October 25, 2026 - Coal and lignite generation increased across Southeast Europe in Week 42 even as overall thermal output fell, highlighting the continued role of solid fuels when gas prices rise and electricity systems require dispatchable generation.

Regional thermal production declined 2.47% to 6,640.75 GWh, but the headline masked a significant change inside the generation mix.

Gas-fired production dropped 7.43% to 3,415.40 GWh, while coal and lignite generation increased 3.40% to 3,225.35 GWh.

The movement coincided with a sharp rise in European natural gas prices, with TTF averaging €86.54/MWh during the week.

Country-level developments illustrate how utilities responded.

Bulgaria increased thermal generation 16.81%, largely through additional coal and lignite production as electricity demand strengthened and renewable generation weakened.

Serbia’s predominantly coal-fired thermal generation increased 5.45%.

Romania raised both coal and gas generation, while Greece moved against the broader regional trend and substantially increased gas-fired output.

This creates an increasingly difficult policy and investment equation for Southeast Europe.

Coal remains capable of providing large volumes of dispatchable electricity when demand rises or renewable production weakens.

But the same generation that supports system adequacy carries growing carbon and environmental costs.

For EU member states, carbon costs are already directly incorporated through the EU Emissions Trading System. For neighbouring Western Balkan markets, deeper integration with European carbon policy and CBAM increasingly raises the strategic cost of carbon-intensive electricity.

The transition challenge therefore cannot be solved simply by announcing additional renewable capacity.

Replacing coal economically means replacing several services coal plants currently provide: energy, capacity, reserves, system stability and dispatchability.

Wind and solar can replace much of the energy.

They cannot independently replace all of those system functions.

Storage, grid-forming technologies, hydropower, demand response, regional interconnection and flexible generation therefore become part of the same transition package.

Week 42 offered a practical demonstration.

Bulgaria’s renewable production fell sharply just as demand increased. Coal output responded.

Serbia experienced higher consumption and weaker hydropower output. Its coal fleet also increased generation.

Without those plants, both systems would have required greater imports or additional demand-side adjustment.

The investment question is therefore not whether coal generation will decline over time.

It is what replaces its flexibility before the capacity is retired.

This matters particularly for lenders assessing new renewable projects. A market with rapidly expanding wind and solar but insufficient balancing capacity may experience more price volatility, curtailment and grid-connection risk.

For industrial consumers, the same transition may create wider differences between inexpensive renewable hours and expensive peak periods.

That price structure strengthens the economics of batteries and flexible demand.

Week 42 consequently reinforces a broader regional trend: coal remains operationally relevant in the short term, but the cost of preserving that dependence continues to rise.

The most valuable future investments may therefore be those that allow Southeast Europe to retire coal without simultaneously increasing exposure to expensive imported gas or volatile cross-border electricity.