In Serbia, the energy landscape is increasingly characterized by a tension between strategic ambitions and practical execution, particularly within the EPS power utility company. This is evident in the ongoing discussions around reversible hydropower and gas-fired generation projects, which have been proposed as solutions to critical challenges such as flexibility, balancing, and security of supply. Despite their potential, these projects remain largely theoretical, caught in a cycle of feasibility studies and announcements without concrete progress.
The Bistrica reversible hydropower plant exemplifies this situation. With an expected capacity of 600–700 MW and storage capabilities allowing for 8–10 hours of full-load operation, Bistrica is positioned as a crucial asset for future system balancing amidst increasing renewable energy penetration. The estimated capital costs range from €900 million to €1.2 billion, primarily due to extensive civil works and integration into the existing grid.
Feasibility studies have consistently highlighted Bistrica’s value from a system perspective, indicating that it could mitigate curtailment risks, enhance peak shaving capabilities, stabilize frequency, and reduce reliance on imports during peak demand scenarios. However, financial closure remains elusive due to the absence of a mature capacity or flexibility market in Serbia that would ensure predictable revenue streams. This uncertainty leaves EPS with a project that is critical for system stability but fraught with financial risk and long payback periods of 10–12 years.
Similar challenges are observed with gas-fired generation projects linked to EPS. Over the past decade, various announcements have been made regarding combined-cycle gas plants typically ranging from 300 to 500 MW in capacity. Capital expenditures for these projects are generally estimated between €250 million and €400 million. They are often presented as transitional solutions aimed at providing flexible support for renewables while phasing out aging lignite units.
While technical feasibility has been established—covering aspects such as heat rates and emissions profiles—the execution of these gas plants remains hindered by structural uncertainties in long-term gas pricing and market conditions post-crisis in Europe. The lack of a domestic capacity market exacerbates the issue by leaving power offtake predominantly reliant on merchant pricing mechanisms devoid of stability.
The connection between Bistrica and gas plants lies in their collective role as flexibility assets whose benefits are not easily monetized. Both projects offer significant system advantages—quantified at €50–100 million annually through avoided costs—but these benefits are diffused across consumers and the state rather than being captured directly by EPS.
This situation creates an institutional paradox where EPS is expected to operate commercially while simultaneously fulfilling national energy security goals. Approving major investments like Bistrica or new gas plants would require substantial financial commitments—estimated at €1–1.5 billion—without guaranteed revenue streams. Consequently, repeated feasibility assessments allow EPS to align with governmental policy objectives without assuming undue financial exposure.
A sequencing issue also complicates matters; both reversible hydro and gas plants become viable only after significant market reforms are implemented—such as capacity remuneration mechanisms or long-term balancing contracts. Currently, discussions about these reforms run parallel to project proposals, resulting in a persistent state of indecision where feasibility acts as a bridge between current limitations and an uncertain future.
In essence, Bistrica and proposed gas power plants reflect a broader institutional behavior within EPS that has historically stalled progress on vital infrastructure improvements due to an aversion to long-term risk amid diffuse accountability structures.
As coal units age and renewable energy sources continue to rise within Serbia’s energy mix, the need for large-scale storage solutions and flexible backup systems becomes increasingly urgent. However, EPS’s strategy has leaned towards continual feasibility refinement rather than decisive investment commitments.
Until there is clarity on who will bear the costs associated with flexibility—whether through tariffs or direct state support—projects like Bistrica and associated gas facilities will likely remain entrenched in planning documents rather than becoming operational realities. As studies evolve and numbers are refined, the sector will continue grappling with unresolved risks that impede tangible progress.
