Serbia enters the 2025–2027 period with a power system profile that is increasingly atypical within South-East Europe. While much of the region is navigating tightening reserve margins, accelerated coal exits, fuel supply volatility, and rising dependence on cross-border imports, Serbia remains one of the few systems whose seasonal adequacy is structurally intact under both reference and stress conditions. This position, reflected consistently in the seasonal adequacy modelling of ENTSO‑E, is not accidental, nor is it purely a legacy of installed capacity. It is the result of a specific generation mix, geographic position, and grid topology that together elevate Serbia from a nationally secure system to a regional stabilising node.
At the core of Serbia’s adequacy profile lies a large, dispatchable baseload fleet dominated by lignite-fired thermal generation operated by Elektroprivreda Srbije. Installed thermal capacity exceeds 4.4 GW, concentrated in the Kolubara and Kostolac basins, with annual lignite production typically in the 35–40 million-tonne range. Unlike gas-dependent systems elsewhere in Europe, Serbia’s baseload economics are largely insulated from international fuel price volatility. Marginal production costs for lignite-based generation remain structurally low, typically estimated in the €25–35/MWh range on a cash OPEX basis, excluding carbon pricing, which Serbia does not yet fully internalise. This cost structure underpins the country’s ability to sustain high availability during winter peaks, when neighbouring systems increasingly face marginal cost spikes.
Hydropower provides the second pillar of adequacy. With more than 3.0 GW of installed hydro capacity across the Đerdap, Drina, Lim, and Ibar cascades, Serbia retains meaningful seasonal flexibility. In high-hydrology years, hydro can account for 30–35 % of total generation, while even in dry years it provides critical peak-shaving capability. Although hydrological variability introduces volatility, ENTSO-E seasonal scenarios consistently show that Serbia’s hydro fleet, combined with thermal baseload, maintains sufficient dependable capacity to meet peak winter demand without forced load shedding. Peak load typically ranges between 7.5 and 8.0 GW, leaving a structural adequacy margin even under conservative availability assumptions.
What differentiates Serbia from several neighbouring systems is not merely the presence of capacity, but the balance between dispatchability and intermittency. Romania, for example, is retiring approximately 1.7 GW of lignite capacity by early 2026, compressing its reserve margin and increasing exposure to weather-driven volatility. Bulgaria faces ageing coal assets with declining availability, while North Macedonia and Montenegro rely heavily on imports during winter stress periods. Serbia, by contrast, enters the same horizon with no abrupt capacity cliff. This continuity has direct implications for regional power flows. During synchronized cold spells across the Balkans, when demand rises simultaneously and hydro inflows weaken, Serbia’s system remains one of the few capable of sustaining net exports or at least neutral balances.
The grid dimension reinforces this role. Serbia’s transmission system, operated by EMS, is one of the most interconnected in South-East Europe. Multiple 400 kV corridors link Serbia northward to Hungary and Romania, westward to Bosnia and Herzegovina and Montenegro, and southward to North Macedonia and Bulgaria. Total cross-border transfer capacity exceeds 6 GW on a technical basis, although commercial availability is constrained by internal bottlenecks and regional congestion patterns. Even so, Serbia consistently ranks among the highest cross-border flow contributors in the Western Balkans synchronous area. In adequacy terms, this means that Serbia’s domestic surplus is not trapped; it can be mobilised regionally when conditions allow.
From an investor perspective, this combination of dispatchable capacity and grid connectivity translates into system value rather than just energy volume. In regional stress scenarios, price formation in neighbouring markets increasingly reflects scarcity rents, while Serbia’s marginal costs remain anchored by lignite economics. This spread creates opportunities for export-linked revenues, balancing services, and congestion income, even without explicit capacity mechanisms. In practice, Serbia’s wholesale prices have often traded at a discount to Hungary or Romania during normal conditions, but converge or invert during winter peaks. Such dynamics are precisely what ENTSO-E’s seasonal adequacy modelling seeks to capture at a probabilistic level, and Serbia repeatedly appears on the low-risk side of those distributions.
