Between 2030 and 2040 hydropower in South-East Europe shifts from being primarily an energy source to being the central balancing instrument in a renewable-dominated system. The key feature of this decade is not how many terawatt-hours hydro plants generate, but how often and how flexibly they can be dispatched in response to solar and wind volatility. The forecast for hydro’s role is therefore less about annual energy and more about how many hours per year reservoirs are operated as fast-response stabilisers rather than slow-moving baseload.
Up to around 2030, hydropower in Serbia, Montenegro, Albania, Croatia, Bosnia and Herzegovina and North Macedonia still behaves with a strong energy component. Reservoirs are scheduled seasonally, and operators attempt to maintain a balance between energy maximisation and balancing provision. Yet the rapid growth of solar and wind forces a change in practice. Daily ramps become sharper, mid-day overgeneration events more frequent, and evening deficits increasingly severe. Hydro operators start to hold back water for peak hours, reducing generation in off-peak periods even when water is available. Hydro shifts from a relatively steady supplier to a more peaking-oriented resource, particularly during winter months when the value of balancing energy spikes.
By the mid-2030s, the hydro-balancing model shows a system under stress in dry years and a system under curtailment pressure in wet years. In dry years, when reservoir inflows are below average, hydro operators become conservative. They provide only minimal balancing in early winter, fearing deeper shortages later in the season. As a result, balancing markets clear at higher prices and cross-border imports increase. Solar and wind cannot replace hydro’s firm capacity during cold, still weeks; the system enters recurring scarcity conditions. In wet years, reservoirs fill quickly, and pressure builds to generate, but high solar output and low spring demand mean that the system cannot absorb hydro energy without depressing prices to extreme levels or forcing curtailment of other renewables. Hydro must then oscillate between water management and market constraint, often releasing water inefficiently to avoid spillage rather than according to price signals alone.
By 2040, hydro’s balancing role becomes fully integrated into a multi-layered flexibility stack. Storage assets, hybrid plants and fast-ramping thermal units share part of the balancing burden. Hydro focuses on medium-duration balancing: multi-hour ramps, daily peaks, short scarcity events spanning a few days. Batteries handle minute-by-minute corrections and intraday arbitrage; gas or flexible engines handle residual capacity needs; demand response absorbs some of the extreme peaks. Hydro’s dispatch curve becomes spikier: a higher proportion of hours at low or zero output, and a higher proportion of hours at high output during peak periods. Average utilisation factors shift downward, but the value per dispatched megawatt-hour rises, because hydro is used when it is most valuable to system stability.
The model also anticipates increasing cross-border coordination of hydro. Albanian reservoirs, Montenegrin hydropower, Croatian storage and Serbian cascades will increasingly be operated with a regional perspective, even if governance remains national. When Romanian wind and Bulgarian solar create regional surpluses, hydro reduces output to preserve water for later deficits. When regional renewables underperform simultaneously, hydro surges across several systems, acting as a shared stabilising backbone. Traders and system operators interacting through platforms such as electricity.trade treat hydro not merely as a domestic asset but as a regional flexibility index: its availability and behaviour influence spreads, price formation and risk premia across interconnectors.
In summary, the 2030–2040 forecast sees hydro moving away from baseload identity and into a specialised balancing role. Its energy contribution may stagnate or decline slightly, but its system value increases. The risk is that climate change reduces inflows precisely when balancing needs are greatest. The opportunity is that, if managed intelligently and complemented by storage, hydro becomes the most strategic asset in a renewable-heavy South-East European power system.
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