Competitiveness in South-East Europe’s energy-intensive economy is no longer determined by average electricity prices or by the headline cost of fuels. It is determined by how systems behave under stress, and by which countries, companies, and sites can absorb that stress without catastrophic price outcomes. In that environment, gas remains the decisive variable—not because it dominates generation volumes, but because it governs marginality, volatility, and risk allocation across power markets. Seasonal adequacy assessments by ENTSO-E confirm that most systems meet average demand. Market outcomes show that competitiveness is decided in the few hours when they do not.
The misconception that gas is becoming irrelevant rests on a volume fallacy. Renewables grow, coal exits, and annual gas burn appears flat or declining. Yet competitiveness is not set by annual averages; it is set by the cost of the marginal megawatt in critical hours. In South-East Europe, that marginal megawatt is increasingly gas-fired. When the system is tight—during winter cold spells, low-wind evenings, or simultaneous regional stress—gas is the last lever available. Whoever controls its cost, availability, and deliverability controls the price outcome.
This dynamic plays out differently across the region. Hungary sits closer to Central Europe’s buffered model, with multiple gas routes, substantial storage, and dense grids. Serbia, Romania, and Bulgaria operate with thinner dispatchable layers and fewer alternatives once hydro and imports are exhausted. The result is that gas marginality arrives faster and lasts longer in SEE, and its price impact is magnified by congestion and deliverability limits.
Quantitatively, the competitiveness gap is visible in stress outcomes. During recent winters, peak electricity prices in constrained SEE zones exceeded €250–350/MWh, while more buffered neighbouring markets cleared €120–160/MWh under the same regional gas price inputs. The difference was not fuel cost; it was system response. Gas was available in both cases, but only one system could deploy it fast enough to stabilise prices. That difference translates directly into industrial margins.
For traders, this means competitiveness is priced through convexity, not averages. Markets with frequent gas marginality and weak buffers embed higher peak premia and wider forward bid–ask spreads. Winter peak products in SEE trade €40–70/MWh above baseload not because gas is expensive, but because gas will be decisive under constraint. Traders who understand this treat gas exposure as a location- and time-dependent option. Those who do not misprice risk and underestimate tail events.
For industrial buyers, the same logic determines plant-level viability. Energy-intensive operations—metals, cement, chemicals, fertilisers—are not undone by average electricity prices of €80–100/MWh. They are undone by weeks where marginal prices clear above €300/MWh and imbalance charges explode. In tight years, 20–35% of annual electricity spend can be incurred in less than 10% of hours. Gas sits at the centre of those hours, either anchoring prices when deliverable or amplifying them when constrained.
Gas infrastructure therefore becomes a competitiveness asset. Access to storage withdrawal, diversified pipeline routes, or firm gas supply during stress confers a pricing advantage that dwarfs differences in average tariffs. A site that can secure 0.5–1.0 mcm/day of firm gas deliverability during winter peaks can materially reduce exposure to extreme electricity prices, even if its average gas cost is higher. Conversely, sites without such access become price takers during the most expensive hours.
Carbon convergence intensifies this sorting mechanism. As coal and lignite retire faster than flexibility is built, gas becomes marginal in more hours. This does not mean gas burn increases; it means the system reaches the “no-slack” condition more often. Each additional hour of gas marginality is an hour when competitiveness is decided by gas deliverability and grid access rather than by renewables output. Until storage withdrawal, grids, and low-carbon flexibility scale sufficiently, gas will remain the fulcrum.
Grid constraints convert gas marginality into locational advantage or disadvantage. When north–south or east–west corridors bind, gas-anchored prices fragment. One zone may clear at €300/MWh while another clears at €150/MWh under identical fuel inputs. Industrial competitiveness then becomes geographic. Companies operating behind constrained corridors face structurally higher volatility unless they invest in on-site flexibility or contract explicit protection.
The financial implications are already visible. Congestion rents of €30–70 million per year on key SEE corridors represent a transfer from consumers to those positioned to exploit spreads. These rents persist because grid reinforcement—often costing €0.8–1.2 million per kilometre for new 400 kV lines—lags system needs. Until that gap closes, gas-driven volatility will continue to decide winners and losers.
Policy design lags this reality. Energy debates focus on capacity additions and renewable targets, while competitiveness is decided by response speed and deliverability. Gas plants that provide system insurance remain underpaid; storage withdrawal capacity remains underbuilt; grid projects remain delayed. Markets respond rationally by pricing volatility. That volatility is the signal that competitiveness is unresolved.
The unified conclusion is blunt. In South-East Europe, gas still decides competitiveness because it decides when prices stop being predictable. It determines whether a cold week is manageable or destructive, whether a plant remains competitive or becomes marginal, whether a trader captures convexity or absorbs it. Renewables shape averages; gas shapes extremes. Extremes decide outcomes.
Until the region builds enough flexibility to make gas irrelevant in stress hours, gas will remain the decisive variable—not as a volume fuel, but as the arbiter of risk. Traders who understand this trade volatility rather than direction. Industrial buyers who understand it design contracts and operations around peak survival rather than average optimisation. Those who do not will continue to discover that competitiveness is not lost slowly—it is lost in a handful of hours when the system runs out of options.