Serbia’s electricity system is facing growing pressure as consumption rises, ageing thermal plants remain dominant and hydropower output becomes more vulnerable to weather conditions. Domestic electricity consumption increased from 28.3 TWh in 2000 to 41.2 TWh in 2024, a rise of about 45%, while major generation capacity did not expand at the same pace.
- Coal supply and thermal generation under pressure
- 2026 power balance remains dominated by thermal plants
- Solar and storage projects expand the generation pipeline
- Bistrica planned as a major balancing asset
- Imports remain part of the 2026 electricity balance
- Hydropower faces increasing weather-related risks
- Grid investment becomes increasingly important
- Coal remains necessary during the transition
- Several years of transition ahead
For much of 2005–2020, Serbia remained a net electricity exporter, with 2018 as the main exception. Hydropower played a major balancing role, allowing higher exports during favourable hydrological periods and greater imports during winter or weaker production periods. The system remains heavily dependent on lignite. Coal has historically supplied around 70% of Serbia’s electricity needs, with the Nikola Tesla and Kostolac thermal complexes providing the core of the country’s baseload generation.
Coal supply and thermal generation under pressure
The vulnerability of the system became particularly visible in December 2021, when operational problems at the Nikola Tesla complex were compounded by poor-quality coal reaching the boilers. Generating availability fell sharply during a period of high winter demand, forcing Serbia to increase electricity purchases on regional markets.
The crisis continued into 2022, which became the most difficult year for Serbia’s modern electricity trade balance and placed significant financial pressure on Elektroprivreda Srbije (EPS). Coal imports also increased. Serbia imported about 2.1 million tonnes of coal in 2000, compared with approximately 6.8 million tonnes in 2022 and 5.4 million tonnes in 2024.
That dependence highlights the limits of relying on lignite as the main source of energy security. The challenge is increasingly whether EPS can develop and operate new mining fields quickly enough, at acceptable costs and with adequate fuel quality, while replacement generation is being built. Coal production has nevertheless improved. EPS reported an increase of around 2 million tonnes in 2025 compared with 2024, while the Drmno mine, which supplies the Kostolac complex, exceeded 10 million tonnes, its highest annual production since operations began.
2026 power balance remains dominated by thermal plants
Serbia’s 2026 Energy Balance envisages gross electricity generation of approximately 39.3 TWh, around 5% above the estimated 37.36 TWh generated in 2025. Conventional thermal power plants are expected to produce about 24.5 TWh, representing 62.35% of gross generation. Combined heat-and-power plants are projected to contribute another 1.38 TWh. Hydropower is expected to generate approximately 9.83 TWh, or around 25% of total production. Wind generation is forecast at 2.11 TWh, while solar production is expected to reach approximately 465 GWh.
EPS added 350 MW through the commissioning of Kostolac B3 and completed its first wind farm and the Petka solar facility in 2025. Those renewable projects contributed another 76 MW, taking the increase in EPS generation capacity over two years to approximately 426 MW. The company plans investment of around €1 billion in 2026, with significant funding directed toward renewable generation and system reliability.
Solar and storage projects expand the generation pipeline
A central EPS project involves 1 GW of self-balancing solar plants combined with 200 MW of battery storage, being developed with Hyundai Engineering and UGT Renewables. The portfolio is expected to generate approximately 1.6 TWh annually. The largest project, with around 460 MW, is planned in the Negotin and Zaječar areas, while another 302 MW is planned near Bošnjace in the municipality of Lebane.
Initial capacity is expected to enter operation from 2027, with completion targeted around mid-2028. The additional generation will contribute to the electricity balance but will not replace the thermal fleet on a one-for-one basis. Solar output is concentrated during daylight hours and varies according to weather and season, increasing the importance of storage, flexible generation and grid capacity. That requirement places pumped storage among Serbia’s strategically important future projects.
Bistrica planned as a major balancing asset
The planned Bistrica pumped-storage hydropower plant, with approximately 660 MW of capacity, is being developed in the Nova Varoš and Priboj area. Technical documentation is nearing completion, the first tender for preparatory infrastructure has been launched and expropriation procedures are progressing. Authorities estimate that the project could support integration of up to 1,500 MW of additional renewable capacity.
