Renewable generation dynamics played a decisive role in shaping electricity markets across South-East Europe in Week 16, as a sharp rebound in wind output combined with declining solar generation and uneven hydro conditions to create a highly volatile supply environment.
Total variable renewable energy (RES) output across SEE increased by 21.7% week-on-week, reaching 3,517 GWh, driven almost entirely by wind generation, which surged by 74.6%. In contrast, solar output declined by 9.4%, reflecting seasonal and weather-related variability.
This divergence between wind and solar created a complex operational landscape for system operators. Wind generation, inherently less predictable and more concentrated in specific geographic areas, introduced significant intra-day variability. Solar, typically more stable and predictable, failed to provide its usual balancing role, particularly during daylight hours when output was weaker than expected.
Türkiye emerged as the dominant driver of renewable dynamics in the region, with total RES generation increasing by 70%, largely due to a near doubling of wind output. Greece also recorded a substantial increase, with wind generation rising by over 150%, offsetting a decline in solar output. Italy, the largest renewable producer in absolute terms, posted a more moderate increase, as strong wind gains were partially counterbalanced by weaker solar generation.
In contrast, Romania and Hungary experienced declines in renewable output, primarily due to sharp reductions in wind generation, which fell by over 30% and 40%, respectively. These declines had a disproportionate impact on local market conditions, forcing increased reliance on thermal generation and contributing to price increases in these markets.
Serbia, although starting from a low base, recorded the highest relative increase in renewable generation, with output more than doubling. However, the absolute contribution remained limited, underscoring the country’s continued dependence on lignite-fired generation and its relatively modest renewable capacity.
Hydropower, traditionally a stabilising force in the SEE generation mix, provided limited support during the week. Total hydro output declined by 3.45%, with significant reductions in key producing countries such as Romania and Bulgaria. These declines were partially offset by strong increases in Italy and Croatia, but the overall effect was a tightening of available low-cost generation.
The interplay between wind, solar and hydro created a highly dynamic generation mix, with rapid shifts in supply conditions driving volatility in day-ahead and intraday markets. During periods of strong wind output, prices were suppressed, particularly in markets with high renewable penetration. However, when wind output dropped or shifted geographically, prices spiked sharply as systems turned to thermal generation to fill the gap.
Thermal generation played a critical balancing role in this environment. Gas-fired output increased across several markets, providing the flexibility needed to respond to rapid changes in renewable generation. Coal generation, while declining slightly at the regional level, remained essential in baseload provision, particularly in countries such as Serbia.
Italy once again stood out as a key balancing market, increasing thermal generation significantly to compensate for renewable variability and rising demand. The country’s reliance on gas-fired generation makes it particularly sensitive to changes in renewable output, with gas plants frequently setting the marginal price.
Cross-border flows further amplified the impact of renewable volatility. As wind generation surged in certain markets, excess power was exported to neighbouring countries, while deficits in others were covered through imports. Greece, for example, shifted to a strong net export position, leveraging increased renewable output to supply neighbouring systems. Conversely, countries experiencing renewable shortfalls, such as Romania, increased imports to maintain system balance.
This dynamic underscores the growing importance of regional integration in managing renewable variability. Interconnectors allow surplus renewable energy to be distributed across a wider geographic area, reducing curtailment and enhancing system efficiency. At the same time, they transmit volatility, as price signals and supply imbalances propagate across borders.
From a market perspective, the increasing share of renewables is fundamentally altering price formation. Traditional baseload generation is being supplemented—and in some cases displaced—by intermittent sources, leading to more frequent and pronounced price swings. This creates both challenges and opportunities for market participants.
For generators, the ability to respond quickly to changing conditions is becoming increasingly valuable. Flexible assets, such as gas-fired plants and storage facilities, are well positioned to capture value in a volatile environment. For traders, volatility creates opportunities for arbitrage, but also increases risk, particularly in the absence of stable price signals.
Looking ahead, the trends observed in Week 16 are likely to intensify as renewable penetration continues to increase across SEE. Wind and solar capacity additions, driven by policy and investment, will further amplify the variability of the generation mix. At the same time, climate-related factors may introduce additional uncertainty in hydro generation, reducing its reliability as a balancing resource.
In this context, system flexibility will become the defining factor in market performance. Investments in storage, demand response, and grid infrastructure will be critical in managing variability and ensuring system stability. Without such investments, the risk of price spikes and system imbalances will increase, particularly during periods of extreme weather or low renewable output.
Week 16 therefore offers a clear illustration of the challenges and opportunities associated with the energy transition in SEE. Renewable energy is no longer a marginal contributor but a central driver of market dynamics. Its variability, however, requires a fundamentally different approach to system operation and market design—one that prioritises flexibility, integration and resilience.