Serbia’s state power utility EPS is using a €100 million European Investment Bank financing programme and fresh EU grant support to modernise ageing hydropower plants and develop more than 120 MW of solar capacity, increasingly turning existing power-sector infrastructure into the backbone of its renewable transition.
The EIB’s EPS Green Financing framework covers rehabilitation of hydropower assets at Bistrica, Potpeć and Đerdap II, construction of an additional 13 MW hydro unit at Potpeć, and development of new renewable projects. The wider programme has an estimated investment cost of about €408 million.
The €100 million EIB loan was signed in December 2024, but individual projects under the framework are now advancing with additional Western Balkans Investment Framework support.
The rehabilitation of Bistrica hydropower plant is expected to receive up to €7.46 million in WBIF grant funding, alongside about €52 million of proposed EIB financing for a project estimated at €59 million.
The investment is intended to extend Bistrica’s operating life by around 30 years, improve production efficiency and strengthen its ability to balance increasing amounts of intermittent generation.
Potpeć is undergoing a broader reconstruction and expansion programme. The project includes a new generating unit and is expected to increase average annual production from 213 GWh to 236.7 GWh. It is expected to benefit from up to €15.24 million in WBIF grant support.
Coal sites offer shortcut for solar expansion
More than 120 MW of solar plants are included in the EIB framework, with existing thermal-power locations emerging as potential development sites.
Sites associated with Morava and Kolubara A could allow EPS to reuse industrial land, grid connections, access roads and other infrastructure after coal generation ends rather than developing entirely new greenfield locations.
That could provide a significant advantage as grid access, permitting and land availability increasingly determine which Serbian renewable projects can reach construction.
It also gives ageing thermal sites an economic role beyond their coal-fired operating lives, potentially reducing the infrastructure cost of replacing part of their generation with new capacity.
Hydro gains value as flexibility asset
At the same time, EPS is extracting more value from its existing hydro fleet.
As Serbia adds wind and solar, the ability to increase or reduce generation quickly becomes more valuable. Modernised hydro plants can respond to changes in renewable output while providing balancing and other system services.
The EIB specifically identifies greater system flexibility as one of the benefits of the Bistrica rehabilitation.
EPS is also advancing the separate RHE Bistrica pumped-storage project, which would add a much larger source of storage and flexibility to the Serbian system.
Together, the investments point to a practical division of roles: new solar adds low-cost generation, while rehabilitated hydro and pumped storage provide the flexibility needed to integrate it.
EU financing changes more than the cost of capital
European financing also carries implications beyond cheaper funding.
Projects supported by the EIB are subject to its procurement, environmental and social requirements, including applicable EU public-procurement standards.
EU grants can reduce the effective cost of rehabilitation, while long-maturity EIB financing makes investments in assets with operating lives measured in decades easier to finance.
For EPS, that matters as the utility faces several capital-intensive demands simultaneously: maintaining lignite security in the near term, rehabilitating ageing generation, adding new capacity and preparing the system for a lower-coal power mix.
The emerging strategy is therefore increasingly asset-focused: reuse valuable infrastructure at thermal sites and extend the productive life of hydro assets rather than replacing everything from scratch.
That approach could reduce both capital requirements and execution risk. But its value will ultimately depend on delivery — particularly whether EPS can modernise its existing fleet and bring replacement capacity online before ageing coal assets become a constraint on Serbia’s power system.