Bistrica would use electricity during periods of surplus to pump water into an upper reservoir and release that water through turbines when demand is higher or renewable generation is weaker. EPS has indicated that around 25–30% of the energy available to Bistrica could come from renewable natural inflows from the upstream Uvac hydroelectric system. Variable-speed equipment would also provide greater pumping flexibility than the technology at the existing Bajina Bašta pumped-storage facility.
Imports remain part of the 2026 electricity balance
Serbia’s 2026 plan envisages electricity imports of around 6.93 TWh and exports of approximately 7.41 TWh, including transit. Estimated 2025 imports were 8.09 TWh, compared with exports of 7.29 TWh. Final electricity consumption is expected to reach approximately 29.97 TWh in 2026, about 1% higher than in 2025. Industry and construction are projected to consume around 10.05 TWh, while households account for approximately 44.6% of final demand.
Imports allow Serbia to balance its system through regional electricity markets, but dependence becomes more costly when neighbouring countries face simultaneous shortages caused by cold weather, drought or generation outages. The 2021–2022 electricity crisis demonstrated the financial exposure created when imports become necessary rather than commercially optional.
Hydropower faces increasing weather-related risks
Hydropower has traditionally provided an important counterbalance to Serbia’s thermal generation. However, low river levels can reduce output from the Đerdap facilities and eliminate part of the summer surplus previously available for exports. Hydrological conditions can therefore compound problems in thermal generation rather than simply compensate for them.
Serbia’s future generation mix will consequently require greater diversification between wind, solar, hydro, batteries, pumped storage and thermal generation. EPS has set a target for 45% of electricity generation to come from renewable sources by 2030, compared with a system in which fossil fuels still account for more than 60% of generation.
Grid investment becomes increasingly important
The expansion of renewable generation will also require new transmission lines, substations and balancing infrastructure. Renewable projects cannot deliver their full economic value without sufficient grid capacity, making network constraints and connection delays an increasingly important consideration for investors and developers. Solar projects also face the risk of lower wholesale electricity prices during periods of high midday generation. Battery storage can shift part of that production into more valuable hours, while wind generation offers a different production profile and can complement photovoltaic output.
The combination of the 1 GW solar programme, 200 MW of batteries, approximately 660 MW of Bistrica pumped storage, new wind capacity, hydro upgrades and grid investment therefore forms a connected part of Serbia’s electricity transition.
Coal remains necessary during the transition
Serbia cannot rapidly remove its thermal fleet without creating a major supply gap. Thermal plants are still expected to account for nearly two-thirds of gross electricity generation in 2026. At the same time, maintaining ageing lignite assets indefinitely carries rising mining, environmental and investment costs.
The EU’s Carbon Border Adjustment Mechanism (CBAM) adds another commercial consideration because the carbon intensity of Serbian electricity can increasingly influence its competitiveness in European markets. Lower-carbon generation therefore has implications beyond electricity supply. Serbian producers of steel, aluminium, fertilisers and other carbon-intensive goods increasingly require access to cleaner electricity to maintain competitiveness in the EU market. The electricity transition is consequently becoming part of Serbia’s wider industrial and investment policy.
Several years of transition ahead
The new generation pipeline will not immediately replace the capacity of the existing coal fleet. The 1 GW solar portfolio is targeted for 2027–2028, while Bistrica remains in the preparatory phase. Serbia therefore faces a period in which ageing thermal and hydro assets must remain reliable while new renewable generation, storage and grid infrastructure are developed.
The investment challenge is balancing reliability spending on existing plants with accelerated construction of renewable capacity, hydro rehabilitation, transmission upgrades and large-scale flexibility. The shift from exporter to importer has developed over more than two decades, as electricity demand increased faster than Serbia expanded and diversified its generation base. The next investment cycle will require several gigawatts of new capacity and billions of euros of investment, while moving the power system away from its historical dependence on lignite and towards a combination of renewable generation, storage, flexible hydro and a gradually declining thermal fleet.