However, adequacy should not be conflated with immunity. Serbia’s advantage is conditional on operational execution. The thermal fleet is ageing, with several units exceeding 40 years of service life. Sustaining availability above 85 % during winter months requires continuous O&M investment. Annual maintenance CAPEX across EPS’s thermal portfolio is estimated in the €250–350 million range, excluding major life-extension projects. Deferred maintenance would quickly erode the very adequacy that underpins Serbia’s regional role. Fuel logistics represent another constraint. Lignite production has historically suffered from underinvestment in overburden removal and equipment renewal, with episodic shortfalls exposing the system to forced imports. While recent corrective measures have improved reliability, the adequacy narrative remains inseparable from mining CAPEX discipline.
Hydropower, too, has limits. Climate variability has increased year-to-year volatility in inflows, and while Serbia’s hydro assets are well suited for peak modulation, they cannot substitute baseload energy in prolonged cold and dry spells. This reinforces the importance of thermal reliability in the adequacy equation. From a system planning perspective, Serbia’s strength lies not in flexibility alone, but in the coexistence of baseload and flexibility within the same portfolio. Few SEE systems retain this balance.
The regional implications of Serbia’s adequacy position extend beyond simple import-export arithmetic. In ENTSO-E stress scenarios, adequacy risk is spatially correlated. Cold weather events tend to affect Romania, Bulgaria, and the Western Balkans simultaneously, amplifying congestion risk on north-south corridors. Serbia’s ability to meet domestic demand without drawing heavily on imports reduces pressure on those corridors, indirectly stabilising upstream systems. In this sense, Serbia functions as a shock absorber within the regional grid. Even when not exporting significant volumes, the absence of Serbian import demand during stress periods frees capacity for more vulnerable systems, particularly those with limited domestic generation.
This systemic role carries strategic implications. As the European Union tightens adequacy standards and integrates capacity and flexibility markets, non-EU systems that contribute to regional stability gain leverage in cross-border coordination frameworks. Serbia’s adequacy profile strengthens its position in discussions on market coupling, balancing cooperation, and future grid investments. It also raises questions about monetisation. At present, much of Serbia’s system value is implicitly provided rather than explicitly remunerated. Capacity markets, strategic reserves, or regional adequacy mechanisms could, over time, assign monetary value to the reliability Serbia already delivers.
From an investor standpoint, the paradox is clear. Serbia’s adequacy surplus reduces urgency for rapid structural change, yet the same surplus creates the opportunity to finance transition investments from a position of strength rather than crisis. Grid-scale storage, pumped hydro modernisation, and selective gas-peaking capacity could enhance flexibility without undermining baseload adequacy. Indicative CAPEX for utility-scale battery storage in the region remains in the €500–700 thousand per MWh range, while pumped hydro upgrades typically require €1.5–2.0 million per MW. Such investments would not be driven by domestic scarcity, but by regional value creation and future-proofing against carbon constraints.
Carbon exposure, while not yet binding domestically, looms over the adequacy discussion. As CBAM mechanisms mature and regional carbon pricing converges, Serbia’s lignite advantage will face external pressure. The key question is timing. ENTSO-E’s seasonal outlooks implicitly assume current regulatory regimes, meaning Serbia’s adequacy advantage is strongest in the near term. Over the medium term, maintaining the same adequacy profile will require either partial decarbonisation of baseload assets or compensating investments in flexibility and low-carbon capacity. This transition, however, can be sequenced rather than rushed, precisely because Serbia does not face imminent adequacy stress.
In regional comparison, Serbia stands out not as a system racing ahead of the transition curve, but as one that still controls its trajectory. Romania’s compressed margins, Moldova’s import dependence, and the Western Balkans’ uneven renewable build-out all contrast with Serbia’s relative optionality. For investors and policymakers alike, this optionality is the real asset. Adequacy is not merely about keeping the lights on; it is about preserving strategic degrees of freedom in how, when, and at what cost the system evolves.
As ENTSO-E’s seasonal assessments continue to flag Serbia as a low-risk node in an increasingly constrained region, the country’s power system quietly shifts from being a national utility concern to a regional infrastructure pillar. Whether Serbia chooses to capitalise on this role through targeted CAPEX, market integration, and service monetisation will define not just its own energy economics, but the resilience of South-East Europe’s power system in the years ahead.