In Southeast Europe, hydropower remains a cornerstone of electricity generation, influencing the economic stability of the region’s power markets. While renewable energy sources like wind and solar attract attention, it is the reliable output from hydropower facilities that often determines the profitability and operational viability of utilities across countries such as Serbia, Montenegro, Bosnia and Herzegovina, Albania, North Macedonia, Croatia, Romania, Bulgaria, and Greece. In 2023 and 2024, hydroelectric generation is projected to reach approximately seventy terawatt-hours annually, significantly impacted by factors such as rainfall patterns and reservoir management strategies.
Serbian utility EPS exemplifies the importance of hydropower in this context. After experiencing a challenging drought in 2022, EPS saw its hydro generation surge to 12.7 TWh in 2023—a remarkable increase of 41.3 percent from the previous year—accounting for 36.5 percent of its total energy production. This rebound led to a record total output of 35.5 TWh for EPS in 2023 and a shift from substantial losses to nearly one billion euros in net profit. However, as hydrological conditions became less favorable in 2024, EPS’s total production fell to 32.9 TWh, resulting in a rise of approximately 15 percent in electricity imports.
Montenegro’s EPCG has mirrored this volatility. In 2023, EPCG generated 3.50 TWh from its plants, with large hydropower contributing around 56 percent of that total. The subsequent year saw a significant decline; despite HPP Perućica and HPP Piva performing close to their targets with outputs of 855 GWh and 746 GWh respectively, overall hydro generation plummeted due to severe drought conditions across the region. Consequently, Montenegro’s primary electricity production dropped to just 2.1 TWh while imports surged to an unprecedented level of 5.95 TWh—resulting in a drastic reduction in net profit from over fifty million euros in 2023 to about ten million euros in 2024.
Bosnia and Herzegovina presents an interesting case for hydropower dynamics. The country’s transmission-connected hydro fleet produced 6.20 TWh in 2023—42 percent of its high-voltage grid output—which positioned it as one of the largest electricity exporters within the Western Balkans. However, adverse hydrological conditions coupled with coal supply disruptions led EPBiH to incur a record loss of approximately 169 million euros that same year despite favorable market prices for electricity.
Albania stands out as Europe’s leading hydropower-centric economy. In recent years, hydroelectric plants have generated between 8.5–8.7 TWh annually—representing nearly all domestic electricity needs—though output fell by about sixteen percent in 2024 due to reduced water availability. This decline has strained Albania’s import requirements while simultaneously curtailing potential export revenues and investment opportunities within the clean-energy sector.
In contrast, Croatia, Romania, and Bulgaria illustrate how hydropower integrates into more diversified energy portfolios. Croatia’s HEP system reported a production increase to 15.1 TWh in 2023 largely due to improved hydrological conditions; similarly, Romania relies heavily on hydropower which constituted around thirty-two percent of its national generation that year before declining significantly due to adverse weather patterns affecting reservoir levels. Bulgaria’s contribution from hydropower remains smaller but still significant at an estimated four point five to four point six TWh.
North Macedonia and Greece occupy an intermediate role regarding their reliance on hydropower. North Macedonia has an installed capacity totaling roughly seven hundred twenty MW across both large and small plants but generates only about one point one TWh annually—representing fifteen percent of domestic consumption—while Greece’s rapid expansion into wind and solar has not diminished hydro’s critical function during periods when these resources are less effective.
The economic rationale for investing in hydropower across Southeast Europe is consistent: once initial capital expenditures are accounted for—the costs associated with constructing dams and related infrastructure—the operating costs are typically low compared to fossil fuel sources. This scenario allows utilities to benefit significantly during wet years when they can maximize output without incurring high operational expenses associated with fuel procurement.
Capital expenditure plans reflect this understanding among regional utilities. Major players are committing hundreds of millions or even billions of euros toward rehabilitating existing hydro assets or enhancing their capacities through modernization projects aimed at improving efficiency while extending operational lifespans. For instance, EPS’s refurbishment initiative is expected to exceed €1.3–1.5 billion by the end of this decade.
The multifaceted role of hydropower within Southeast Europe cannot be overstated. It serves not only as a baseload contributor but also as a flexible resource capable of balancing supply during fluctuations caused by variable renewable generation sources like wind and solar power. Furthermore, it plays an essential part in financing green capital expenditure initiatives supported by European institutions while also influencing wholesale price levels crucial for industrial consumers across the region.
The overarching conclusion is that understanding the intricacies surrounding hydrology within key river systems will be vital for stakeholders aiming at forecasting financial performance effectively amidst changing climatic conditions while navigating regulatory landscapes that increasingly favor sustainable energy solutions throughout Southeast Europe.
