Fortis Energy is moving forward with a utility-scale solar and battery storage platform in northern Serbia, in a development that is attracting growing interest from lenders and infrastructure investors seeking exposure to carbon-driven power market dynamics in Southeast Europe.
The project, located near Sremska Mitrovica, is being developed as a multi-phase hybrid complex combining up to 270 MW of solar capacity with battery storage scaling to around 72 MWh, alongside an initial phase of 90 MW solar paired with 36 MWh of storage. Total grid connection capacity is understood to be approximately 180 MW AC, positioning the site among the largest integrated solar-battery developments in the region.
Market participants indicate that the project’s scale and hybrid design are key factors underpinning its financing appeal, particularly as Southeast Europe’s power markets enter a period of heightened volatility linked to carbon pricing and cross-border trade adjustments.
Annual output from the full build-out is expected to exceed 365 GWh, implying potential annual revenues of €30–45 million under current regional baseload price ranges of €80–120/MWh, with upside to €50–60 million in tighter market conditions.
Hybrid design supports bankability
The inclusion of battery energy storage is emerging as a central element of the project’s investment case. By enabling peak shifting and intraday arbitrage, the system allows operators to capture price spreads that have widened significantly across Southeast Europe, frequently reaching €30–80/MWh within a single trading day.
Traders active in the region point to increasing divergence between EU carbon-priced markets and non-EU systems as a key driver of these spreads. EU ETS prices in the range of €70–90/tCO₂ are adding an estimated €55–85/MWh to thermal generation costs within the bloc, while neighbouring Balkan systems continue to operate with limited carbon cost internalisation.
This has created persistent cross-border price differentials of €20–60/MWh, with spikes above €80/MWh during periods of tight supply or low renewable output, strengthening the case for flexible assets capable of optimising dispatch.
Battery storage also improves grid compliance and reduces curtailment risk, particularly in northern Serbia where solar capacity additions are accelerating and transmission constraints are tightening.
Financing structure gains traction
The project is expected to require total investment in the range of €220–285 million, based on regional benchmarks of €0.55–0.75 million/MW for solar and €350–500/kWh for battery storage systems.
Market sources indicate that discussions with international financial institutions are ongoing, with potential participation from multilateral lenders expected to anchor the financing structure and support longer tenors.
Such involvement would provide additional comfort to commercial banks, particularly in a market where merchant exposure remains significant and long-term power purchase agreements are still developing.
Debt sizing in similar projects across the region typically reaches 65–75% of total CAPEX, with tenors extending up to 15 years, depending on revenue visibility and hedging structures.
Revenue stack broadens beyond baseload
Unlike traditional solar developments, the Fortis project is expected to rely on a diversified revenue stack, combining day-ahead market sales with intraday trading, ancillary services and potential bilateral contracts with industrial offtakers.
Market participants note growing interest from energy-intensive industries seeking access to low-carbon electricity, particularly as carbon border costs begin to influence export competitiveness.
Battery storage is expected to play a key role in capturing intraday volatility, which has intensified alongside rising renewable penetration in EU markets. Price swings of €50–100/MWh within 24 hours are increasingly common, providing additional revenue opportunities for flexible generation assets.
CBAM reshapes investment logic
The project’s positioning is also being shaped by the introduction of carbon border pricing, which is altering the economics of cross-border electricity flows.
Coal-based generation in Southeast Europe, typically produced at €50–60/MWh, becomes significantly less competitive when adjusted for carbon costs equivalent to EU levels, with effective costs rising to €110–140/MWh. This is reducing the viability of traditional export-driven trading strategies and increasing the relative value of renewable, carbon-compliant electricity.
Market analysts estimate that up to 60–70% of current regional electricity export volumes could face margin compression under full carbon cost alignment, equivalent to a potential reduction of 8–10 TWh annually in cross-border flows.
Against this backdrop, hybrid renewable projects are increasingly viewed as strategic assets capable of maintaining access to EU-linked markets.
Equity returns supported by volatility
Equity investors are expected to target returns in the range of 10–13% IRR under base case assumptions, with upside to 14–18% driven by intraday trading gains and favourable price spreads.
Downside scenarios, including higher curtailment or price compression, are seen reducing returns to 8–10%, although battery integration is expected to mitigate some of these risks.
Grid constraints remain a consideration, particularly in northern Serbia, where rapid renewable build-out is testing transmission capacity. However, the project’s storage component and secured grid connection are expected to limit exposure.
Market transition accelerates
The Fortis development reflects a broader shift in Southeast Europe’s power markets, where value is increasingly linked to flexibility, carbon positioning and trading capability rather than purely to generation cost.
As carbon pricing continues to reshape regional price formation, hybrid solar-plus-storage assets are emerging as a preferred investment structure, offering both stable generation and exposure to market-driven upside.
For lenders, the project provides a scalable, ESG-aligned infrastructure opportunity with improving revenue visibility. For investors, it offers access to a market where volatility and regulatory transition are creating new avenues for value capture.
