Serbia’s state power utility EPS is advancing a €408 million investment programme combining hydropower rehabilitation, new generation capacity and more than 120 MW of solar development, supported by European financing and grants.
The programme is built around a €100 million European Investment Bank (EIB) loan signed in December 2024 under the EPS Green Financing framework. Individual projects are now progressing with additional support from the Western Balkans Investment Framework (WBIF). The EIB framework covers rehabilitation work at Bistrica, Potpeć and Đerdap II hydropower plants, construction of an additional 13 MW generating unit at Potpeć, and development of new renewable-energy projects.
Bistrica and Potpeć receive additional EU support
The rehabilitation of Bistrica hydropower plant is expected to receive up to €7.46 million in WBIF grants, alongside about €52 million of proposed EIB financing. The project has an estimated total investment cost of €59 million. The works are designed to extend Bistrica’s operating life by about 30 years, raise production efficiency and improve the plant’s ability to balance variable renewable generation.
At Potpeć, EPS is implementing a reconstruction and expansion programme that includes construction of a new generating unit. Average annual electricity production is expected to rise from 213 GWh to 236.7 GWh, with the project eligible for up to €15.24 million in WBIF grant support.
The wider EIB framework also includes rehabilitation of Đerdap II, expanding the investment programme across several existing hydropower assets.
Former coal sites identified for solar development
The programme also provides for more than 120 MW of new solar capacity, including potential projects at existing thermal-power locations. Sites connected with Morava and Kolubara A could provide locations where EPS can reuse industrial land, grid connections, access roads and other infrastructure after coal-fired generation ends.
Using these existing assets could reduce the need to develop entirely new sites for renewable generation, particularly where grid access, permitting and land availability affect project development. The approach would also give former thermal-power locations a continuing role in the electricity system after the end of coal generation, while allowing EPS to reuse infrastructure already established at those sites.
Hydropower supports renewable integration
The investment programme places additional emphasis on the flexibility provided by existing hydropower capacity as Serbia expands wind and solar generation. Modernised hydro units can adjust generation in response to changes in renewable output and provide balancing and other system services. The EIB identifies increased system flexibility as one of the expected benefits of the Bistrica rehabilitation.
EPS is also progressing the separate RHE Bistrica pumped-storage project, which would provide additional storage and flexibility for the Serbian electricity system. Within the broader investment structure, new solar capacity would increase renewable generation, while rehabilitated hydropower and pumped storage would provide flexibility for integrating variable output.
EIB and WBIF financing support long-term investments
The European financing structure also brings procurement, environmental and social requirements, including applicable EU public-procurement standards, alongside the funding itself. WBIF grants can reduce the effective cost of rehabilitation projects, while long-term EIB financing supports investment in generation assets designed to operate for decades.
For EPS, the programme forms part of a wider set of capital requirements that includes maintaining lignite supply in the near term, rehabilitating ageing generation, adding new electricity capacity and preparing the power system for a lower-coal generation mix. The projects therefore combine continued use of existing infrastructure with the development of new renewable capacity, including solar installations at former thermal-power locations and upgraded hydropower assets.
