Solar power has become the most misunderstood structural force in the South-East Europe electricity market. It is still discussed primarily as a national policy success — installed capacity, renewable targets, cheaper power, decarbonisation progress. In reality, once solar reaches meaningful scale inside a coupled regional grid, it stops behaving as a national asset altogether. It becomes a system-level price shaper whose effects are felt first outside the country that built it.
The defining feature of solar in SEE is not capacity growth itself, but spillover. Solar does not remain where it is installed. Its price impact moves instantly across borders through interconnectors, altering outcomes for markets, industries, and trading books that had no role in the original investment decision. This is why solar has become the dominant intraday price setter across SEE, including in countries with relatively modest domestic photovoltaic penetration.
The reason lies in solar’s non-linear effect on price formation. At low penetration levels, solar behaves like incremental supply. Prices soften, but system structure remains intact. Once penetration crosses a relatively low threshold, however, the system flips. Midday solar output begins to exceed local demand, marginal pricing shifts decisively from fuel costs to weather conditions, and surplus electricity is forced into neighbouring markets. At that point, solar stops being additive and starts redefining the entire price curve.
This threshold has already been crossed in several SEE countries. Greece, Bulgaria, Romania, and Hungary now experience regular hours in which solar alone can cover a substantial share of system demand. When that happens, prices collapse during high-generation hours regardless of domestic fundamentals. These price signals do not stop at national borders. They propagate automatically until interconnector capacity is exhausted. Serbia experiences midday price suppression driven by Hungarian or Bulgarian solar output. North Macedonia inherits Greek solar price patterns despite limited domestic PV. Romania exports price volatility into Hungary and Serbia even when its own demand remains stable. Solar spillover, in this context, is not episodic. It is structural.
What makes this spillover particularly destabilising is its asymmetry. Cheap electricity travels easily. Firm electricity does not. Midday surplus flows across borders with little resistance, compressing prices simultaneously across multiple markets and creating the appearance of regional abundance. Evening scarcity, by contrast, cannot be exported at the same scale. It is constrained by ramping limits, congestion, and the physical absence of dispatchable capacity. The result is a market that appears cheap on average but becomes violently expensive during the hours that matter most.
This asymmetry is where solar begins to undermine traditional procurement logic. Average prices decline, but volatility increases. The value of firm supply during evening and early-night hours rises faster than the savings generated during solar-heavy midday periods. For industrial buyers, this produces a paradoxical outcome: electricity looks cheaper on paper while becoming more expensive in operation.
At the same time, solar destroys the traditional baseload price curve. In coal-dominated systems, prices were anchored by continuous generation. Intraday spreads existed, but they were modest. Solar inverts this structure. Prices collapse at midday, ramp steeply into the evening, and increasingly reflect scarcity rather than fuel costs. Baseload loses relevance not because it disappears immediately, but because its economic signal is overwhelmed by time-dependent volatility.
This transformation does not respect borders. A country with limited solar but strong interconnection inherits the solar-shaped curve of its neighbours. Domestic generation mixes cease to explain domestic prices. Contracts built around baseload assumptions fail to hedge exposure. Cheap hours become operationally irrelevant for industries whose consumption peaks later in the day.
Beyond energy, solar spillover exports risk. Forecast errors, ramping requirements, and balancing stress are not borne exclusively by the system that installs solar. They are redistributed across all connected markets. This is not a flaw in market design; it is a direct consequence of coupling. Risk is allocated not to those who create it, but to those who are connected to it.
As solar penetration rises, this redistribution intensifies. Storage deployment lags capacity growth. Demand remains largely inflexible. Coal exits remove ramping capability faster than it is replaced. Hydro becomes increasingly strategic rather than freely available. Each additional tranche of solar deepens midday price suppression and sharpens evening scarcity. Spillover effects grow stronger, not weaker.
Market behaviour reinforces these dynamics. Traders respond rationally to solar patterns, positioning long during midday surplus and short into evening ramps. Intraday forecast updates accelerate price moves in both directions. When solar over-delivers, prices collapse faster. When it under-delivers, evening prices spike harder. Trading activity does not create volatility, but it transmits and amplifies it across borders.
For industrial buyers, the consequence is unavoidable. They benefit from lower averages while absorbing higher tail risk. Peak exposure increases, hedge effectiveness declines, imbalance costs rise, and cash-flow predictability deteriorates. Crucially, these effects apply even to buyers who did not invest in solar themselves. In a coupled system, solar pricing becomes regional by default.
This creates a subtle political economy tension. Countries that invest heavily in solar can claim success through lower domestic prices and emissions reductions. Neighbours absorb volatility without equivalent benefits. Over time, this feeds debates about balancing cost allocation, capacity remuneration, and grid investment priorities. Each response layer adds further uncertainty for market participants.
Solar spillover is therefore not a transitional anomaly. It is the central organising force of the SEE power market over the next decade. Price formation will remain regional. Volatility will intensify before stabilising. Flexibility will outperform volume. Procurement strategies built on domestic isolation will fail.
Solar has ended the illusion of national electricity markets in South-East Europe. It has turned the region into a single, weather-driven price system with local constraints. Understanding this spillover is no longer optional. It is the foundation for understanding every other risk in the SEE power system.
Elevated by clarion.energy