Serbia’s prolonged drought has altered the operational role of its hydropower fleet, with electricity production tied to available water rather than installed capacity alone. Extremely low Danube inflows at the Đerdap hydropower complex fell to around 1,500 cubic metres per second, pushing generation to the lowest levels recorded since the plants entered operation.
Hydrological limits on Đerdap generation
Even with generating units remaining technically available, hydrological conditions constrained actual output. Đerdap 1 operated at approximately 20% of installed capacity, while Đerdap 2 produced at around 30%. The figures indicated that infrastructure availability does not ensure generation when water resources are restricted.
Cooling constraints at Kostolac and higher demand
The drought affected thermal operations as well as hydro output. Lower Danube water levels reduced cooling efficiency at the Kostolac thermal power complex, leading some coal-fired units to cut output by approximately one-third. Electricity consumption rose to 100–105 GWh per day, approaching winter peak demand levels of 110–115 GWh, driven largely by higher air-conditioning use during extreme temperatures.
With reduced hydropower production, restricted thermal availability and elevated electricity demand occurring together, Elektroprivreda Srbije (EPS) faced a combined supply-demand squeeze. The episode highlighted the need for flexible generation assets that can respond quickly to changing system conditions.
Bajina Bašta pumped storage during price and peak periods
A key operational resource during the drought was the rehabilitated Bajina Bašta pumped-storage hydropower plant. Reservoir levels were approximately 75%, enabling the facility to absorb electricity during lower-price hours, particularly when solar generation was strong. It also released energy during morning and evening demand peaks.
Pumped-storage does not add net electricity because pumping consumes more energy than is recovered later. Its value comes from shifting electricity between market periods, providing balancing services, supporting system reserves and reducing exposure to extreme prices during limited supply conditions.
Đerdap 3 procurement and planned reversible design
Serbia’s future storage plans include the Đerdap 3 pumped-storage project. The country has launched a procurement process worth around €5.3 million covering general design, preliminary feasibility study, special-purpose spatial plan and strategic environmental assessment.
Current concepts envisage a reversible facility with capacity between 1,200 MW and 2,400 MW, along with a hydraulic head of approximately 400 metres. The existing Đerdap 1 reservoir would be used as the lower basin, while potential upper reservoir locations include Pešača or Brodica on Severni Kučaj.
Role in balancing, reserves and congestion management
The project’s function is expected to extend beyond conventional power generation. Multiple roles cited for Đerdap 3 include energy arbitrage, balancing services, reserve capacity and congestion management, with potential eligibility for strategic capacity mechanisms.
A merchant-only approach would be difficult given a multi-billion-euro scale, a long development timeline and complex environmental approvals within the Đerdap National Park. Cooperation with Romania is also described as necessary because the project would interact with shared Danube hydropower and navigation operations.
Bidders, procurement separation and financing confidence
The procurement structure is expected to influence long-term bankability. A consortium led by Bechtel and ENKA was the only applicant to qualify for the next stage of a government process aimed at attracting US participation after six initial applications.
The process also requires clear separation between early-stage studies, project development, engineering-procurement-construction arrangements, financing structures and final investment approval. This separation is intended to support confidence among international lenders during negotiations.
Vlasinske cascade modernisation supported by EBRD and EU funding
Alongside new storage development, EPS plans upgrades to existing hydropower assets. EPS intends to invest €109.7 million in modernising the Vlasinske hydropower cascade, supported by a €67 million EBRD loan, a €15.43 million EU grant, and €27.26 million of EPS financing.
The company previously rehabilitated facilities including Bajina Bašta, Đerdap 1 and Zvornik, increasing Serbia’s installed hydropower capacity by a combined 172 MW. Such upgrades are described as extending asset lifetimes, improving operational reliability and increasing peak-generation capability without adding permitting risks associated with entirely new projects.
Drought-linked priorities for Serbia’s future power system flexibility
The drought episode also shaped expectations for Serbia’s longer-term electricity strategy. Expanding wind and solar generation is expected to reduce fossil-fuel dependence and emissions, while their system value would increase when combined with energy storage, modernised hydropower, stronger interconnections and flexible demand management.
