Southeast Europe has traditionally addressed grid congestion by building more infrastructure: another transmission line, transformer or interconnector. The approach is logical. Rising electricity demand and rapid renewable deployment require stronger networks. Yet major grid projects can take years to develop, permit and construct, while equipment supply chains remain under pressure.
That makes ACER’s 2026 analysis particularly relevant. It places greater emphasis on using existing networks more efficiently and deploying grid-enhancing technologies, alongside conventional infrastructure investment.
The shift could have significant consequences for the region. The power grid is increasingly becoming more than a collection of physical assets. It is evolving into a digitally managed system where data, automation and flexible demand can unlock additional capacity without immediately requiring new infrastructure.
From copper to algorithms
Dynamic line rating is one of the clearest examples. Transmission lines are often operated according to conservative seasonal limits even though their actual thermal capacity varies with ambient temperature, wind conditions and solar heating.
Sensors and analytical models can determine the real-time operating capability of a line and increase its permitted loading when conditions allow. ACER estimates that capacity gains of more than 50% can be possible in certain circumstances.
Such gains do not mean that a transmission line permanently becomes 50% larger. Available capacity depends on weather, location and operating conditions. However, dynamic line rating can unlock additional transfer capability during many hours without waiting years for a new transmission corridor.
Other grid-enhancing technologies can produce similar effects. Advanced conductors can increase transfer capability within existing rights of way, while topology optimisation can alter network configurations to manage electricity flows more efficiently.
Improved outage coordination can prevent simultaneous maintenance on critical corridors. Curative remedial actions can allow TSOs to operate closer to network limits while retaining the ability to respond after a contingency. Flow-based capacity calculation can also make more of the physical network available for cross-border market coupling.
The common principle is straightforward: engineering information is being converted into additional market capacity.
At distribution level, local flexibility provides a similar solution. A transformer may be constrained for only a few hours during a winter evening or a summer tourism peak. Instead of immediately reinforcing the entire feeder, a DSO could procure flexibility from batteries, EV fleets, industrial facilities or commercial buildings located behind the constraint.
The value of such flexibility is highly dependent on geography. A megawatt located on the wrong side of a network bottleneck may have little value for solving the problem. Flexibility markets therefore introduce a new locational dimension to distribution-system economics.
Investment consequences
The growing role of grid-enhancing technologies also challenges traditional approaches to network investment.
Regulatory frameworks have historically favoured capital expenditure because utilities earn regulated returns on physical infrastructure. Flexibility contracts, automation and software may instead be classified as operating expenditure, even when they deliver a lower total system cost.
If regulators fail to account for that difference, network operators have a rational incentive to continue building physical assets.
A modern investment framework should therefore compare the full economic cost of traditional reinforcement with alternatives such as dynamic line ratings, contracted flexibility, automation and advanced network operation.
The implications extend to renewable and industrial developers. Grid connection capacity is becoming increasingly scarce, and flexible connection agreements could allow projects to connect sooner in exchange for accepting limited restrictions during periods of congestion.
A data centre could temporarily reduce non-essential loads. An EV depot could delay charging. A battery could absorb local surplus generation.
These arrangements create an important middle ground between full firm grid access and rejection of a connection application. They also establish a mechanism for assigning a direct economic value to flexibility at the exact location where the network needs it.
Regional market impact
Better utilisation of existing transmission infrastructure could reduce price separation between Southeast Europe and Central Europe during periods of network stress, although it cannot eliminate structural bottlenecks.
ACER’s assessment that limited cross-border capacity contributed to higher price spikes in 2024 illustrates the direct connection between network constraints and wholesale-market outcomes.
Additional available capacity can reduce scarcity rents, change congestion revenues and alter the economics of generators operating on either side of a transmission constraint.
Grid-enhancing technologies are therefore no longer simply an engineering or procurement issue. They can influence trading strategies, renewable capture prices, industrial electricity costs and the bankability of new energy projects.
A transmission corridor that gains several hundred megawatts of usable capacity can materially change cross-border price spreads without a single new tower being constructed.
Market participants will therefore increasingly need to monitor the deployment of operational grid technologies with the same attention they currently give to new interconnectors and major transmission projects.
The emerging model
Southeast Europe will still need substantial investment in new electricity infrastructure. Dynamic line rating cannot resolve every bottleneck, while local flexibility cannot substitute for reinforcement where electricity demand is growing permanently.
The future network model is therefore likely to be layered: build where capacity is structurally required, optimise existing infrastructure where operating limits are conservative, and procure flexibility where constraints are temporary.
The most important transformation may ultimately be institutional rather than technological.
TSOs and DSOs will increasingly need to become buyers of technology and flexibility services rather than relying primarily on physical infrastructure investment. Regulators will need to recognise solutions that deliver value through avoided congestion, improved asset utilisation and deferred capital expenditure.
Customers, batteries, EV fleets, industrial facilities and other distributed resources will increasingly become part of network planning rather than being treated solely as sources of demand or generation.
The next stage of Southeast Europe’s grid development is therefore not simply about building more wires. It is about turning the existing network into a more dynamic, intelligent and market-responsive system—using data, prices, contracts and digital control to extract more value from infrastructure that is already in place.
