Serbia and Azerbaijan are advancing cooperation on one of the country’s most strategically significant energy projects, agreeing to jointly finance the design phase of a new gas-fired power plant in Niš, marking a shift from political agreement toward early-stage execution.
The initiative builds on a broader bilateral energy partnership formalised earlier in 2026, when the two governments signed an agreement covering the development, design, construction, and operationof a combined-cycle gas facility in southern Serbia.
At the core of the project is a planned combined-cycle gas turbine (CCGT) plant with around 500 MW installed capacity, structured to deliver approximately 350 MW of electricity and 150 MW of heat, integrating both power generation and district heating for the Niš region.
The total investment envelope is estimated at roughly €600 million, positioning the plant among the largest new thermal generation assets in Southeast Europe.
The latest development—joint financing of project design—signals that the project is entering a more concrete phase. Conceptual engineering, site definition, and technical structuring are expected to begin, following earlier political agreements and term-sheet level arrangements between the two sides.
From a system perspective, the Niš plant is designed to play a dual role. It will provide baseload capacity to stabilise Serbia’s electricity system while also acting as a flexible complement to renewable energy, particularly as solar and wind penetration increases. Gas-fired plants can ramp output quickly, making them critical for balancing intermittent generation.
The project is also tightly linked to Serbia’s broader energy diversification strategy. Azerbaijan is expected to supply natural gas for the facility, reducing reliance on Russian imports and aligning with ongoing efforts to expand supply routes via interconnectors and regional gas corridors.
Current technical expectations indicate annual production of roughly 3 TWh of electricity and 1.3 TWh of heat, with gas demand in the range of 450–500 million cubic metres per year, underscoring the project’s scale within the national energy balance.
Location selection is being refined within the broader Niš industrial perimeter, with candidate zones prioritising proximity to gas pipelines, transmission grid nodes, and industrial demand clusters, reflecting the infrastructure-heavy requirements of combined-cycle plants.
Construction timelines discussed by Serbian officials suggest a build period of just over two years, implying potential commissioning before the end of the decade, depending on permitting, financing structure, and final investment decision milestones.
The move to jointly fund the design phase effectively transitions the project from a diplomatic initiative into an engineering and financing workflow, where key questions—ownership structure, gas pricing, EPC contracting, and grid integration—will begin to define its bankability and execution path within Serbia’s evolving energy mix.
