SOCAR and Serbia’s state-owned utility Elektroprivreda Srbije (EPS) are negotiating a shareholder agreement for a joint venture to develop a gas-fired power plant in Niš, extending Azerbaijan’s role in the Serbian energy market from gas supply into electricity-generation infrastructure.
The project is being developed under the Serbia–Azerbaijan cooperation framework. An agreement connected to the initiative was signed in Belgrade in February 2026, while EPS and SOCAR signed key cooperation terms in Baku in early June 2026. Those terms set principles for project development, construction, operation, the establishment of a joint company and core commercial parameters.
Project documentation is under preparation, and Niš has adopted a territorial development plan for the plant. Construction is expected to be completed by the end of 2030.
Gas Plant Planned During Electricity-System Transition
Serbia’s power system remains heavily dependent on coal-fired generation while facing environmental compliance requirements, ageing assets, regional decarbonisation policies, cross-border carbon exposure and increasing renewable-energy integration.
The country is also advancing major renewable projects. SANY Renewable Energy is developing the 168 MW Alibunar wind project, valued at about €240 million. Serbia is separately pursuing a state-backed 1.2 GWp solar programme with 200 MW / 400 MWh of battery storage, supported by €900 million in South Korean export financing.
The planned Niš plant would be developed for a power system expected to have greater solar, wind and battery capacity by 2030. Its commercial role would depend on dispatchable capacity, system balancing, reserve provision, grid support and availability during periods of reduced renewable output, hydrological weakness, coal outages or higher regional import prices.
The project’s economics would be influenced by heat rate, start-up time, ramping capability, minimum stable load, ancillary-service eligibility, fuel flexibility and capacity-market design. Its generation value would depend on availability during periods of system scarcity rather than continuous annual output.
SOCAR Expands Beyond Gas Sales
SOCAR already supplies gas to European markets including Italy, Greece, Bulgaria, Romania, Hungary and Serbia, according to the source material. The Niš project would give the Azerbaijani company an ownership position in electricity-generation infrastructure in Europe.
The investment would link gas supply with power generation, providing SOCAR exposure to the margin between fuel input and electricity output. It would also establish a long-term infrastructure position in Serbia’s electricity sector and deepen bilateral energy cooperation between Serbia and Azerbaijan.
Energy security in Serbia is increasingly linked to electricity-system stability during heatwaves, winter demand peaks, coal outages, renewable intermittency and regional price movements. The Niš facility is expected to be evaluated against its ability to provide firm and dispatchable capacity in those conditions.
Regional Gas Routes and Energy Investment
Southeast Europe is developing as a regional corridor for gas, LNG, electricity and related infrastructure. Greece is expanding its position as an LNG and gas-routing hub through the Vertical Corridor.
Atlantic SEE LNG Trade and Venture Global have agreed a 20-year, $9 billion LNG arrangement covering 1.5 bcm of gas for Albania and Bosnia from 2030. The gas is intended to move northward from Greece through the Balkans toward Central and Eastern Europe.
Serbia is connected to EU energy policy through trade, investment, grid integration, industrial exports and prospective carbon-related costs, despite not being an EU member. Its energy sector also involves Azerbaijan through gas supply and the Niš project, Hungary through MOL’s interest in NIS, Russia through legacy oil-sector ownership structures, China through renewable construction and industrial investment, South Korea through solar export finance, and the EU through regulatory requirements.
The source material states that MOL has received another US authorisation to continue negotiations over acquiring a majority stake in NIS, Serbia’s oil and gas company, from Russian ownership interests. Maintaining the full operational capacity of the Pančevo refinery is identified as a fundamental condition for Belgrade.
Commercial Structure and Technology Remain Undisclosed
The available information does not disclose the planned plant capacity, EPC structure, turbine type, financing terms or offtake model. Fuel security, transport capacity, price-indexation arrangements and supply-disruption exposure will be central to the project’s financing structure.
A plant intended to operate during scarcity periods would require revenue mechanisms that compensate availability and flexibility in addition to electricity sold into the day-ahead market. Carbon exposure will also remain relevant as Serbia’s electricity trade, industrial exports and regulatory alignment increasingly intersect with EU carbon policy.
A high-efficiency combined-cycle gas turbine could reduce emissions per MWh and improve fuel efficiency, while an open-cycle configuration could provide faster operational flexibility. A hybrid design with future hydrogen-readiness could affect the project’s longer-term positioning, although hydrogen economics in the Balkans remain at an early stage.
Niš Location Requires Grid and Permit Development
As a major city in southern Serbia, Niš could provide a location for generation capacity, grid support and industrial-energy development. The project’s execution will depend on grid connection, transmission constraints, gas pipeline access, land permitting, cooling requirements, environmental approvals and community acceptance.
The plant is being planned alongside Serbia’s expanding renewable portfolio. The Alibunar wind project is moving into construction, while the solar-and-storage programme is intended to alter the country’s generation mix if delivered on schedule.
The wider Balkan energy market is also developing through multiple technologies and supply models. Albania is working with ENI on strategic oil and gas reserves. Greece is expanding LNG and gas infrastructure, Bulgaria is pursuing refinery-security and battery projects, Romania is scaling renewable, battery and green hydrogen-linked industrial investments, and Croatia is examining nuclear cooperation and hydrogen corridors.
The SOCAR–EPS project would add a gas-fired generation asset to Serbia’s energy portfolio alongside renewable developments, storage projects, foreign strategic investment, export-credit financing and state-controlled entities including EPS and EMS.
