January’s price dynamics in South-East Europe produced a very clear redistribution of value across the electricity value chain. Elevated and volatile wholesale prices did not benefit the market uniformly; instead, they amplified existing structural advantages while exposing long-standing vulnerabilities.
On the winning side, merchant thermal generators, particularly gas-fired and lignite-based plants, captured the largest short-term upside. With gas units frequently setting the marginal price during cold spells, operators with flexible dispatch capability monetised price spikes above €120–130/MWh while running at high load factors. In systems such as Serbia, Romania and Bulgaria, lignite plants with regulated or legacy fuel cost structures benefited disproportionately, as their marginal costs remained far below clearing prices. These assets effectively extracted scarcity rents created by winter demand and limited cross-border capacity.
Closely linked to this group were cross-border traders and congestion rent beneficiaries. Transmission system operators and market participants positioned on constrained interconnections captured significant congestion income during January. Persistent bottlenecks on north–south and east–west corridors meant that price spreads between SEE hubs and Central European markets remained wide during peak stress hours. Traders with physical access rights and flexible portfolios were able to arbitrage these spreads, while TSOs accumulated congestion revenues that materially exceeded off-winter averages.
Hydropower operators also emerged as partial winners, though in a more selective way. While overall hydro availability was uneven, plants with reservoir flexibility were able to time generation into peak price hours, capturing outsized value per megawatt-hour. Even moderate volumes sold into €110–130/MWh price windows significantly improved January revenue profiles compared with average-year assumptions.
On the losing side, retail suppliers and utilities with fixed-price obligations were among the most exposed. Suppliers locked into regulated tariffs or long-term fixed-price contracts faced a widening gap between procurement costs and retail revenues. In several Western Balkan markets, January reinforced the inevitability of later tariff adjustments, as short-term losses accumulated in supply portfolios. State-owned suppliers, in particular, absorbed implicit fiscal pressure as wholesale volatility translated into balance-sheet strain.
Energy-intensive industrial consumers were another clear loser group. Large industrial off-takers exposed to spot or index-linked contracts faced materially higher electricity input costs during January, compressing margins in sectors such as metals, construction materials and chemicals. For exporters competing with producers in lower-priced Western European markets, January pricing widened competitiveness gaps rather than narrowing them.
Some renewable generators, particularly merchant solar, also underperformed relative to the broader market. Seasonal solar output was structurally low in January, limiting the ability of solar-heavy portfolios to benefit from price spikes. Wind performed better in selected periods, but overall variability meant that many renewable assets did not fully capture the upside of peak price events, especially where curtailment or grid constraints applied.
Finally, public finances and consumers absorbed indirect losses. While household tariffs did not immediately reflect January wholesale prices everywhere, the month added pressure to future regulatory decisions. Deferred pass-through increases fiscal exposure, particularly in systems where utilities remain state-backed and politically constrained in adjusting prices.
Taken together, January’s market trends reinforced a familiar SEE pattern: flexible, dispatchable assets and well-positioned traders capture volatility rents, while fixed-price suppliers, industrial consumers and inflexible renewable portfolios bear the cost. The distributional effects observed in January were not cyclical anomalies but a reflection of how scarcity, fuel linkage and grid constraints continue to shape who gains and who loses in South-East Europe’s electricity markets.
By virtu.energy
