In Southeast Europe (SEE), coal and lignite generation increased in Week 42 while total thermal output declined. Regional thermal production fell 2.47% to 6,640.75 GWh; gas-fired output dropped 7.43% to 3,415.40 GWh, while coal and lignite output rose 3.40% to 3,225.35 GWh. European natural gas prices also rose sharply, with TTF averaging €86.54/MWh during the week; the figures are courtesy of Virtu.Energy.
Country-level changes varied. Bulgaria’s thermal generation increased 16.81%, largely on higher coal and lignite output as electricity demand strengthened and renewable generation weakened. Serbia’s predominantly coal-fired thermal generation rose 5.45%, Romania increased both coal and gas generation, and Greece moved against the regional trend with a substantial rise in gas-fired output.
Carbon costs and the role of dispatchable generation
The shifts leave Southeast Europe facing a difficult policy and investment equation. Coal can still supply large volumes of dispatchable electricity when demand rises or renewable production weakens. But that generation also carries increasing carbon and environmental costs.
In EU member states, carbon costs are already directly incorporated through the EU Emissions Trading System (EU ETS). In neighbouring Western Balkan markets, deeper integration with European carbon policy and the Carbon Border Adjustment Mechanism (CBAM) increasingly raises the strategic cost of carbon-intensive electricity. The transition challenge cannot therefore be addressed simply by announcing additional renewable capacity.
Replacing coal economically requires replacing several services provided by coal plants: energy, capacity, reserves, system stability and dispatchability. Wind and solar can replace much of the energy, but cannot independently provide all those system functions. Storage, grid-forming technologies, hydropower, demand response, regional interconnection and flexible generation are therefore part of the same transition package.
Week 42 shows coal’s operational role
Week 42 provided practical examples of these system dynamics. Bulgaria’s renewable production fell sharply as demand increased, and coal output responded. Serbia saw higher consumption and weaker hydropower output, while its coal fleet also increased generation.
Without those plants, both systems would have needed greater imports or additional demand-side adjustment. The investment question is not whether coal generation will decline over time, but what will replace its flexibility before capacity is retired. This is particularly relevant to lenders assessing new renewable projects.
Markets with rapidly expanding wind and solar but insufficient balancing capacity may face greater price volatility, curtailment and grid-connection risk. For industrial consumers, the transition may also widen the gap between inexpensive renewable hours and expensive peak periods. That price structure strengthens the economics of batteries and flexible demand.
Week 42 reinforces a broader regional trend: coal remains operationally relevant in the short term, while the cost of maintaining that dependence continues to rise. Future investments may be most valuable when they allow Southeast Europe to retire coal without increasing exposure to expensive imported gas or volatile cross-border electricity.
Courtesy of Virtu.Energy