Serbia and Azerbaijan are accelerating plans for the construction of a major gas-fired power plant near Niš, a project increasingly emerging as one of the most strategically important energy investments in Serbia’s post-coal transition framework. According to announcements from both sides, construction could begin as early as 2027, with the facility expected to have an installed capacity of approximately 500 MW.
The project goes far beyond the construction of a single thermal power asset. It represents a broader geopolitical and infrastructure shift in Serbia’s energy strategy, combining electricity generation, gas diversification, district heating potential and regional energy-security considerations into a single investment platform.
Energy analysts interviewed by Serbian public broadcaster RTS estimate that the future plant could generate between 2 and 3 TWh annually, equivalent to as much as 10% of Serbia’s current electricity production.
The planned facility would likely operate as a combined-cycle gas turbine (CCGT) plant, providing stable baseload and balancing capacity for Serbia’s increasingly renewable-heavy electricity system. Unlike wind and solar generation, gas-fired generation offers dispatchable flexibility capable of stabilizing grid frequency and supporting intermittent renewable integration.
That balancing role is becoming increasingly important as Serbia expands utility-scale solar and wind projects while simultaneously confronting aging coal infrastructure and rising electricity demand from industrial expansion, digital infrastructure and data centers. Serbian Energy Minister Dubravka Đedović Handanović previously stated that the plant could eventually serve as a partial replacement for thermal coal generation while supporting integration of renewable energy into the national grid.
The project also introduces a potentially transformative heating dimension for southern Serbia. According to RTS reporting, the plant may additionally provide district heating capacity for Niš households, effectively creating a dual electricity-and-heat energy hub in southern Serbia.
One of the central questions surrounding the project is gas supply security. Serbia currently imports Azerbaijani gas through the Bulgaria–Serbia interconnector, which became operational in late 2023. Existing import volumes, however, are insufficient to fully support a large-scale new gas-fired generation facility.
Analysts therefore expect the Niš project to trigger broader negotiations over expanded Azerbaijani gas deliveries, additional transport capacity and potentially new long-term supply agreements involving SOCAR, Srbijagas and EPS. Current estimates suggest the future plant could consume approximately 600 million cubic meters of gas annually, a substantial increase relative to Serbia’s existing Azerbaijani supply arrangements.
The geopolitical timing is highly significant. Azerbaijan has committed to increasing gas exports to the European Union by 2027, positioning itself as one of Europe’s alternative suppliers amid the continent’s continuing efforts to reduce dependence on Russian gas flows. Serbia, meanwhile, is attempting to secure diversified energy supply channels while simultaneously navigating uncertainty surrounding the future ownership and sanction-related status of NIS.
The project’s ownership structure also reflects its strategic nature. Earlier statements suggested Serbia and Azerbaijan could each hold 50% ownership stakes in the future plant, potentially through cooperation involving EPS, Srbijagas and SOCAR.
Financially, estimates for the overall investment have ranged around €600 million, placing the project among Serbia’s largest planned energy infrastructure investments outside the renewable sector.
The investment also reflects a broader regional reality increasingly visible across Southeast Europe. While governments continue promoting renewables and decarbonization, system operators and investors are simultaneously returning to gas-fired generation as a transitional stabilizing technology capable of supporting grid reliability amid rising solar and wind penetration.
Across the Western Balkans, gas generation is increasingly viewed not only as a replacement for coal, but as an infrastructure bridge supporting industrial competitiveness, electricity security and flexibility markets. Serbia’s Niš project now appears positioned directly within that emerging regional energy architecture.
