The electricity landscape in the Western Balkans is set for significant transformation by 2030, as the region evolves from being a marginal player in the European power market to a central figure in South-East Europe’s energy flexibility dynamics. The findings from recent modelling conducted by Agora Energiewende and the REKK Foundation indicate that future stability will hinge on the interplay of aging baseload assets, hydropower influenced by climate variability, increasing variable renewables, and enhanced cross-border integration.
The current power systems in Serbia, Bosnia and Herzegovina, Kosovo*, and parts of North Macedonia are heavily reliant on lignite-fired generation established decades ago. In contrast, Albania and Montenegro depend significantly on hydropower. This legacy system was effective under stable demand conditions but now faces vulnerabilities due to the rise of renewable energy sources and climate unpredictability.
While projections do not suggest an abrupt decline in thermal capacity by 2030, they indicate a shift in operational roles for lignite and coal plants. These facilities are expected to operate less frequently due to competition from wind and solar energy sources prevalent in Romania, Bulgaria, and Greece. As a result, these thermal plants will likely be called upon during evening peaks or adverse weather events when renewable generation is low, creating a paradox where they are both uneconomic yet essential for maintaining supply adequacy.
Serbia stands out as a crucial player within this evolving framework. As the largest load center in the region, it serves as a vital transit route between Central Europe and the southern Balkans. By 2030, Serbian lignite is projected to remain critical for regional supply security during peak demand periods; however, its economic viability is increasingly jeopardized by carbon pricing pressures and diminishing capacity factors. Simulations predict that Serbia’s power system will experience fluctuations between surplus exports and scarcity within short timeframes, driven by solar generation patterns.
Hydropower’s role as a regional asset is viewed with caution in light of recent analyses. Although annual hydroelectric output remains stable overall, its reliability has been compromised by increasing climate variability. Regions like Albania and Montenegro face heightened risks associated with hydrological changes, while Bosnia and Herzegovina’s mixed energy profile offers some resilience but cannot entirely mitigate these risks.
Contrary to assumptions that the Western Balkans can perpetually export flexibility to neighboring markets, the study reveals that during droughts or heatwaves, the region may find itself short of resources. In such scenarios, reliance on imports from Romania, Hungary, Bulgaria, and Greece becomes necessary—highlighting a bidirectional dependency that will shape future pricing strategies.
Renewable energy deployment is anticipated to accelerate across the Western Balkans by 2030; however, this growth will not be uniform. Serbia and Bosnia and Herzegovina are expected to lead in wind energy expansion while solar installations will spread more evenly across North Macedonia, Albania, and Kosovo*. Notably, wind generation in this area may exhibit greater short-term volatility compared to other European regions due to concentrated wind patterns lacking geographic diversity.
Solar energy presents unique challenges as well; high midday output can suppress market prices while evening demand peaks coincide with declining solar production. Without substantial storage solutions or demand-side management strategies in place, these dynamics could lead to recurring stress across South-East European electricity systems.
Gas-fired generation is projected to play an increasingly important role despite not dominating the overall energy mix. Gas units are expected to serve as primary fast-ramping resources during periods of low renewable output. This trend contrasts with earlier expectations that suggested a potential bypassing of gas reliance without adequate alternatives such as storage or demand response mechanisms.
However, the development of storage solutions and demand-side responses remains limited due to lagging policy frameworks and market designs that do not align with technical requirements. Consequently, hydropower resources alongside cross-border trading will need to shoulder most balancing responsibilities—heightening systemic risks during coinciding stress events which previously led to significant price fluctuations.
Network constraints further complicate these challenges as critical flow corridors like Serbia-Romania and Serbia-Hungary often become congested during peak stress conditions. This results in local market isolation despite available regional capacity—leading to scarcity pricing even when energy is accessible elsewhere.
The distinction between installed capacity versus deliverable capacity emerges as a key consideration moving forward. While aggregate reserve margins may appear sufficient across South-East Europe by 2030, factors such as location flexibility and network access are far more critical than total megawatt figures alone. For the Western Balkans specifically, adequacy risks may manifest through price spikes rather than outright blackouts—a scenario where technical supply exists but economic stresses prevail.
This evolving landscape suggests that price volatility will become an inherent feature rather than an exception as renewable penetration increases across the region. The interplay between surplus conditions and scarcity will increasingly dictate market prices—not merely reflecting fuel costs but indicative of system tightness instead. Market coupling mechanisms will facilitate these signals across borders but may also exacerbate regional stress dynamics.
In conclusion, the Western Balkans are positioned at a pivotal junction within South-East Europe’s transition towards sustainable energy practices. The combination of existing hydro assets alongside thermal infrastructure provides significant leverage over regional balancing capabilities while simultaneously exposing vulnerabilities if investments in flexibility measures falter. The ability of this region’s power system to adapt effectively hinges on achieving deeper integration alongside improved dispatchable capacity—all essential for navigating future challenges successfully.
