Serbia to invest EUR 400 million in reconstruction of hydropower plants

dedovic djedovic Handanovic Serbia EUR 400 million in reconstruction hydropower plants

Photo: Emilija Jovanović / Ministry of Mining and Energy


March 18, 2024



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March 18, 2024



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Minister of Mining and Energy Dubravka Đedović Handanović said EUR 400 million would be invested in the revitalization of hydropower plants run by state-owned power utility EPS. International financial institutions are making gas investments harder, the minister pointed out and revealed that this year’s round of auctions, the second one, for market premiums for electricity from wind and solar would be held when the market is considered ready.

Minister of Mining and Energy Dubravka Đedović Handanović spoke with a mission from the International Monetary Fund (IMF), led by mission chief Donal McGettigan. The meeting was organized within the third revision of its standby agreement with Serbia. The officials discussed investments, energy sector reforms and measures to increase energy security and diversify the sources and routes of energy supply, the ministry said.

“In the energy sector’s decarbonization process, the government must act responsibly in line with the international obligations to which it agreed, to provide the security of supply at every moment and improve energy independence. We are working on the creation of a favorable ambiance for private investments, but the reality is that if the government doesn’t invest significantly,  we aren’t really able to pursue decarbonization goals that we obligated to meet in the Paris Agreement and the Sofia Declaration on the Green Agenda for the Western Balkans,” Đedović Handanović stated.

Desulfurization system in coal-fired power plant TENT A set for completion soon

It is necessary to increase the efficiency of energy enterprises in terms of operating expenses and the planning and realization of investments, she added. The ministry is negotiating with the consortium consisting of Hyundai Engineering and UGT Renewables on the conditions of the strategic partnership that it was selected for, Đedović Handanović asserted.

The minister of mining and energy expects the new coal plant, Kostolac B3, to be online soon

It is for the construction of solar power plants with a combined 1 GW in capacity and with batteries. The investor would transfer the systems to state-owned power utility Elektroprivreda Srbije (EPS).

The minister says she expects Kostolac B3, the new coal-fired thermal power plant, to be online soon, followed by EPS’s first wind park, also in Kostolac, in the first half of next year. The construction of the desulfurization facility in the TENT A coal plant, part of the Termoelektrane Nikola Tesla complex, is nearing its end, Đedović Handanović stressed. It is currently the biggest environmental project in thermal power plants in Europe and the third by size in Europe, she said and revealed it would be put into operation within weeks.

Two studies for pumped storage hydropower plant Đerdap 3 are complete

Đedović Handanović underscored that there is good progress in the preparations for the construction of the Bistrica pumped storage hydropower plant. Among the priorities are four projects for the revitalization of hydropower plants within EPS, she said. “We plan to invest around EUR 400 million. The hydrology study and the preliminary feasibility study have been completed for the Đerdap 3 pumped storage hydropower plant project,” she pointed out.

The four refurbishment and upgrade projects are for Potpeć, the existing hydropower plant Bistrica, Đerdap 2, and the Vlasina (Vlasinske) cascade. Of note, there is also one other Bistrica hydropower project underway, on an eponymous river across the border in Bosnia and Herzegovina.

Serbia shares the Đerdap 1 and 2 (Iron Gate) hydropower complex on the Danube with Romania. It is called Porțile de Fier in the neighboring country.

The minister said total coal stockpiles at TENT A, TENT B and the Kostolac thermal power plants are currently around 2.2 million tons and that current hydrological reserves are two times higher than in December and almost 40% above the five-year average.

EPS earns almost EUR 1 billion in 2023

Last year EPS earned EUR 973 million, she asserted. In addition to the improvement in the financial situation, investments started to be conducted more efficiently, according to the minister.

This year the ministry will conduct the second round of auctions for the purchase of electricity from renewable sources via contracts for difference (CfDs), Đedović Handanović said and added: “When we estimate that the market is prepared.” The bidding in question was earlier scheduled to be held by the end of March.

Gas interconnections with North Macedonia, Romania are priority

She pointed out that last year the construction of the Serbia-Bulgaria, gas interconnection, which enabled importing gas from Azerbaijan and the liquefied natural gas (LNG) in Alexandroupolis in Greece, was finished in time last year.

“We are planning to continue diversification in the natural gas supply sector, where gas interconnections with North Macedonia and Romania are priority. The biggest challenge with gas projects at the moment is the limited scopet in securing financing, because of the stance of the international financial institutions”, Đedović Handanović said.

In cooperation with Elektroprivreda Srbije and Srbijagas, the main fossil gas supplier, works are underway on a new methodology for calculating electricity and gas prices for companies, for flexibility in reacting to market trends, according to the ministry. Đedović Handanović earlier said power prices for households wouldn’t be raised this year and that the prices for companies would be lowered later in the year “if the current market trend continues.”

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