Coal-fired power generation remains a vital component of the energy landscape in Southeast Europe, yet its future is increasingly characterized by a managed decline. Recent data indicates that coal output in the region reached 4,477 MW in week 16, marking a slight week-on-week increase but still hovering near the lowest levels recorded since mid-2025. This trend underscores the ongoing challenges faced by coal operators, despite temporary boosts in revenue due to higher electricity prices and stable fuel costs.
Serbia stands out as the dominant player in this sector, contributing approximately 38–40% of the region’s coal generation. The country experienced an increase of 292 MW in coal output during the week; however, this gain was offset by declines in other countries such as Slovenia and Montenegro, highlighting the uneven dynamics within the regional market.
A year-on-year analysis reveals a concerning trend: coal generation across Southeast Europe is currently 673 MW lower than during the same period in 2025. This decline can be attributed to several factors, including a rise in renewable energy sources, stricter environmental regulations, and shifting market conditions that favor cleaner energy alternatives.
Despite their role in providing essential baseload power and system stability—particularly during low renewable output periods—coal plants are increasingly restricted to specific operational windows. The escalating costs associated with carbon emissions, with European Union Allowance (EUA) prices reaching €74.9/t, further diminish the long-term viability of coal as a competitive energy source.
The notion of “managed decline” has gained traction among operators who are now focused on maximizing remaining value while preparing for an eventual phase-out of coal generation. Strategies include optimizing maintenance schedules and reducing operating hours, along with exploring options for conversion or repurposing of existing facilities.
This evolving landscape presents significant challenges for policymakers and system operators, who must navigate the delicate balance between ensuring reliable power generation and meeting environmental objectives. In light of insufficient flexible capacity alternatives, coal plants may remain integral to the energy mix longer than initially anticipated, albeit with decreasing utilization rates.
