January across South-East Europe cleared as a single, stress-tested power system whose behaviour cannot be understood by isolating fuels or technologies. Prices, flows, and volatility were the outcome of how hydro flexibility, nuclear baseload, variable wind and solar, gas availability, and cross-border constraints interacted hour by hour. The month’s defining feature was not persistently high prices, but repeated regime shifts between energy-long and flexibility-short conditions, with a small number of constrained evening hours driving a disproportionate share of cost and value transfer.
At the base of the stack sat nuclear. Bulgaria and Romania’s nuclear fleets provided a continuous, predictable anchor that flattened the lower half of the supply curve across the region. Bulgaria’s nuclear output enabled sustained exports into neighbouring systems, most visibly into Romania, where northbound flows from Bulgaria exceeded 400 GWh over the month. This baseload certainty mattered less for headline price spikes and more for what did not happen: there was no prolonged fuel-driven scarcity, no gas-led spiral, and no systemic loss of adequacy. Nuclear set the floor, reduced the risk premium embedded in spot prices, and allowed markets to clear tight hours without cascading into multi-day crises. In systems without direct nuclear access, such as Montenegro and Serbia, that anchor arrived only via imports, increasing exposure to congestion risk.
Hydropower defined the shape. Reservoir and cascade hydro across Serbia, Croatia, Romania, Bosnia and Herzegovina, and Montenegro acted as the region’s primary flexibility asset. January hydrology did not overwhelm the system with volume, but it supplied timing. Hydro was dispatched selectively into evening ramps, precisely where power exchanges priced scarcity. This behaviour is visible in the coexistence of soft baseload days near €60–70/MWh with peak extremes approaching €300/MWh on SEEPEX, €165–180/MWh peak averages on CROPEX and OPCOM, and extreme dispersion on MEPX. Hydro reduced the duration of scarcity but preserved its value. Water carried option value across weeks, so operators rationally withheld in energy-long hours and released into ramps, monetising shape rather than suppressing prices.
Wind provided volume but added variance. January wind production across the region rebounded sharply in several weeks, particularly in Romania and parts of the eastern Balkans, occasionally flooding systems with low-marginal-cost energy and compressing prices during off-peak hours. Yet wind’s contribution was episodic. Lulls coincided with cold spells and evening demand peaks, precisely when flexibility was most valuable. Wind therefore amplified the regime-switching nature of the month: when it blew, prices softened quickly; when it dropped, the system fell back onto hydro, imports, and residual thermal capacity, accelerating the move into scarcity pricing. Markets with deeper liquidity and better interconnection absorbed these swings more smoothly than thin systems.
Solar was structurally secondary but still relevant. Winter irradiation limited absolute output, yet solar shaped intra-day profiles by depressing midday prices and steepening evening ramps. This increased the premium on flexibility assets able to arbitrage from midday softness into evening stress. In January, solar did not drive volumes, but it sharpened the curve, indirectly increasing the value of hydro, storage, and fast-ramping units.
Gas, notably, did not set the tone. Regional gas supply was stable, storage was adequate, and pricing tracked European hubs without shock. Serbia’s long-term supply structure insulated gas-to-power from spot volatility; Romania’s domestic production further reduced exposure; Croatia’s LNG access ensured security at a higher but controlled cost. As a result, gas acted as a ceiling rather than a trigger. Power prices spiked without a corresponding gas spike, confirming a structural shift: flexibility and grid constraints, not fuel scarcity, were the marginal drivers in January.
Cross-border constraints converted these fundamentals into prices. Interconnectors determined whether scarcity was shared or isolated. The Romania–Bulgaria corridor illustrated this clearly, with strongly asymmetric flows favouring Bulgaria-to-Romania during large parts of the month. The Romania–Hungary interface flipped direction repeatedly, signalling alternating price leadership and intermittent convergence. Bulgaria’s high throughput on IBEX, including record daily volumes, shows that coupling worked aggressively in unconstrained hours, but saturation during critical ramps left residual scarcity to be priced locally. In small markets like Montenegro, thin liquidity magnified this effect, producing days as low as €18.79/MWh and peaks above €180/MWh within the same month.
When combined, these elements explain January’s distributional outcomes. The primary winners were holders of controllable flexibility and optionality: hydro operators, nuclear-anchored exporters, portfolio traders with cross-border access, and any asset capable of shifting energy from off-peak to peak. The repeated spread between off-peak levels near €120–125/MWh in Romania and peak averages above €170/MWh, or between Serbian minima near €67/MWh and peak extremes near €294/MWh, was consistently monetisable. The clearest losers were inflexible buyers and suppliers structurally short during evening ramps—industrial loads without demand response, district heating systems, and portfolios hedged flat rather than by shape—who paid for a small number of hours that dominated monthly costs.
January therefore revealed the current anatomy of South-East Europe’s power markets. Nuclear defines the floor and prevents systemic crises. Hydro controls timing and monetises scarcity without eliminating it. Wind and solar inject low-cost volume but increase variability. Gas stabilises rather than destabilises. Cross-border constraints decide who pays and who earns when the system tightens. The result is a market capable of extreme, short-lived dislocations without collapsing—one where averages are misleading and where value increasingly accrues to flexibility, not fuel.
By virtu.energy
