The Southeast European electricity market moved decisively lower during the second half of May as stronger hydro conditions, accelerating solar generation and improving wind output overwhelmed the bullish impact of higher gas and carbon prices. Across the region, the market increasingly behaved like a renewable-driven system rather than a fuel-driven one, creating widening price differences between flexible assets and inflexible generation, reports Electricity.Trade
Average regional demand excluding Greece eased from 22,578 MW during the first half of May to 21,927 MW during the second half despite warmer weather. At the same time, hydro generation increased to 6,580 MW, solar output reached 5,632 MW, and wind generation climbed to 2,833 MW. Together, renewable technologies supplied the majority of electricity across the Southeast European market, while coal and nuclear generation both declined.
The resulting effect was visible across every major power exchange.
Albania recorded the largest price correction in the region. Average ALPEX prices fell from €98.60/MWh to €81.16/MWh, a decline of more than 17%. Strong hydrology once again transformed Albania into one of the region’s lowest-cost generators and reinforced its position as a major exporter during wet periods.
Montenegro followed a similar trajectory. BELEN prices dropped from €98.76/MWh to €83.92/MWh, placing Montenegro among the cheapest markets in Southeast Europe. The market increasingly moved in line with Albania and North Macedonia rather than Croatia or Hungary, highlighting the growing influence of southern Balkan renewable generation on regional pricing.
North Macedonia also experienced substantial downward pressure. MEMO prices declined from €97.17/MWh to €82.66/MWh, reflecting lower import costs, stronger regional renewable production and increased market integration.
The decline was less severe but still significant in the region’s larger markets.
Serbia’s SEEPEX averaged €91.95/MWh, down from €101.61/MWh. While prices fell almost 10%, Serbia remained more expensive than Albania, Montenegro and North Macedonia, reflecting its central position within regional trading flows and balancing markets.
Bulgaria’s IBEX fell from €104.98/MWh to €97.41/MWh, while Romania’s OPCOM dropped from €115.88/MWhto €103.64/MWh. Despite the correction, Romania remained among the highest-priced markets in Southeast Europe, largely because of transmission constraints and its role as a regional balancing hub.
Greece continued to move lower as renewable penetration increased. HENEX prices averaged €85.81/MWh, down from €92.36/MWh, reinforcing concerns already emerging among solar investors regarding declining merchant revenues and increasingly frequent negative-price periods.
Further north, Croatia and Slovenia remained relatively resilient. CROPEX averaged €101.52/MWh, while Slovenia’s BSP averaged €101.15/MWh. Both markets remain more closely coupled with Central European pricing and therefore experienced smaller corrections than southern Balkan exchanges.
The largest structural development during May was not the decline in average prices but the continued expansion of the price gap between daylight and evening hours.
Across the region, solar generation continued to suppress midday prices. As photovoltaic output increased, thermal generators were increasingly displaced from the merit order during daylight hours. Once solar production faded in the evening, gas, hydro and flexible thermal units regained importance, supporting higher prices during peak consumption periods.
This dynamic increasingly favors assets capable of shifting energy across time rather than merely producing volume. Battery storage, pumped hydro, flexible gas generation and dispatchable hydro facilities all gained relative value during May.
Regional cross-border flows also showed important changes, reports Electricity.Trade
Net exports improved significantly during the second half of the month. Southeast Europe exported more electricity toward Italy while reducing dependence on imports from Central Europe. Flows toward Italy shifted from a net import position during the first half of May to a net export position during the second half, demonstrating improving competitiveness of renewable generation across the Balkans.
Commercial flow patterns further highlighted Romania’s role as a major exporter toward Hungary, while Bulgaria maintained its position as a key balancing corridor linking Romania, Greece, Serbia and Turkey. Serbia continued operating as one of the region’s most important transit and trading hubs, sitting at the intersection of flows from Romania, Bulgaria, Bosnia and Herzegovina and Hungary.
Interestingly, commodity markets moved in the opposite direction, reports Electricity.Trade
Average Austrian gas prices increased to €49.85/MWh, Greek gas prices rose to €46.09/MWh, and EU carbon allowances climbed to €77.18/t. Under traditional market conditions, such movements would have supported higher power prices. Instead, electricity prices declined sharply, demonstrating how renewable generation is increasingly determining market outcomes across Southeast Europe.
For investors, May provided another indication that the market is entering a new phase.
Solar generation capacity continues expanding rapidly in Romania, Bulgaria, Greece and increasingly across the Western Balkans. As a result, standalone merchant solar projects face growing revenue compression during daylight hours. Wind projects, by contrast, remain better positioned because production profiles are more closely aligned with evening and nighttime demand peaks when prices remain stronger.
Hydropower continues to play a decisive role. Improved hydrology during May strengthened export capability across Albania, Montenegro and parts of Bosnia and Herzegovina, while simultaneously reducing regional price levels. Weather conditions therefore remain one of the most important variables for traders heading into the summer season.
Looking ahead, the market is increasingly separating into three distinct zones.
The first is the renewable-discount zone, comprising Albania, Montenegro, North Macedonia and increasingly Greece, where abundant hydro and solar output continue suppressing prices.
The second is the balancing and transit zone, led by Serbia, Bulgaria and Romania, where network constraints and regional trading activity maintain higher price levels.
The third is the Central European convergence zone, represented by Croatia, Slovenia and Hungary, where stronger integration with western European markets provides greater price support.
May 2026 confirmed that Southeast Europe is no longer primarily a coal-and-gas-driven power market. Price formation is increasingly determined by renewable production, interconnection availability, system flexibility and storage capacity. The consequence is lower average prices, wider intraday volatility and a steadily increasing premium on flexible generation and trading strategies, reports Electricity.Trade