Energy

About Sector

The EU provided Serbia with the Energy Support Package of EUR 165 million in order to help citizens and small and medium-sized enterprises dealing with the increasing energy prices and green energy transition. Additionally, EUR 31 million was approved for the construction of new wind farm Kostolac (KfW loan EUR 81.8 million) and EUR 16.1 million for the reconstruction of hydro power plant Vlasina (EBRD loan EUR 61.6 million). 

The European Union is the biggest donor of the energy sector in Serbia, with investments exceeding EUR 1 billion in grant funds since 2000. The EU is funding projects in Serbia that aim at security of supply, diversification of energy sources, market liberalization and improved energy efficiency. The ultimate goal is to reduce pollution and mitigate climate change, which are the goals of the European Green Deal and the Green Agenda for the Western Balkans, endorsed by Serbia in 2020.

In 2022 the EU supported entire energy sector in Serbia in the amount of EUR 100 million, including EUR 49.6 million for an important project of energy interconnection between Europe and Serbia – The gas inter-connector Serbia – Bulgaria. The new gas inter-connector, whose construction began on January 14, 2022, will connect the City of Niš with the Bulgarian capital, Sofia. The projected capacity of the new gas pipeline will allow for the transfer of 1.8 billion cubic meters of natural gas annually. Finalization of the gas pipeline is planned for the fourth quarter of 2023 and it will provide additional 60 percent capacity increase relative to Serbian’s current gas needs (around 3 billion cubic meters annually) and it will largely increase the overall security of natural gas supply. This project will also contribute to the clean energy goals.

Another very important connectivity project is the construction of the Trans-Balkan Electricity Corridor. The construction of this corridor will increase the security of electricity supply and the market integration, connecting the region of Southeast Europe with Italy. The grant funds in the amount of EUR 32.1 million, provided through the Western Balkans Investment Framework (WBIF), will mobilize EUR 164 million in investment.

Energy efficiency is an important segment of the EU support to the Serbian energy sector. In order to reduce its energy consumption and negative environmental impact, Serbia needs to work on the introduction of more energy efficient technologies and increase the energy efficiency of the buildings and industries. In addition to investments projects, the EU provides support to the Government of the Republic of Serbia in the necessary legislative improvements in this field.

One of the leading energy efficiency projects in Serbia is the rehabilitation of the Military Medical Academy (VMA) in Belgrade, with the estimated value of works exceeding EUR 200 million. Currently, preparation of the technical documentation for the reconstruction of the VMA hospital is supported with EUR 5 million EU  grant funds. The upcoming rehabilitation of public buildings in Belgrade and Serbia is supported through grant funds of EUR 20 million, and it will be implemented within four years.

Serbia produces most of its electricity by burning coal in thermal power plants. This type of electricity production causes large emission of harmful gases and wastewater. The European Union is helping Serbia reduce pollution from thermal power plants by modernizing and installing treatment systems. The construction of a wastewater treatment plant in Thermal Power Plant “Nikola Tesla” in Obrenovac and Thermal Power Plant “Kostolac B” have reduced the amount of harmful oil water discharge into the rivers, which has led to improved water quality in the vicinity of the thermal power plants.

Energy efficiency projects in Serbia can be financed with favorable loans, which are often accompanied by EU subsidies. The following supported programs and funds are available to citizens and businesses: Western Balkans Investment Framework (WBIF), Green Economy Financing Facility (GEFF), Green for Growth Fund (GGF): Regional Energy Efficiency Programme (REEP).