Serbia is preparing to build a large gas-fired power plant that could become one of the most important additions to its electricity system in the coming decade. The project, agreed during the visit of the president of Ilham Aliyev to Serbia, envisions construction of a 500 MW gas power plant that would begin operating around 2029 and represent a major investment in the country’s energy transition.
Estimated at around €600 million, the facility is planned as a joint project between Serbia and Azerbaijan and would combine electricity generation with district heating supply for the city of Niš.
Yet despite the strategic importance of the project, a central question remains unresolved: who will supply the natural gas needed to operate the power plant.
A new 500 MW gas power plant in Serbia’s energy system
According to the plans discussed by Serbian and Azerbaijani officials, the plant would have a total capacity of 500 megawatts, divided between 350 MW of electricity generation and 150 MW of thermal energy for district heating.
Annual electricity production is expected to reach roughly 3 million MWh, while the cogeneration system would also provide approximately 1.3 million MWh of heat energy for the local heating network.
The project is designed as a combined heat and power plant (CHP), meaning that waste heat from electricity production would be used to supply district heating systems. This approach significantly improves energy efficiency. Using a single fuel source for both electricity and heat could raise total fuel-use efficiency to over 90 percent.
In practical terms, this means the new facility could transform how the city of Niš receives heat during winter while also contributing to Serbia’s electricity generation.
A transitional energy source as Serbia moves away from coal
Serbia’s power system remains heavily dependent on coal. Around 70 percent of electricity production currently comes from lignite-fired power plants operated by Elektroprivreda Srbije.
While lignite has historically provided cheap baseload power, it also produces large quantities of carbon emissions and local air pollution. As Serbia gradually aligns its environmental policies with European standards, coal-fired power plants will face increasing pressure from carbon-pricing mechanisms and emissions regulations.
In this context, natural gas is often described as a transitional fuel in the energy transition. Although still a fossil fuel, gas combustion produces significantly lower emissions compared with coal and allows power plants to start and stop quickly.
This flexibility is particularly important as Serbia expands renewable energy capacity. Wind and solar power generation depends heavily on weather conditions, creating fluctuations in electricity supply. Gas-fired plants can compensate for these fluctuations and maintain system stability.
According to Serbia’s national energy transition strategies, gas power plants are expected to operate as bridge technologies until around 2050, when the country aims to achieve long-term climate neutrality.
Strategic role in electricity supply
The planned Niš gas plant could also play an important role in Serbia’s electricity balance. Energy experts estimate that the facility could provide approximately six percent of Serbia’s electricity production, helping stabilize supply during peak demand periods.
During winter months Serbia’s electricity consumption can exceed 5,000 MW, meaning the new power plant could cover a substantial share of national demand.
At the same time, the project would support the integration of renewable energy sources into the grid. As Serbia continues to expand wind farms and solar plants, dispatchable generation sources such as gas plants become increasingly important to balance variable electricity production.
The central question: Where will the gas come from?
Despite the project’s strategic importance, its long-term viability depends on reliable access to natural gas. The planned plant would require between 450 million and 500 million cubic meters of gas annually in order to operate at full capacity.
That figure represents a substantial addition to Serbia’s gas consumption. Current gas supplies primarily serve household heating and industrial demand, meaning additional volumes would need to be secured before the plant could operate.
Initial discussions between Serbia and Azerbaijan suggested that gas for the facility could be supplied from Azerbaijani fields through the Southern Gas Corridor, which already transports gas from the Caspian region to Europe.
However, analysts warn that existing pipeline infrastructure may not have sufficient capacity to deliver such large additional volumes. Expanding supply would likely require either pipeline upgrades or additional import routes.
Another potential challenge relates to pricing. Serbia currently imports significant quantities of gas from Russia via the Balkan Stream pipeline, a branch of the TurkStream system. Energy experts note that it is uncertain whether Russia would offer preferential pricing for gas used specifically to fuel the new power plant.
As a result, Serbia may need to diversify its gas imports further in order to secure competitive supply for the project.
Niš as a strategic location
The region around Niš has been identified as the most logical location for the new gas plant. The city sits near the Serbia–Bulgaria gas interconnector, which recently expanded Serbia’s ability to import gas from alternative sources including Azerbaijan and liquefied natural gas terminals in Greece.
This infrastructure development is part of a broader effort to diversify Serbia’s gas supply routes and reduce dependence on a single supplier.
The Niš region also hosts several renewable energy projects, including large solar plants in eastern and southern Serbia. Locating a flexible gas-fired power plant nearby could allow it to complement renewable generation and reduce electricity transmission losses.
Balancing energy security and energy transition
The proposed gas power plant illustrates the complexity of Serbia’s energy transition. On one hand, the country must reduce its dependence on coal and modernize its electricity system. On the other hand, it must maintain energy security and ensure reliable power supply for industry and households.
Gas-fired generation offers a potential solution to this challenge by providing cleaner electricity than coal while supporting the integration of renewable energy sources.
Yet the success of the project will ultimately depend on resolving the fundamental question raised by energy analysts: who will supply the gas required to run the plant.
Without a long-term and competitively priced supply contract, even a technologically advanced gas power plant could struggle to operate economically.
As Serbia expands its energy infrastructure and seeks to diversify gas imports through new pipelines and regional partnerships, the answer to this question will determine whether the Niš gas plant becomes a cornerstone of the country’s future energy system—or a project constrained by fuel supply uncertainty.
