The energy sector in Serbia

Serbia, with a population of around 7.1 million, satisfies most of its electricity demand from domestic production. Electricity production in Serbia relies around 70 per cent on coal, while the remaining 30 per cent is generated in hydropower plants. The electricity market in Serbia is dominated by the national power utility EPS (Elektroprivreda Srbije – Power Industry of Serbia), which owns all large generation capacities and supplies most consumers.

Serbia has large coal reserves, with 4.5 billion tonnes of proven lignite deposits. The reserves are located in two main coal basins, Kolubara and Kostolac. The coal mines in Serbia are owned and managed by subsidiaries of EPS.

The Kolubara Mining Basin provides around 75 per cent of the lignite used for EPS’ thermal generation. It produces 29 to 31 million tonnes of lignite annually, which is supplied to the Nikola Tesla, Kolubara A and Morava power plants, together producing more than 50 per cent of Serbia’s electricity. The Drmno mine near Kostolac provides the other 25 per cent, averaging 9 million tonnes. Its coal is used by the Kostolac A and B plants, and production is planned to expand to 12 million tonnes annually for the needs of the new Kostolac B3 unit.

Serbia has produced oil and gas in small quantities since the mid-50s, but is heavily reliant on imports, mostly from Russia.

Electricity generation in 2019, in GWh

Source: Serbian national energy balance for 2020

Serbia has undertaken commitments to increase the share of renewable energy under the Energy Community Treaty to 27 per cent by 2020, however in 2017 it had managed only 20.6 percent renewable energy – mostly wood used for space heating. In 2019 several wind plants came online, a trend expected to continue in 2020, but this will not be enough to meet the target.

No new large hydropower plants have been built for several years, although several are mentioned in the energy strategy as possibilities. In recent years, a proliferation of small hydropower plants has started to cause concerns as they are often sited in or near protected areas. Inadequate planning and assessment of cumulative impacts means that they often cause a large amount of damage compared to the small amount of electricity they generate. In 2018, hydropower under 10 MW contributed just 0.8 per cent of Serbia’s electricity generation. Financiers of the plants are often hard to trace but include Austria’s Erste, Unicredit and the EBRD.

As Serbia intends to join the EU, it should also be aiming for 80-95 per cent emissions reductions by 2050, in line with EU policy. However Serbian government and EPS plan to remain locked-in to a carbon-intensive energy system, most notably through the construction of the 350 MW Kostolac B3 lignite power plant and the revival of the long-dormant Kolubara B project.

Although Kostolac B3 is the only plant expected to be built before 2025, the Serbian Energy Strategy also puts forward several more potential fossil fuel generation plants for construction:

• Nikola Tesla B3 – 750 MW – lignite
• Kolubara B – 2 x 375 MW – lignite
• Novi Kovin – 2 x 350 MW – lignite
• Štavalj – 300 MW – lignite
• CHP Novi Sad – 340 MW – gas (may consist of separate plants)
• Other gas combined heat and power plants – 860 MWe – gas

The coal plants would also entail expansion of lignite mining, for example the opening of the Radljevo field in the Kolubara region.

Not only does this exacerbate climate change, but ironically Serbia’s coal mines have also suffered from its consequences. In May 2014 the Kolubara mines were turned into polluted lakes. Each of the four mines was flooded, two of them completely. In the biggest open-pit mine, Tamnava West, ten huge excavators used for mining were flooded, and six of them completely underwater.

The Drmno mine also suffered serious flooding in 2014. During the May floods a heroic effort was mounted to save the mine, but between July and September of the same year more than 2 million cubic metres of water spilled into the mine, bringing with it around 800 000 cubic metres of sludge and mud, and engulfed mining machinery in mud.

With its traditional forms of generation not proving resilient to climate change, Serbia would do well to diversify its energy mix and work more on energy efficiency. Serbia has promising potential for renewable energy, but as with all the countries in the region, different sources put the exact figures at quite different levels, depending among other things on whether they use sustainability criteria.

Serbia has significant potential for energy efficiency and has a target to increase energy efficiency by 20 per cent by 2020 under the Energy Community Treaty. Inefficient use of energy represents a major concern in the country. It has the second-highest energy intensity in the region, nearly four times as much as the EU average. However, by November 2019, Serbia had not even transposed the EU Energy Efficiency Directive. Incentives to save energy are limited due to artificially low electricity prices but this is going to have to change in the coming years as Serbia integrates into the European electricity market.