When Elektroprivreda Srbije announced that it would offtake electricity from the Alibunar 1 and Alibunar 2 wind parks — a combined 168 megawatts of new renewable capacity — the statement appeared modest, almost procedural. Serbia has been adding wind capacity for nearly a decade, and private developers have taken the lead in most recent projects. Yet behind this announcement was something far more important than the raw megawatts: a strategic signal that EPS, the dominant and historically conservative pillar of Serbia’s energy system, is preparing for a role it has long resisted. For the first time, the company positioned itself not only as a producer tied to legacy coal and hydropower, but as a participant in a modernized, partially liberalized energy market where renewables and market-based pricing mechanisms are central features.
For decades, EPS operated within an energy architecture built on thermal baseload and hydropower flexibility. Its institutional structure, investment cycles, workforce profile and corporate culture all reflected the assumptions of an earlier era, when electricity systems were vertically integrated and insulated from competitive pressures. The company’s identity was shaped by the Kolubara coal basin, the TENT complex, the Kostolac units and the sprawling network of hydropower plants across Serbia’s rivers. Renewables existed on the margins, not as strategic pillars but as occasional supplements, managed primarily by private investors operating through feed-in tariffs. EPS had no obligation to internalize the dynamics of intermittent generation or market-based contracting. Its mandate was to generate, deliver and stabilize — not to adapt, negotiate or compete.
That world no longer exists. Serbia’s energy system today is defined by the intersection of three pressures: the inevitable decline of coal, the volatility of hydropower and the rapid expansion of renewable capacity. Coal is becoming increasingly costly to maintain as mines deepen, lignite quality falls and plants require extensive retrofits to meet environmental expectations. Hydropower, once Serbia’s most reliable flexible resource, is now exposed to unpredictable climate cycles, as evidenced by projections for 2025 in which hydropower output may fall by a dramatic 25 percent. Renewable sources, especially wind in the Vojvodina region, have grown rapidly but remain constrained by grid limitations and the lack of large-scale storage. Analyses carried by serbia-energy.eu highlight that Serbia is entering a period where each segment of its system — coal, hydro and renewables — must be reimagined in order to maintain equilibrium.
Within this context, EPS’s engagement with the Alibunar wind farms carries strategic meaning that far exceeds their immediately measurable output. The decision to procure electricity under market-based pricing arrangements, instead of the administratively set tariffs of the past, signals that EPS recognizes it must learn to operate in an environment where competitive pricing, flexible portfolio management and transparent contracting are essential. The energy transition requires not only megawatts but institutional transformation. EPS is beginning to accept that its survival — and Serbia’s energy stability — depend on its ability to evolve.
The choice of Alibunar as an early test case is meaningful. The Banat region, with its strong and consistent wind patterns, is central to Serbia’s renewable geography. The integration of two new wind parks into EPS’s supply portfolio represents a small but tangible step in building a more diversified generation structure. Yet integrating wind energy also obliges EPS to confront challenges it avoided for years. Unlike coal, which provides steady baseload, or hydropower, which can be dispatched quickly when reservoirs allow, wind generation fluctuates with weather conditions. EPS must now refine its load forecasting, redesign its balancing strategies and develop more sophisticated trading capabilities. A system once dominated by predictable, controllable inputs now requires adaptation to variable and sometimes unpredictable flows.
In practice, this means the company must undertake changes across its operational culture. Forecasting must shift from static year-ahead models to dynamic, data-driven tools capable of predicting wind output with high temporal granularity. Unit commitment strategies must adjust to accommodate sudden surges or drops in renewable generation. Hydropower dispatch must become more tightly coordinated with renewable output to ensure grid stability. At the same time, thermal plants — still indispensable in the short to medium term — must learn to operate with greater flexibility, even though they were never designed for the frequent cycling now required by systems with growing renewable shares.
The integration of Alibunar also highlights the limitations of Serbia’s grid, which analysts at serbia-energy.eu identify as one of the most significant bottlenecks to renewable expansion. The Vojvodina region, despite being ideal for wind development, suffers from transmission congestion and insufficient transformer capacity. These structural constraints force operators to curtail renewable output at certain times, a practice that will become increasingly problematic as Serbia adds more wind and solar capacity. For EPS, the Alibunar offtake serves as a practical reminder that renewable expansion must be accompanied by grid modernization, a responsibility shared by the transmission operator EMS, the government and EPS itself.
There is also a financial dimension to this shift. EPS has long relied on a generation portfolio that, while aging, offered predictable revenue streams. Coal plants, despite their inefficiencies, operated at high capacity factors. Hydropower provided inexpensive balancing energy when water was abundant. The entry into renewable procurement introduces new risk profiles. Market-based pricing is volatile, shaped by regional power markets, seasonal patterns and cross-border flows. EPS must therefore develop more advanced risk-management practices, learning to hedge exposure, contract strategically and anticipate market shifts. The Alibunar agreement is a modest but essential step in building these capabilities.
It is equally important to recognize the symbolic dimension of this transition. EPS has been criticized for years as slow, resistant and institutionally rigid, often blamed for delays in Serbia’s broader energy transition. The decision to embrace renewable procurement under market terms demonstrates that pressure from the state, the Energy Community, financial institutions and market forces is beginning to take effect. Alibunar represents a moment in which EPS acknowledges that Serbia cannot modernize its energy system without the full participation of its largest energy institution. The company is, in effect, signaling that it understands the future will require cooperation with private developers, engagement with renewable investors and adaptation to a competitive market environment.
Looking ahead, the integration of Alibunar should be seen not as an isolated achievement but as a test for a much larger shift. Serbia will need several gigawatts of new renewable generation to replace declining coal capacity and meet rising demand. EPS will inevitably have to procure more renewable power, build its own renewable projects, expand hydropower flexibility, participate in regional markets and incorporate storage solutions. It will need stronger governance, modern financial planning and a corporate structure aligned with European standards. The Alibunar offtake, small as it is, represents the first step toward this future.
Ultimately, the importance of the EPS–Alibunar relationship lies in its implicit acknowledgment that Serbia’s energy system must transform itself before structural vulnerabilities become structural failures. Renewables alone cannot solve the country’s problems; they require a balancing framework, a flexible grid and institutions capable of managing variability. EPS, through this early adoption of market-based renewable procurement, has begun to accept that it must be an architect of change rather than a passive observer. The transition will be long, complex and challenging, but the foundation must be poured now.
The Alibunar wind parks are not just turbines turning in the Banat wind. They are indicators of a deeper institutional shift, one that will define whether Serbia’s energy transition succeeds. EPS has taken a step — cautious, perhaps, but unmistakably forward. What follows will determine whether this moment becomes a historical footnote or the beginning of a genuine transformation.
