Southeast Europe entered July with elevated electricity prices, tighter supply margins and a more fragile balance between gas and power markets following a challenging final week of June. Week 26 highlighted the growing pressure on regional electricity systems, with power demand rising 12.7% to 18.41 TWh, thermal generation increasing 24.7%, while hydropower production declined 2.8%. As a result, most wholesale electricity markets across the region recorded weekly average prices above €100/MWh, while day-ahead prices at the beginning of July signaled further upward momentum, ranging from €169.11/MWh in Greece to €235.17/MWh in Hungary on 1 July.
These market conditions provide a challenging starting point for July. The region entered the month immediately after a prolonged heatwave that pushed wholesale electricity prices significantly higher in Hungary, Romania, Italy and Croatia. Serbia experienced tighter market conditions and shifted from a net electricity exporter to a marginal importer, while Greece maintained comparatively lower prices despite rising electricity demand and higher import requirements. Bulgaria continued to support regional supply as a net exporter, although declining hydropower generation reduced some of its flexibility. Collectively, these developments suggest that Southeast Europe begins July with multiple supply-side pressures already in place.
Temperature remains the most immediate market risk. Electricity demand for cooling has become the dominant short-term driver of wholesale prices across the region. Additional heatwaves could rapidly increase electricity consumption in major markets including Italy, Greece, Croatia, Serbia, Hungary and Romania. Week 26 demonstrated that regional demand can rise by double-digit percentages within a single week, requiring significantly higher thermal generation and placing further upward pressure on peak electricity prices.
The regional generation mix represents another important source of uncertainty. Thermal power plants provided much of the additional balancing capacity during the final week of June, with both gas-fired and coal/lignite generation increasing substantially. Consequently, electricity prices throughout July are likely to remain highly sensitive to power plant availability, fuel costs, carbon allowance prices and operational constraints. Hydropower availability will also play a crucial role. Lower hydro output in Bulgaria or Türkiye could further tighten regional supply, while stronger hydro generation in Serbia, Croatia or Greece could help moderate local electricity prices.
Natural gas continues to represent another key market risk. Although TTF natural gas prices eased slightly during Week 26, European gas storage remained well below seasonal averages at 48.3% on 27 June, maintaining an underlying risk premium across both gas and electricity markets. A prolonged period of high temperatures would increase gas consumption for electricity generation while making it more difficult to refill storage facilities ahead of winter. Under these conditions, wholesale electricity prices may continue rising even without a significant increase in gas prices, simply because gas-fired power plants are required more frequently to balance electricity demand.
The evolving hourly price profile also deserves increasing attention. Evening electricity price spikes have emerged as one of the defining characteristics of current market conditions. While solar generation continues to reduce prices during daylight hours, it cannot meet demand after sunset without sufficient battery storage or other flexible resources. As a result, traders, electricity suppliers and industrial consumers should expect the greatest price volatility to remain concentrated during evening peak periods, particularly when wind generation weakens or cross-border transmission capacity becomes constrained.
July is therefore shaping up as a market that rewards active risk management rather than passive procurement strategies. Traditional baseload purchasing and full exposure to spot market pricing are becoming less effective under increasingly volatile market conditions. Greater commercial value is shifting toward flexible generation, battery energy storage, demand response, cross-border optimization and verified renewable electricity procurement. The opening weeks of summer have already demonstrated that electricity prices across Southeast Europe are being driven not only by rising temperatures but also by the availability of system flexibility and the growing cost of maintaining supply-demand balance on an hour-by-hour basis.
Elevated by Virtu.Energy