Hydropower continues to serve as a pivotal element in the electricity markets of Southeast Europe, influencing profitability and operational strategies for utilities across the region. While renewable technologies like wind and solar often capture public attention, it is the region’s extensive network of rivers and reservoirs that fundamentally determines the financial health of energy companies. In 2023 and 2024, hydropower generation across Serbia, Montenegro, Bosnia and Herzegovina, Albania, North Macedonia, Croatia, Romania, Bulgaria, and Greece is projected to remain around seventy terawatt-hours annually, subject to climatic conditions such as rainfall and snowmelt.
Serbia’s Electric Power Industry (EPS) exemplifies the economic dynamics tied to hydropower. Following a challenging drought in 2022, EPS’s hydro generation surged by 41.3 percent to 12.7 TWh in 2023, accounting for 36.5 percent of its total output. This rebound significantly contributed to EPS achieving a record production level of 35.5 TWh and transitioning from losses to nearly one billion euros in net profit. However, projections for 2024 indicate a downturn with total output expected to decrease to 32.9 TWh, prompting a rise in imports by approximately 15 percent as hydrological conditions deteriorate.
Montenegro’s EPCG has mirrored this narrative on a smaller scale. In 2023, hydropower generated approximately 56 percent of its total output of 3.50 TWh. However, a severe drought in 2024 led to a drastic reduction in hydro generation, forcing EPCG to rely on expensive imports to meet demand. The utility’s primary electricity production fell to just 2.1 TWh while imports surged to 5.95 TWh. Consequently, net profits plummeted from over fifty million euros in 2023 to around ten million euros in the following year.
In Bosnia and Herzegovina, hydropower appears advantageous on paper but remains vulnerable to fluctuations in water availability. The country produced about 6.20 TWh from its transmission-connected hydro fleet in 2023, constituting approximately 42 percent of its high-voltage grid generation. However, adverse hydrological conditions and coal supply issues resulted in EPBiH facing a record loss of around 169 million euros despite favorable market prices.
Albania stands out as Europe’s most hydropower-dependent nation, with hydro plants generating nearly all its electricity—around 98 percent—during optimal conditions in 2023. However, anticipated declines in hydro output for the following year have raised concerns regarding import dependencies and reduced investment flows into clean energy projects.
In contrast, countries like Croatia and Romania illustrate how hydropower interacts with more diverse energy portfolios. Croatia’s HEP reported a production increase to 15.1 TWh in 2023 due largely to favorable hydrological conditions while maintaining a near net-neutral trade position. Romania’s reliance on hydropower is significant but also subject to variability; its output dropped from about 17.3 TWh in 2023 to an estimated 13.9 TWh in the subsequent year due to lower reservoir levels.
North Macedonia and Greece occupy an intermediate position regarding hydropower’s role within their energy systems. North Macedonia’s hydro capacity contributes around 15 percent of its domestic consumption while Greece has expanded its renewable portfolio but still relies on hydro for peak management during periods of low wind or solar generation.
The overarching economic rationale for investing in hydropower remains consistent across the region: once capital expenditures are made for infrastructure development, the operational costs are minimal compared to fossil fuel-based generation. In Serbia, for instance, the operational expenses associated with hydropower are considerably lower than those incurred by lignite plants.
Utilities are increasingly recognizing this reality through significant capital expenditure programs aimed at refurbishing existing hydro facilities. EPS plans investments exceeding €1.3–1.5 billion through 2030 for upgrades that could enhance capacity by up to fifteen percent while extending operational lifespans significantly.
Overall, hydropower serves multiple roles within Southeast Europe’s energy landscape: it acts as a baseload contributor in some markets while providing flexibility and earnings enhancement during high-water years across others. For industrial consumers and policymakers alike, understanding the intricacies of regional hydrology is essential for forecasting financial performance and assessing macroeconomic risks.
As renewable energy integration progresses and coal usage declines, the importance of reliable and cost-effective hydropower will likely grow further within Southeast Europe’s electricity framework.
