Southeast Europe’s thermal generation fell in Week 42, while coal and lignite output increased and gas-fired production declined. TTF prices averaged €86.54/MWh during the week.
Courtesy of Virtu.Energy
Regional thermal output decreased 2.47% to 6,640.75 GWh. Gas-fired generation fell 7.43% to 3,415.40 GWh, while coal and lignite output rose 3.40% to 3,225.35 GWh.
National generation trends
Bulgaria increased thermal generation by 16.81%, mainly through additional coal and lignite output as electricity demand strengthened and renewable generation weakened. Serbia’s predominantly coal-fired thermal generation rose 5.45%. Romania increased both coal and gas generation, while Greece went against the regional trend and substantially raised gas-fired output.
Carbon costs and system flexibility
The generation shifts highlight a difficult policy and investment equation for Southeast Europe. Coal can supply large volumes of dispatchable electricity when demand rises or renewable output weakens, but it also carries growing carbon and environmental costs. In EU member states, carbon costs are directly incorporated through the EU Emissions Trading System (EU ETS).
For neighbouring Western Balkan markets, deeper integration with European carbon policy and the Carbon Border Adjustment Mechanism (CBAM) increasingly raises the strategic cost of carbon-intensive electricity. The transition cannot be achieved simply by announcing additional renewable capacity. Replacing coal economically means replacing several services its plants provide: energy, capacity, reserves, system stability and dispatchability.
Wind and solar can replace much of coal’s energy output, but cannot independently provide all of those system functions. Storage, grid-forming technologies, hydropower, demand response, regional interconnection and flexible generation are therefore part of the same transition package.
Operational needs and investment considerations
Week 42 demonstrated the operational role of coal in the region. Bulgaria’s renewable production fell sharply as demand increased, and coal output responded. In Serbia, consumption rose and hydropower output weakened, while the coal fleet increased generation.
Without those plants, both systems would have needed greater imports or additional demand-side adjustment. The investment question is not whether coal generation will decline over time, but what will replace its flexibility before capacity is retired. This is particularly relevant for lenders assessing new renewable projects.
Markets where wind and solar expand rapidly but balancing capacity remains insufficient may face more price volatility, curtailment and grid-connection risk. For industrial consumers, the transition may also widen the gap between inexpensive renewable hours and expensive peak periods, strengthening the economics of batteries and flexible demand.
Coal remains operationally relevant in the short term across Southeast Europe, while the cost of maintaining that dependence continues to rise. Future investments may be most valuable when they enable coal retirement without simultaneously increasing exposure to expensive imported gas or volatile cross-border electricity.
Courtesy of Virtu.Energy