In boardrooms across South-East Europe, 2025 delivered an uncomfortable realisation. Many industrial consumers entered the year believing their electricity exposure was under control. Hedge ratios approached 100 %, forward contracts were in place, and budgets appeared secure. Yet when delivery concluded and financials were reviewed, results told a different story. Portfolios labelled “fully hedged” had still produced material cost variance.
The source of this discrepancy lay not in execution errors, but in structural mismatch. Industrial buyers typically hedged price risk using a combination of local forwards, regional futures, and bilateral contracts. On paper, exposure was covered. In practice, the hedges did not align perfectly with physical consumption profiles, delivery timing, or geographic price formation.
For a typical industrial facility consuming 30–50 MW baseload, annual energy demand reached 260–440 GWh. Hedging strategies commonly involved annual baseload contracts indexed to regional benchmarks, sometimes supplemented by quarterly layers. These instruments smoothed average prices, but they could not eliminate volatility arising from basis movements, congestion, and intra-year supply shocks.
In 2025, this residual exposure became visible. Even after hedging, many portfolios exhibited 15–30 % effective exposure relative to total consumption. This did not mean catastrophic losses, but it translated into millions of euros of variance against budgeted energy costs. For a 50 MW consumer, a ±8–10 €/MWh deviation over part of the year meant ±3–4 million € of unexpected cost or missed savings.
Crucially, the exposure was asymmetric. Hedges proved effective at protecting against extreme upward price spikes, which mattered operationally. However, during periods of local oversupply, strong hydro output, or constrained exports, prices in SEE markets fell faster than hedge benchmarks. Industrial buyers were unable to capture the full benefit of these downturns, effectively overpaying relative to spot conditions.
Utilities supplying industrial clients faced a similar outcome. While revenue stability improved, margins fluctuated as procurement hedges failed to track local price dynamics perfectly. The result was earnings volatility that surprised even experienced risk managers.
By late 2025, sophisticated consumers had begun to reframe their understanding of hedging. The objective was no longer complete price certainty, but volatility containment. Hedging was recognised as a tool to cap downside risk, not to eliminate variance altogether. This shift in mindset had strategic implications. Energy procurement moved from a static annual exercise to a continuous risk-management function requiring monitoring, adjustment, and explicit basis budgeting.
The lesson from 2025 was not that hedging failed, but that expectations were misaligned with market reality. In South-East Europe, a “fully hedged” portfolio was never truly neutral. It carried embedded geographic, temporal, and structural risk that could not be diversified away using existing instruments. Accepting and managing that residual exposure became the defining challenge for industrial energy strategy moving forward.
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