As Serbia approaches the latter part of the decade, its energy landscape is poised for significant transformation. The country, traditionally characterized by concerns over coal-based generation adequacy, is now facing a new challenge: curtailment risk. This shift arises from an anticipated regional oversupply of renewable energy sources coupled with insufficient internal flexibility to manage the excess generation.
By 2026, Serbia will be surrounded by approximately 45–50 GW of solar capacity from neighboring countries such as Hungary, Romania, Bulgaria, and Croatia. During peak spring and summer hours, electricity prices in these markets are already trending towards zero or even negative levels. Through market coupling mechanisms, these low prices can flow into Serbia whenever interconnectors are not constrained. The addition of domestic solar generation further exacerbates this situation.
The implications of this evolving dynamic are evident in the dispatch curve for Serbia’s power system. From around 09:00 to 16:00, the country is likely to experience surplus electricity conditions. Conversely, between 18:00 and 21:00, a scarcity of ramping capacity will emerge. Lignite plants struggle to adjust economically to these fluctuations, while gas-fired units operate at low utilization rates. In this context, battery storage solutions stand out as structurally advantageous.
Forecasts indicate that without adequate storage solutions in place, Serbia may encounter an effective curtailment rate of 5–8% for low-marginal-cost energy by 2028, potentially exceeding 10% by the early 2030s if domestic renewable projects proceed as planned. This curtailment extends beyond solar energy; it increasingly impacts hydropower during wetter years when excess generation leads to spillage rather than exports due to grid congestion.
The economic ramifications of curtailment are substantial. Each percentage point of curtailed energy could result in losses ranging from €35–50 million annually at current wholesale prices. Over ten years, unmanaged curtailment could erode more value than the capital expenditure required for a comprehensive national battery initiative. While gas peaking units do not alleviate curtailment issues—they remain idle during surplus periods—coal reserves exacerbate the situation by occupying essential operational slots needed for system stability.
This evolving dispatch scenario is also reshaping investment strategies within the sector. Renewable projects lacking storage face increasing risks of price cannibalization and elevated merchant risk, which subsequently raises their weighted average cost of capital (WACC). In contrast, hybrid projects combining solar with battery storage or hydro with rapid response capabilities can mitigate both curtailment and financing costs. For stakeholders in Serbia’s energy market, this distinction is critical as capital markets tend to react more swiftly to grid realities than policy frameworks can adapt.
The role of imports further complicates Serbia’s energy situation. During periods when neighboring EU countries experience surplus generation, Serbia often imports cheaper electricity instead of utilizing its domestic resources. Conversely, during times of scarcity, it incurs higher costs for imported power. The lack of internal flexibility exacerbates this imbalance in trade and puts pressure on EPS (Electric Power Industry of Serbia), exposing it to margin compression risks. Storage solutions could help mitigate this volatility by enabling effective arbitrage.
The outlook for dispatch from 2026 to 2032 suggests a fundamental shift in operational logic for Serbia’s power system. The challenge lies not in a shortage of megawatts but rather in a deficit of responsive capability at critical nodes and times. As such, curtailment risk—not blackout risk—emerges as a crucial cost driver within the system. Investments that fail to directly address issues related to ramp stress or congestion will likely diminish overall system value despite nominal increases in capacity.
This emerging reality necessitates a reevaluation of policy priorities concerning energy transition strategies. The focus should shift from merely substituting fuel types to achieving temporal and spatial optimization. Investments in storage technologies, dynamic reserve systems, and grid enhancements are projected to yield greater returns compared to new thermal assets under various plausible scenarios. While natural gas may still have a role, it is likely limited to serving as a tightly defined balancing mechanism rather than a cornerstone for capacity expansion.
Looking ahead to the early 2030s, Serbia’s power system economics will increasingly hinge on its ability to respond effectively rather than solely on its generation capacity. Assets that can capitalize on market volatility will thrive; those requiring consistent operation may falter. The implications of curtailment will serve as an early indicator of these shifts—an evolving narrative already evident within available data.
