Gas–power linkage: LNG, merit order and price setting across South-East Europe Electricity pricing in South-East Europe is ultimately anchored not in renewables or coal, but in gas. More precisely, it is anchored in liquefied natural gas and the infrastructure that brings it into the region. While renewable capacity is expanding rapidly and coal remains part of the system, the marginal price—the price that clears the market during peak hours—is increasingly set by gas-fired generation, particularly in Greece and, through interconnection, across the broader Balkan system. This linkage between gas and power is not theoretical. It is structural, measurable and persistent. It defines the price floor, the volatility envelope and the upside scenarios across all major electricity markets in the region, including Greece (HEnEx), Bulgaria (IBEX), Romania (OPCOM), Hungary (HUPX) and indirectly Serbia, which remains outside full market coupling but is fully exposed through cross-border flows. The starting point of this structure is Greece’s LNG import system. The Revithoussa terminal, with capacity of approximately 7 bcm per year, has long been the primary entry point for LNG into the Greek system. Its expansion and operational optimisation have increased flexibility, allowing for rapid response to market conditions. The addition of the Alexandroupolis FSRU, with capacity of 5.5 bcm per year, fundamentally changes the scale and redundancy of supply, effectively doubling Greece’s ability to import LNG and positioning it as a regional gas hub. Gas entering these terminals is priced against global LNG benchmarks, primarily influenced by Asian demand, European storage levels and geopolitical supply dynamics. Delivered gas costs into Greece typically translate into power generation costs of €70–120/MWh, depending on plant efficiency (typically 50–60% for combined-cycle gas turbines) and carbon costs under the EU ETS. With carbon prices in the range of €70–90 per tonne CO₂, gas-fired generation costs are structurally elevated compared to historical norms. These gas plants—operated by companies such as PPC, Mytilineos and Motor Oil—form the marginal generation layer in Greece. When renewable output is insufficient or demand peaks, these plants set the clearing price in the day-ahead market. As a result, Greek wholesale electricity prices have averaged €100–140/MWh in recent trading periods, with spikes above €200/MWh during periods of tight supply or elevated gas prices. The influence of this pricing extends beyond Greece’s borders. The Bulgaria–Greece interconnection, with capacity of 1,200–1,500 MW and annual flows exceeding 10–12 TWh, transmits these price signals northward. During periods of high Greek prices, electricity flows from Bulgaria into Greece, raising prices in Bulgaria as supply is redirected
