Stronger European natural gas prices are adding upward pressure to Southeast European electricity markets after Week 27 recorded higher thermal power generation across the region alongside firmer TTF gas futures, reinforcing the outlook for elevated wholesale power prices.
Average TTF natural gas futures reached EUR 43.59/MWh during Week 27, representing a 5.5% increase from the previous week. Prices moved above EUR 45/MWh by the end of the reporting period, while the front-month TTF contract was trading near EUR 49.045/MWh, signalling that gas markets continue to price in tighter supply conditions.
The increase in gas prices coincided with a greater reliance on thermal electricity generation across Southeast Europe. Regional thermal output rose 6.5%, increasing from 6.44 TWh to 6.86 TWh, as stronger lignite, coal and gas-fired generation helped offset weaker renewable output and lower hydro production.
Within the thermal mix, gas-fired generation increased 3.3% week on week, while lignite and coal generation climbed 11.6%. The stronger contribution from dispatchable power plants highlights their growing influence on electricity price formation, particularly during periods of elevated demand and reduced renewable generation.
The greatest pricing risk remains concentrated during the evening peak hours, when solar production declines and electricity systems become increasingly dependent on thermal generation and cross-border imports. Under these conditions, higher gas prices can quickly translate into higher wholesale electricity prices, particularly in import-dependent markets such as Romania, Hungary, Serbia and Croatia.
Gas market fundamentals also remain supportive of elevated prices. Higher temperatures have boosted seasonal demand, while European gas storage levels remained around 48% full during the reporting period. At the same time, ongoing competition for LNG cargoes and supply uncertainties linked to the Strait of Hormuz and the normalisation of production in Qatar continue to influence market sentiment.
For power traders, TTF and THE gas benchmarks should remain central indicators in daily market analysis rather than secondary variables. A stronger gas forward curve reinforces the case for continued tightness in Southeast European electricity markets, while a decline in gas prices would reduce part of the upside risk, particularly if accompanied by stronger wind generation or an improvement in regional hydro output.
Market outlook: European gas prices are currently acting as a key amplifier of electricity prices across Southeast Europe. Traders should closely monitor developments in the TTF and THE markets alongside renewable generation, hydro conditions and evening peak demand to assess whether higher fuel costs continue feeding through into regional wholesale power prices.