Serbia’s prolonged drought has altered the operational role of its hydropower fleet, with electricity generation tied to water availability as well as installed capacity. Extremely low Danube inflows at the Đerdap hydropower complex fell to around 1,500 cubic metres per second, pushing production to the lowest levels recorded since the plants entered operation.
Generating units remained technically available, but hydrological conditions limited actual output. Đerdap 1 operated at approximately 20% of installed capacity, while Đerdap 2 ran at around 30%, indicating that infrastructure availability alone did not ensure generation during constrained flows.
Drought impacts on thermal generation and electricity demand
The drought affected more than hydro output through lower Danube water levels. At the Kostolac thermal power complex, cooling efficiency was reduced, and some coal-fired units cut output by approximately one-third.
Electricity consumption increased to 100–105 GWh per day, approaching winter peak demand levels of 110–115 GWh. The higher load was driven largely by increased air-conditioning use during extreme temperatures.
Elektroprivreda Srbije (EPS) therefore faced reduced hydropower production alongside restricted thermal availability and higher electricity demand. The situation highlighted the need for flexible generation assets able to respond quickly to changing system conditions.
Pumped storage provides balancing during low inflows
A key resource during the crisis was the rehabilitated Bajina Bašta pumped-storage plant. With reservoir levels at approximately 75%, it was able to absorb electricity during lower-price periods, particularly during hours of strong solar generation.
The same facility released energy during morning and evening demand peaks. Pumped-storage does not add net electricity because pumping consumes more energy than is recovered later.
The strategic value comes from shifting electricity between different market periods, supporting balancing services and system reserves. It also reduces exposure to extreme prices when supply is limited.
Đerdap 3 procurement and planned storage configuration
Serbia’s future storage plans include the Đerdap 3 pumped-storage project. The country launched a procurement process worth around €5.3 million covering general design, preliminary feasibility study, special-purpose spatial plan and strategic environmental assessment.
Current concepts envisage a reversible facility with capacity between 1,200 MW and 2,400 MW. The hydraulic head is estimated at approximately 400 metres, using the existing Đerdap 1 reservoir as the lower basin.
Potential upper reservoir locations include Pešača or Brodica on Severni Kučaj. The project is positioned as more than conventional generation, with functions expected to include energy arbitrage, balancing services, reserve capacity, congestion management and potentially strategic capacity mechanisms.
Bidding structure, financing approach and grid coordination needs
A purely merchant investment model would be challenging given project scale in the billions of euros, a long development period and complex environmental approvals within the Đerdap National Park. Cooperation with Romania is also described as essential because the project would interact with shared Danube hydropower and navigation systems.
The procurement structure is expected to influence long-term bankability. A consortium led by Bechtel and ENKA was the only applicant to qualify for the next stage of a government process aimed at attracting US participation after six initial applications.
The process requires separation between early-stage studies, project development, engineering-procurement-construction arrangements, financing structures and final investment approval. This is intended to support confidence among international lenders.
Vlasinske modernisation and prior rehabilitation additions
Alongside new storage development, EPS plans upgrades to existing hydropower assets as a lower-risk resilience measure. EPS intends to invest €109.7 million in modernising the Vlasinske hydropower cascade, supported by a €67 million EBRD loan, a €15.43 million EU grant, and €27.26 million of EPS financing.
Earlier rehabilitation projects at Bajina Bašta, Đerdap 1, and Zvorniк
