Carbon convergence has become the most consequential timing risk in South-East European power trading. Direction is broadly agreed: carbon costs will rise, coal and lignite will exit, and market coupling will deepen. What remains deeply uncertain—and now decisively priced by markets—is when these forces will align, how fast they will propagate through cross-border trade, and whether grids and flexibility will arrive

South-East Europe’s power markets are undergoing a quiet but decisive reordering in which congestion, rather than generation cost, increasingly determines who clears at scarcity prices and who does not. The traditional hierarchy—where lower-cost systems reliably price below higher-cost neighbours—has been eroded by structural transmission constraints, declining dispatchable depth, and synchronized stress events. In this environment,

Winter stress events have evolved from regional anomalies into continental trading events that simultaneously reshape demand, supply, and transmission conditions across Central Europe and South-East Europe. These episodes now define annual P&L outcomes more decisively than average conditions, because they compress multiple risk factors—temperature-driven demand surges, renewable underperformance, reduced hydro flexibility, declining inertia, and constrained

The repricing of South-East Europe’s power markets is increasingly driven not by energy scarcity but by the erosion of system inertia and fast-response capability. As synchronous coal and lignite units retire or operate fewer hours, the physical properties that once stabilised frequency and dampened short-term volatility are disappearing. Markets are responding by repricing balancing risk,