The energy landscape in the Western Balkans is poised for significant transformation as the region navigates a crucial decade marked by rapid renewable energy expansion and a decline in coal-fired generation. As governments implement decarbonization strategies and investors leverage decreasing technology costs, the challenge will shift from merely increasing renewable capacity to ensuring adequate flexibility resources to balance variable generation between 2026 and 2035.
Flexibility is essential for a power system to adapt generation or demand swiftly in response to fluctuations in electricity supply. The intermittent nature of wind and solar energy necessitates a robust framework of flexible resources to prevent imbalances that could threaten system stability. Historically, coal-fired plants provided this flexibility, but as their output diminishes, the region faces a significant loss of traditional balancing capabilities.
The scale of renewable projects in Southeast Europe underscores the urgency of addressing this flexibility gap. Currently, there are over 30 GW of wind and solar projects planned, with Serbia’s renewable strategy alone targeting several gigawatts of new capacity by the end of the decade. Neighboring countries are also advancing similar initiatives, further complicating the operational dynamics of electricity markets.
With variable renewable generation patterns emerging—solar peaking during midday and wind fluctuating with weather—there is an increasing need for adaptable resources that can respond quickly to changes in supply. Battery storage systems are emerging as a key solution, capable of providing instantaneous responses to supply-demand shifts. The significant reduction in lithium-ion battery costs has facilitated their deployment across global electricity markets.
Although battery storage deployment remains nascent in Southeast Europe, it is expected to gain momentum as regulatory frameworks evolve to allow these assets to participate in electricity markets and offer balancing services. This maturation process will likely coincide with increased renewable installations across the region.
Pumped hydro storage also plays a vital role in enhancing flexibility. Unlike batteries that typically manage short-term fluctuations, pumped hydro facilities can store energy for longer durations, effectively addressing multi-hour or multi-day variability in renewable generation. The Western Balkans’ mountainous terrain and existing hydropower infrastructure present significant opportunities for developing such projects, exemplified by Serbia’s Bistrica pumped storage project, which is expected to have a capacity of around 600 MW.
Albania’s reliance on hydropower along the Drin River cascade provides additional flexibility, allowing for quick adjustments in output based on market conditions. This capability enables Albania to optimize electricity exports during high-price periods while importing power when other regions have surplus renewable generation.
Demand-side flexibility remains an underutilized asset within the region. Industrial consumers can adjust their production schedules based on price signals, alleviating grid stress during peak demand times. As markets evolve, demand response programs are anticipated to become increasingly integral to maintaining system balance.
The interconnected nature of Southeast European electricity markets facilitates cross-border trading, contributing further to system flexibility. Countries can import electricity when local generation falls short and export excess power during periods of high renewable output. However, this mechanism relies heavily on adequate transmission capacity and coordinated market operations.
The term “flexibility gap” describes the disparity between existing flexibility resources and those necessary to accommodate projected renewable capacity increases. Analysts predict that Southeast Europe will require several gigawatts of additional storage and flexible generation capacity by 2030 to ensure reliable operations within its electricity systems.
Addressing this gap will necessitate coordinated investments across various sectors. Expanding transmission infrastructure is critical for integrating new renewable sources and enabling cross-border electricity flows. Additionally, scaling up storage technologies is essential for providing necessary balancing services while market reforms must allow flexible assets to capitalize on their capabilities through ancillary services markets.
The evolution of electricity markets will be pivotal as renewable penetration grows. Solely relying on energy prices may not suffice to sustain investment in flexible generation assets; thus, mechanisms such as capacity markets and long-term contracts may be required to secure sufficient funding for these resources.
The flexibility gap presents both challenges and opportunities within the energy sector. Projects that integrate renewable generation with storage or flexible operations may gain competitive advantages amid price volatility and curtailment risks. Utilities and infrastructure funds are increasingly considering such hybrid projects as part of their broader strategies.
As the Western Balkans transition from merely constructing renewable capacity toward establishing a fully integrated and flexible electricity system by 2035, advancements in storage technologies, hydropower assets, demand response initiatives, and cross-border market integration will be essential components shaping this new energy landscape.
