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Serbia faces power shortages due to drought and aging plants; Electricity imports rise

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Elektroprivreda Srbije (EPS) is currently importing 10 to 15 percent of its daily electricity needs due to insufficient production from its own facilities. This challenge is driven by poor hydrological conditions caused by recent droughts, ongoing maintenance of various plants ahead of the winter season, and the outdated state of thermal power plants combined with a lack of solar power capacity. According to energy expert Nenad Jovanović, Serbia’s import-export balance was negative by 29 million euros at the end of August. EPS spent 100 million euros on electricity imports during July and August, with evening prices reaching between 800 and 900 euros per megawatt-hour.

Factors contributing to increased imports

The reliance on imported electricity results from several factors. The extreme heat this summer, the hottest in the Balkans in a century, led to severe droughts that reduced river water levels, thereby decreasing hydroelectric power generation. Additionally, maintenance work on EPS facilities is currently underway, further limiting power production. For example, the first unit at the “Bajina BaÅ¡ta” Reversible Hydroelectric Power Plant is undergoing revitalization, with completion expected in November.

Increased coal import costs

Earlier announcements indicated that major renovations to Block A2 at the “Nikola Tesla” Thermal Power Plant and Block B1 at the “Kostolac” Thermal Power Plant would be completed by September. However, experts point out that the high cost of electricity imports reflects not just current challenges but also years of underinvestment in EPS facilities. Many of EPS’s thermal power plants are outdated, and insufficient production of quality coal from surface mines has led to the need to import expensive coal.

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From July 2022 to August 2023, coal imports from countries such as Indonesia increased tenfold, costing around 567 million euros. The energy balance for the current year forecasts an import of 5.5 million tons of coal, 10 percent more than the estimated import for 2023. Last year’s estimated coal import was 4.8 million tons, a 70 percent increase from 2.8 million tons in 2022.

EPS reports that coal production in the first three months of this year was 11 percent higher compared to 2023, and coal production in the first five months of the year matched last year’s levels. Professor Nikola Rajaković from the Faculty of Electrical Engineering in Belgrade explains that poor hydrology is a major factor in the reduced hydroelectric power production, forcing EPS to import electricity.

Potential solutions and future outlook

Rajaković also notes that the impact of the drought would have been mitigated if Serbia had a larger solar energy capacity. With 500 megawatts of solar power already in place, EPS would have had a greater share of domestically produced electricity.

Energy expert Velimir Gavrilović highlights that the extreme temperatures have increased electricity consumption and reduced hydroelectric production due to low water levels. Additionally, the quality of domestic coal and ongoing issues at the Obrenovac thermal power plant have worsened the situation. If Serbia is importing electricity now, it may face even greater challenges during the heating season if winter conditions are harsh.

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In the first half of this year, EPS achieved a profit of 23 million euros from selling electricity on the open market. The company took advantage of low prices when European solar power plants generated excess electricity, conserving water and coal while exporting electricity at higher prices. However, the drought has drastically changed this dynamic, leading to increased imports.

Currently, Serbia imports around 700 megawatts of electricity daily, with prices averaging 100 euros per megawatt-hour between 10 a.m. and 6 p.m. Prices can fluctuate, with some days seeing significantly lower or even minimal rates.

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