The Institute of Energy for Southeast Europe has published a study titled “New Challenges to Energy Security in Southeast Europe,” which examines the changing landscape of energy security in the region following the 2022–2023 energy crisis. The study is presented in the context of ongoing geopolitical tensions, including the war in Ukraine and renewed instability in the Eastern Mediterranean and the Middle East.
The energy crisis, triggered by reductions in Russian gas exports to Europe, has shifted the continent’s energy priorities. Significant progress has been made in diversifying supplies through the import of liquefied natural gas (LNG) and the development of regional interconnectors that facilitate access to Caspian gas. However, Southeast Europe remains particularly vulnerable due to its dependence on fossil fuels, underdeveloped energy infrastructure, and a complex geopolitical environment.
The authors (Costis Stambolis, John Roberts and Dimitris Mezartasoglou) of the report emphasize the need for additional infrastructure investment and much closer regional cooperation to ensure affordable, reliable, and sustainable energy. A key issue is the importance of expanding domestic gas production in countries such as Romania, Croatia, Greece, Turkey, and potentially Bulgaria. These developments—particularly in the Black Sea—are crucial for strengthening local production, achieving energy independence, and supporting broader EU efforts to diversify supplies.
The report also explores the strategic significance of the Vertical Gas Corridor, the Southern Gas Corridor, as well as new LNG terminals and floating storage and regasification units (FSRUs), such as the one in Alexandroupolis, Greece.
Special attention is given to the critical issues of electricity transmission and the stability and reliability of the power grid, in light of the rapidly increasing share of renewable energy sources in the regional energy mix. The report also highlights the key role that nuclear energy is expected to play in electricity generation in Southeast Europe over the coming decades.
According to the study, market analysts identify the main cause of the electricity crisis in the region in September/October 2024 as the disappearance of Ukrainian electricity exports to neighboring countries. Russia has been systematically attempting to destroy Ukraine’s power grid, which is currently operating at only about 70% of its previous capacity. For the region, this means the end of dependence on Ukrainian electricity exports and a need to find new ways to increase electricity supply in Central and Southeast Europe. At the same time, Ukraine must import electricity from the rest of Europe to compensate for its lost domestic production, which naturally reduces the volume of electricity available for Southeast European markets.
More interconnectors would help facilitate regional exports, but a potential issue is that this could jeopardize domestic electricity supply. When countries commit to exporting certain quantities of electricity to their neighbors, they are contractually obligated to do so, regardless of the level of domestic production. While minimum guaranteed supply to the local market is always a relevant requirement, electricity generation can fluctuate—particularly for weather-dependent sources such as hydro, wind, and solar power. This increases the risk of shortages in the local or regional power grid.
Another critical issue is the high volatility of electricity markets, which highlights the structural differences in how electricity markets operate across the region. Balkan countries rely on the Net Transfer Capacity (NTC) model for allocating transmission capacity, while Central and Western Europe use the more advanced Flow-Based Market Coupling (FBMC) approach. The FBMC algorithm can severely limit or even block electricity flows from Germany and Austria to Hungary, which serves as a major energy hub for the region and a key supplier to Ukraine. As a result, Ukraine is increasingly supplied from the south, which further drives up electricity prices in Southeast Europe.
The main conclusion regarding electricity and energy security in Southeast Europe is that power systems in the region are becoming increasingly unreliable. This is due to the growing share of intermittent renewable sources, while the role of traditional base-load fuels—particularly coal—is decreasing. Therefore, there is a continued need for stable and competitive base-load pricing.
Energy policy in recent years has focused on transforming energy systems and accelerating electrification, which brings with it growing challenges and security risks. This is particularly evident in the heart of Southeast Europe, where the development of electricity networks lags behind the growth in installed generation capacity. Unlike other fuels such as oil and gas, electricity systems are more vulnerable because their operation depends on multiple subsystems and extended infrastructure, including power grids, interconnectors, substations, inverters, power electronics, and more.
The authors of the study believe that gas will play an increasingly important role in electricity generation across much of the region, despite the challenges stemming from the loss of Russian gas supplies following Russia’s invasion of Ukraine in February 2022.
