Serbia’s organized electricity market is preparing for a structural shift in price formation, with SEEPEX confirming that negative electricity prices will be introduced from early May 2026, marking a key milestone in the country’s integration with European power markets.
The first day-ahead auction allowing negative prices is scheduled for 5 May 2026, for delivery on 6 May, while intraday continuous trading with negative prices will become available later that evening, after 23:00 CEST. The move will replace the existing 0 EUR/MWh price floor with a lower bound of –500 EUR/MWh on the day-ahead market and –9,999 EUR/MWh on the intraday market, aligning Serbia with the harmonised minimum clearing price used across the EU.
The introduction follows testing procedures and reflects broader efforts to synchronise Serbia’s market design with European standards under frameworks coordinated by ENTSO-E, particularly in preparation for eventual market coupling.
In operational terms, negative pricing allows the market to clear even during periods of structural oversupply, when generation exceeds demand and system flexibility is constrained. Such conditions are increasingly common across continental Europe, where high renewable output—especially solar during midday hours and wind overnight—can depress prices below zero, incentivising generators to reduce output or pay to remain online.
For Serbia, the shift introduces a new layer of price volatility and risk for market participants. Thermal generation assets, predominantly operated by EPS, are expected to face growing exposure to negative price intervals, particularly during periods of strong regional renewable generation. Many lignite-fired units operate with limited flexibility, raising the likelihood of economically inefficient dispatch during oversupplied conditions.
At the same time, the change enhances the role of intraday trading and balancing strategies. Market participants active on SEEPEX will gain access to a broader pricing spectrum, enabling arbitrage opportunities but also increasing the importance of short-term forecasting and portfolio optimisation.
The introduction of negative prices is also expected to accelerate the business case for flexibility assets. Battery energy storage systems and pumped hydro capacity stand to benefit from the ability to absorb excess generation during negative price periods and release energy during peak demand. Industrial consumers with flexible load profiles may also find opportunities to monetise consumption during negative pricing intervals.
Cross-border dynamics are likely to play a significant role in shaping price formation. Serbia’s interconnected position means that surplus renewable generation in neighbouring markets such as Romania, Bulgaria, and Greece could increasingly influence domestic prices, particularly as regional integration deepens. The removal of the price floor is therefore seen as a prerequisite for efficient cross-border flows under EU market coupling mechanisms.
In parallel, the VAT treatment of negative prices introduces additional financial considerations. Under Serbian legislation, transactions at negative prices are treated as a service, meaning that domestic companies selling electricity under such conditions remain liable for 20% VAT. This creates a potential cash-flow burden, as market participants may be required to pay VAT despite effectively paying to offload electricity. Foreign companies, by contrast, will apply VAT rules based on their country of registration, potentially introducing structural differences in trading strategies.
From an investment perspective, the move is expected to reshape revenue profiles across generation technologies. Solar assets, which are most exposed to midday oversupply, may face an increasing number of zero or negative price hours, requiring more sophisticated power purchase agreements or co-location with storage. Wind generation, while generally less correlated with solar output, remains exposed during periods of strong regional wind conditions.
The introduction of negative pricing signals a transition in Serbia’s electricity market from a constrained, price-capped environment to a more dynamic and volatility-driven system. As integration with European markets progresses, price signals are expected to become more granular, reinforcing the value of flexibility, interconnection, and active portfolio management across the South East European power sector.
