The energy landscape in South-East Europe is undergoing an irreversible transformation. As the region moves towards a decarbonised, solar and wind-dominated grid, industrial buyers are faced with a set of risks and opportunities unlike any they have encountered before. Power procurement has become a strategic discipline, requiring companies to rethink their approach not just to cost management, but to risk mitigation, flexibility, and long-term operational resilience.
The industrial power playbook for SEE over the next decade is defined by one central principle: volatility is here to stay. For industrial buyers, the challenge is no longer just to secure cheap power, but to manage when, where, and how they consume energy. This chapter outlines the key steps industrial players must take to navigate this new reality — from designing robust procurement strategies to leveraging flexibility as a core competitive asset.
Shift from price optimisation to risk optimisation
Historically, industrial power procurement has been a matter of price optimisation. The goal was to secure the lowest possible energy cost, often locked in through long-term contracts or fixed-price PPAs. Today, however, price is only one part of the equation. The key question for industrial buyers is: How do I stabilise costs and cash flows in an unpredictable power market?
This shift requires a mindset change:
- Move from optimising for the cheapest price to optimising for predictable outcomes.
- Understand that price stability is no longer synonymous with cost stability.
- Treat power procurement as a risk management function, not just a cost-reduction function.
In volatile systems, managing risk through shape, timing, and flexibility is just as important, if not more so, than securing a fixed price.
Embrace flexibility as a core asset
Flexibility is the most valuable hedge in SEE power markets. The ability to adapt industrial operations based on price signals, to shift consumption during peak hours, or to reduce load when prices are too high, is what will separate resilient buyers from vulnerable ones.
This requires:
- Operational flexibility: Designing processes and equipment that can tolerate curtailments, delays, or load shifts during high-price periods.
- Market flexibility: Engaging with intraday markets, demand response programmes, or storage solutions to optimise power procurement in real time.
- Financial flexibility: Designing contracts that allow for quick adaptations in response to market conditions, such as hybrid PPAs or optionality within long-term agreements.
Flexibility isn’t just a technical requirement; it’s a strategic advantage. The more flexible the industry, the less it relies on rigid contracts and the better it can capture value from volatile markets.
Redesign procurement portfolios
The traditional model of a single, all-encompassing PPA or fixed-price contract no longer works. To manage the full range of risks in SEE power markets, industrial buyers must build procurement portfolios that combine multiple hedging strategies, contractual structures, and operational adjustments.
A strong portfolio includes:
- A mix of PPAs: Hybrid PPAs, firmed PPAs, and energy-only PPAs should be blended to match the company’s load profile and risk tolerance.
- Financial hedges: Forward contracts, options, and swaps should be used for predictable volumes, while shape-based hedges (such as intraday and peak hedging) address timing risk.
- Operational flexibility: Load shifting, demand response, storage, and curtailment options should be embedded in the procurement strategy to manage volatility in real-time.
Procurement portfolios must be dynamic, continually adjusted as market conditions evolve. Companies must regularly reassess their exposure to price, shape, and timing risk to ensure that their strategies remain effective.
Incorporate cross-border and regional factors
SEE’s electricity markets are deeply interconnected, and the risks in one market often cascade across borders. As market coupling increases, industrial buyers must account for regional price dynamics, grid constraints, and interconnection risks in their procurement strategies.
Key considerations include:
- Cross-border pricing: Markets such as Hungary, Greece, and Romania increasingly influence SEE electricity prices. Industrial buyers must incorporate these dynamics into their hedging strategies to avoid being caught out by sudden price movements due to regional events.
- Intraday volatility: Price volatility in one country can directly impact prices in neighbouring markets. Buyers should monitor regional balancing markets and be prepared to adjust their strategies accordingly.
- System constraints: Grid bottlenecks or interconnection issues can affect the flow of electricity, creating price spikes or shortages. These risks should be factored into portfolio construction and real-time procurement.
Regional integration is both an opportunity and a risk. Buyers who understand how regional dynamics influence power prices can capture arbitrage opportunities, while those who fail to account for these factors may be exposed to unexpected price movements.
Leverage firmed PPAs and storage solutions
As SEE power systems evolve, firmed PPAs will become a cornerstone of many industrial procurement strategies. These contracts combine renewable energy with firming mechanisms like storage or dispatchable generation to provide reliability during peak hours and system stress.
Firmed PPAs address the core mismatch between industrial demand, which tends to peak during the evening, and renewable supply, which is abundant during midday hours. However, firmness comes at a price. Buyers must weigh the cost of added reliability against the potential value of flexibility and market-based optimisation.
The rise of storage solutions will also play a critical role. Batteries, pumped hydro, and other storage technologies enable industrial buyers to store excess energy during low-price periods and discharge it during high-price periods.
Storage adds another layer of flexibility to the procurement strategy, enabling buyers to manage shape risk more effectively while also capturing the value of price volatility.
Prepare for rising imbalance costs
As SEE power systems become more reliant on variable generation, imbalance costs are likely to increase. Imbalance pricing has become a significant financial risk for industrial buyers, particularly those with rigid PPAs or fixed-price contracts.
To manage imbalance risk, industrial buyers must:
- Monitor real-time market prices: Keep track of intraday price movements and engage with balancing markets when necessary.
- Integrate flexibility: Operational flexibility, such as load shifting or curtailment, can reduce exposure to imbalance penalties.
- Invest in storage: Batteries and other storage solutions can smooth consumption profiles and reduce the risk of imbalance charges.
Managing imbalance costs requires real-time visibility into market conditions and the ability to adjust consumption patterns quickly. The more agile the buyer, the better they can mitigate imbalance penalties.
Sustainability and risk management are no longer separate
Sustainability and financial risk management are often treated as distinct domains within an industrial buyer’s organisation. However, as power markets become more volatile, the distinction between these two areas will disappear. Sustainability is a risk management decision.
As decarbonisation pressures intensify and carbon pricing mechanisms like the CBAM (Carbon Border Adjustment Mechanism) come into play, industrial buyers will be increasingly exposed to the financial impacts of not aligning power procurement with sustainability goals. Conversely, investing in green power procurement will become not only an environmental necessity but also a strategic financial decision.
Companies must integrate sustainability into their overall risk management framework, ensuring that green power procurement aligns with both decarbonisation and financial resilience goals.
Build a risk-aware procurement culture
Finally, to succeed in SEE’s evolving power markets, industrial companies must foster a risk-aware procurement culture. This involves:
- Training procurement teams to understand power markets, volatility, and hedging strategies.
- Collaborating closely with finance, operations, and sustainability departments to align procurement with broader business objectives.
- Developing a proactive risk management mindset that anticipates volatility rather than reacting to it.
A well-informed, agile procurement team will be better equipped to navigate the complexities of SEE’s power markets and capture the value hidden within volatility.
Adapting to an unpredictable future
The next decade will redefine power procurement for South-East Europe’s industrial sector. The old models of fixed-price PPAs and passive cost optimisation are being replaced by strategies that embrace flexibility, adaptability, and active risk management.
For industrial buyers, the challenge is clear: manage volatility or pay for it. By designing procurement portfolios that blend financial hedging with operational flexibility, by investing in firmed PPAs and storage, and by embracing regional dynamics, companies can stabilise their costs and protect their margins.
In a volatile grid, the most resilient companies will not be those with the lowest headline prices, but those with the most agile, flexible, and strategic power procurement strategies.
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