Fortis Energy is progressing with a significant solar and battery storage initiative in northern Serbia, coinciding with a pivotal transformation in the country’s electricity market. This shift is characterized by decreasing supply margins, heightened price volatility, and an increased influence of carbon pricing mechanisms from interconnected European markets.
Situated near Sremska Mitrovica, the project is designed as a hybrid system that will incorporate up to 270 MW of solar power generation paired with approximately 72 MWh of battery storage. The initial phase will feature 90 MW of solar capacity combined with 36 MWh of storage, all supported by a secured grid connection of around 180 MW AC. This configuration positions the project to actively participate in Serbia’s balancing and day-ahead market frameworks while also allowing for potential cross-border electricity trading.
Serbia’s electricity landscape has historically been dominated by lignite generation from the state-owned Electric Power Industry of Serbia (EPS). However, the system is now facing constraints due to aging thermal plants, intermittent outages, and variability in hydrological conditions. Demand has stabilized at elevated levels between 32–35 TWh annually, further complicating the operational environment.
Wholesale prices are increasingly shaped by interconnections with neighboring EU markets including Hungary, Romania, Bulgaria, and Croatia. Recent trends indicate that day-ahead prices on the South East European Power Exchange (SEEPEX) have closely followed Central European benchmarks, fluctuating between €80/MWh and €130/MWh for baseload periods and exceeding €150/MWh during peak winter demand.
This price coupling is accompanied by rising volatility within the market. Intraday price spreads have been observed at levels of €30–70/MWh due to fluctuating renewable output from surrounding EU systems combined with limited domestic dispatch flexibility.
In this evolving landscape, hybrid solar-plus-storage assets like Fortis’ project are gaining significance in managing supply-demand imbalances. The battery storage component will facilitate intraday arbitrage opportunities across SEEPEX and adjacent markets, enable peak shifting from midday solar generation to evening demand periods, and allow participation in ancillary services as Serbia enhances its flexibility markets.
The integration of battery storage is particularly crucial in northern Serbia where increasing solar capacity is leading to greater grid congestion during high-generation hours. Without adequate storage solutions, excess solar output may face curtailment risks; however, with integrated storage systems in place, this output can be transformed into a more manageable profile that improves both system integration and revenue predictability.
While Serbia does not currently operate a full carbon pricing regime equivalent to the EU Emissions Trading System (ETS), carbon costs are progressively influencing domestic electricity prices through market coupling mechanisms. Current EU ETS prices range between €70–90 per ton of CO₂, adding an estimated €55–85/MWh to thermal generation costs within neighboring EU markets. As Serbia engages in electricity trade across these borders, these carbon-adjusted prices are becoming increasingly relevant to price formation on SEEPEX.
This dynamic creates a notable contrast: domestic lignite generation remains relatively low-cost at around €50–60/MWh while imported or EU-linked electricity prices frequently surpass €100–130/MWh. Consequently, this widening gap between production costs and market prices underscores the growing value attributed to low-marginal-cost renewable energy sources.
The Fortis project aims to generate over 365 GWh annually, establishing it as one of the larger renewable contributors within Serbia’s shifting energy mix. At prevailing baseload price levels of €80–120/MWh, projected annual revenues could range from €30 million to €45 million—potentially enhanced during periods of tight supply constraints.
Moreover, a significant portion of revenue is expected to derive from short-term market fluctuations rather than solely from baseload production. The project’s battery storage capabilities are anticipated to capitalize on intraday price spreads often reaching between €50–100/MWh as well as spikes during evening peak times or system stress events.
However, challenges persist regarding grid constraints and curtailment risks associated with renewable energy integration within Serbia’s transmission network operated by EMS. Ongoing development of multiple solar and wind projects—particularly in Vojvodina—has intensified pressure on the grid infrastructure. During high-output periods coupled with limited export capacity, there may be instances where generation must be curtailed to maintain system stability.
The Fortis project seeks to alleviate these risks through its integrated battery storage solution that allows for output management alongside its strategic location near essential transmission corridors and its secured grid connection capacity of 180 MW AC. Nevertheless, potential delays in grid enhancements or interconnection expansions could adversely affect project performance; estimates suggest that a 12-18 month delay could reduce equity returns by approximately 2-4 percentage points.
The total investment required for this initiative ranges between €220 million and €285 million encompassing solar generation facilities, storage systems, and necessary grid infrastructure improvements. Debt financing is projected to cover 65-75% of capital expenditures (CAPEX), drawing interest from international lenders attracted by Serbia’s growing pipeline for renewable projects alongside the hybrid nature of this venture.
Projected equity returns span various scenarios: a base case estimate suggests an internal rate of return (IRR) between 10-13%, while upside potential driven by market volatility could elevate returns to between 14-18%. Conversely, under scenarios involving higher curtailment or price compression pressures, returns may decline to an IRR range between 8-10%.
The Fortis project exemplifies a broader trend within Serbia’s electricity sector towards increased reliance on renewable energy sources coupled with market responsiveness. Although coal continues to dominate energy production in the country, it faces mounting challenges from rising maintenance costs and operational limitations as well as increasing alignment with EU carbon pricing frameworks alongside greater incorporation of wind and solar technologies into the energy mix.
This transition indicates that hybrid renewable assets are becoming essential components bridging traditional baseload generation methods with a more adaptable and market-driven electrical system. As Serbia’s power sector evolves toward pricing structures influenced by cross-border carbon-adjusted valuations and renewable intermittency dynamics alongside short-term trading behaviors, projects like Fortis’ solar-plus-storage platform are poised to play critical roles in both system balancing efforts and strategic investment considerations throughout Southeast Europe.
