Wholesale electricity markets across South-East Europe entered January 2026 under clear winter stress, with price formation dominated by weather-driven demand, gas-linked marginal costs and persistent structural constraints in regional interconnection. Across the month, day-ahead prices showed wide intramonth volatility rather than a smooth seasonal premium, underscoring the fragility of balance conditions in SEE power systems during cold periods.
January opened with relatively contained prices during milder days, when average day-ahead clearing levels in core SEE markets hovered in the €65–75/MWh range. This quickly shifted as colder weather set in across Central and Eastern Europe, driving up heating demand and tightening system margins. During these colder episodes, day-ahead prices repeatedly exceeded €120/MWh, with several trading days printing peaks close to €130/MWh, particularly in interconnected markets such as Serbia, Hungary, Romania and Bulgaria. The resulting price range within a single month illustrates the degree of volatility that remains structurally embedded in the region.
By the second week of January, the upward momentum became more pronounced. Average weekly prices across the SEE zone moved decisively above €100/MWh, representing a sharp increase of more than 20 % week-on-week compared with early January levels. Hungary, Romania and Bulgaria frequently cleared in the €125–136/MWh band during peak stress days, while Greece and Türkiye tended to trade at somewhat lower averages, reflecting differences in generation mix, gas exposure and cross-border availability. Despite these divergences, the broader regional pattern was one of elevated clearing prices across nearly all hubs.
The fundamental drivers behind January pricing followed a familiar winter logic but were amplified by regional characteristics. Cold weather materially increased load, while solar output remained seasonally weak and wind generation was uneven across the region. Hydropower availability improved modestly in some systems but did not provide sufficient buffering capacity to suppress marginal prices. As a result, gas-fired generation frequently set the marginal price, importing volatility directly from regional gas markets into electricity price formation. This gas linkage remains one of the most important transmission mechanisms shaping SEE electricity prices during winter months.
Structural constraints further reinforced price pressure. Limited cross-border transmission capacity, particularly on key north–south and east–west corridors, restricted arbitrage with lower-priced Central European markets during peak stress hours. Congestion premiums remained visible in several border directions, preventing sustained price convergence even when neighbouring systems experienced looser supply conditions. These bottlenecks continue to differentiate SEE pricing from Western and parts of Central Europe, where stronger interconnection and deeper liquidity often dampen volatility.
January’s wholesale dynamics also fed into retail and regulated price discussions across the Western Balkans. Several jurisdictions entered 2026 with announced or anticipated tariff adjustments, reflecting the cumulative impact of higher wholesale procurement costs, inflationary pressures and delayed cost recovery from previous years. While Serbia signalled that larger retail revisions are likely later in the year, other markets moved earlier, reinforcing the pass-through channel from volatile wholesale prices to end-user tariffs.
In comparative European context, South-East Europe once again traded at a structural premium. Even excluding the coldest days, January average wholesale prices in much of the region remained anchored in the €85–105/MWh range, materially above levels observed during the same period in parts of Western Europe. This differential reflects not only short-term weather effects but deeper market characteristics: higher reliance on thermal generation at the margin, weaker interconnection density, and slower deployment of large-scale flexibility such as storage and demand response.
January 2026 therefore reinforced a recurring message for SEE electricity markets. Seasonal volatility is no longer an exceptional phenomenon but a defining feature, particularly during winter. Without accelerated investment in grid reinforcement, regional interconnection, flexible generation and storage, the region is likely to continue experiencing sharp price swings whenever demand surges or renewable output falters. The January price pattern was not an anomaly, but a concentrated illustration of how structural constraints and winter fundamentals continue to shape electricity market outcomes across South-East Europe.
By virtu.energy
