In Southeast Europe, coal-fired generation is experiencing a significant shift as it enters a phase of managed decline. This trend is becoming increasingly evident as the region grapples with environmental policies and the growing presence of renewable energy sources. The latest data indicates that coal output in the region reached 4,477 MW during week 16, marking a slight week-on-week increase but remaining close to the lowest levels recorded since mid-2025.
Serbia continues to be the dominant player in coal production, contributing approximately 38–40% of the total regional output. Recent figures show an increase of 292 MW in Serbian coal generation for the week; however, declines in neighboring countries such as Slovenia and Montenegro have counterbalanced these gains. Year-on-year comparisons highlight a concerning trend, with current coal generation levels 673 MW lower than those observed in 2025.
This decline is attributed to several factors, including the rising penetration of renewable energy, stricter environmental regulations, and changing market dynamics. Although coal plants provide critical baseload power and stability during periods of low renewable output, their operational relevance is increasingly restricted to specific timeframes. The situation is exacerbated by increasing carbon costs, as evidenced by emissions unit allowance (EUA) prices climbing to €74.9/t, which further diminishes coal’s long-term viability.
The notion of a “managed decline” has gained traction among operators aiming to extract maximum value from existing coal assets while preparing for an eventual phase-out. Strategies being employed include optimizing maintenance schedules and reducing operational hours, alongside investigating potential conversion or repurposing initiatives.
This evolving landscape presents challenges for policymakers and system operators who must navigate the dual objectives of ensuring reliable energy supply while adhering to environmental targets. In light of insufficient flexible capacity alternatives, it appears that coal plants may remain integral to the energy mix longer than anticipated, although with diminishing utilization rates.
