The signing of basic cooperation terms between EPS and Azerbaijan’s state energy company SOCAR marks a significant step toward the development of a new gas-fired power plant in Niš, a project that could become one of Serbia’s most important energy investments of the coming decade.
The agreement outlines the core commercial and organizational framework for cooperation between the two sides, including plans for the establishment of a joint project structure that would oversee development, construction and future operation of the facility.
Current plans envisage a facility with up to 500 MW of installed electricity generation capacity and approximately 150 MW of thermal output, positioning the project among the largest new thermal energy investments currently under consideration in Southeast Europe. Investment estimates linked to earlier project discussions have reached approximately €600 million, highlighting the strategic scale of the initiative.
For Serbia, the project addresses several energy challenges simultaneously. Electricity demand is expected to increase in the coming years due to industrial expansion, electrification trends, digital infrastructure growth and rising consumption from large energy-intensive facilities. At the same time, the country faces growing pressure to modernize an aging generation fleet while gradually reducing dependence on older coal-based production assets.
The proposed plant near Niš is designed as a combined-cycle gas facility, a technology significantly more efficient than conventional gas generation systems. Combined-cycle plants use both gas and steam turbines to maximize energy output from fuel consumption, reducing emissions while improving operational flexibility. Such facilities are increasingly viewed across Europe as transitional infrastructure capable of supporting renewable integration by providing fast-response balancing capacity during periods of low wind or solar generation.
The choice of Niš is strategically important. Southern Serbia has long been viewed as an area requiring additional generation capacity, particularly as industrial activity expands and electricity demand becomes more geographically diversified. The location also benefits from direct access to major gas infrastructure, including the Serbia-Bulgaria gas interconnector and the Balkan Stream pipeline system. These connections improve fuel supply security while supporting Serbia’s broader diversification strategy away from excessive dependence on a single gas source.
The project further deepens energy cooperation between Serbia and Azerbaijan, which has expanded considerably over recent years. Azerbaijani gas has become an increasingly important component of Serbia’s diversification efforts, particularly following the commissioning of new regional interconnection infrastructure. Existing supply agreements already provide significant volumes of Azerbaijani gas to the Serbian market, while bilateral energy cooperation has expanded beyond gas supply into broader investment and infrastructure projects.
According to project discussions, the future power plant could require approximately 600 million cubic meters of natural gas annually once fully operational. This would make it one of the largest single industrial gas consumers in Serbia and further strengthen long-term commercial ties between Belgrade and Baku.
The investment also highlights a broader reality confronting many Southeast European power systems. While renewable energy investment continues to accelerate, grid operators increasingly require flexible generation capable of compensating for renewable intermittency. Gas-fired generation is therefore being positioned not only as a source of baseload electricity but also as an operational balancing mechanism supporting system stability.
This dynamic is becoming increasingly relevant for Serbia. The country is simultaneously pursuing large-scale solar, wind and battery storage projects while attempting to maintain security of supply during periods of renewable variability. In that context, the Niš gas project represents part of a wider transition strategy rather than a standalone thermal investment.
Industrial implications are equally important. A stable new generation source in southern Serbia could improve supply reliability for manufacturing facilities, logistics centers and future industrial investments. The thermal component of the project may also create opportunities for district heating integration and industrial heat supply applications, expanding its economic role beyond electricity generation alone.
The next phase will focus on finalizing commercial arrangements, ownership structures, financing mechanisms and detailed technical specifications. Authorities have indicated that commissioning is currently targeted around 2030, although timelines will depend on permitting, engineering development, financing structures and construction execution.
The project therefore represents more than a new power plant. It reflects Serbia’s attempt to build a more diversified energy system, strengthen regional energy partnerships and create infrastructure capable of supporting both industrial growth and the gradual transformation of the national electricity sector. As renewable deployment accelerates and regional power markets become increasingly volatile, the strategic value of flexible generation assets such as the planned Niš facility is likely to become even more significant.
