a meaningful impact when demand is already growing at double-digit rates.
Looking ahead, hydro conditions will become an increasingly important factor in Southeast Europe’s summer electricity outlook. Market participants will need to monitor not only gas prices and renewable generation, but also reservoir levels, river flows, pumped-storage availability and hydro dispatch strategies. The ability of hydro operators to preserve water resources for high-value peak periods could play a decisive role in determining electricity price volatility throughout the summer.
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