Energy Resilience in the New Era: Serbia’s Path to Diversification

Introduction

The war in Ukraine has sharply amplified geopolitical volatility, fracturing global alliances and putting energy security at the center of strategic debates. Serbia today stands in a particularly fragile position: it remains heavily dependent on Russian fossil fuels at the very moment when Moscow has shown its readiness to weaponize energy exports for political leverage. Russia’s drastic cuts in gas supplies to Europe in 2022, which reduced its share of the EU market from 40% to just 9%, and the channeling of energy revenues to finance war efforts clearly demonstrate the risks of over-reliance.

For Serbia, this vulnerability is even more pronounced. The country still sources the majority of its natural gas and oil from Russia, while its largest oil and gas company, Naftna Industrija Srbije (NIS), remains majority-owned by Russian firms. Such a degree of dependence is strategically unsustainable. In the current era of fractured international relations and the emerging concept of “trusted connectivity”, Serbia has no alternative but to urgently diversify its energy mix. Only by broadening supply routes and partners, both in fossil fuels and renewables, can it reduce exposure to coercion and shield itself from supply shocks.

Fossil Fuels: Reducing Reliance on Russia

Natural Gas – Overcoming the 80% Russian Supply Dominance

Serbia’s gas vulnerability remains severe: until recently, the country was “almost 100% dependent on Russian gas imports”, supplied mainly through TurkStream. Domestic production covers only 10–15% of demand, leaving ~85–90% of Serbia’s annual 2.2 bcm consumption reliant on Gazprom. With storage at Banatski Dvor capped at 450 million m³, barely 60 days of winter demand, compared to the EU’s 90-day norm, any supply disruption could cripple the system. The wider Southeast Europe region also suffers from scarce storage, amplifying exposure to shocks.

Belgrade, however, has begun executing a diversification strategy. The Bulgaria–Serbia interconnector, launched in December 2023, adds 1.8 bcm per year capacity, around 60% of Serbia’s annual needs (in practice). Backed by EU funds, it grants access to Azerbaijani gas and LNG via Bulgaria. Serbia already signed for 0.4 bcm/year from Azerbaijan starting 2024, and can draw supplies from Greece’s Alexandroupolis LNG terminal i the future. President Aliyev’s presence at the inauguration underscored the link’s strategic importance.

New projects are on the table. A 146 km link to North Macedonia (MG14) was approved in 2025, integrating Serbia into the Southern Gas Corridor and potentially the EastMed system, should EU support materialize. Also, a Serbia–Romania interconnector could open access to growing Black Sea production by 2027. Domestically, Banatski Dvor’s storage expansion to 750 mcm by 2026 and a new 300–500 mcm site near Belgrade could double storage resilience.

In parallel, Serbia maintains its 3-year Gazprom contract signed in May 2022 for 2.2 bcm/year, securing short-term stability.

Potential Decline of Russian Gas Share in Serbia

Indicative Scenarios for Russian Share Reduction (if every project goes as planned):

• Short term (2024–early 2025): With 0.4 bcm from Azerbaijan, the Russian share falls from >90% to ~70–80%.

• Medium term (end 2025–2026): With 0.3–0.6 bcm LNG + 0.4 bcm Azeri gas, the Russian share could decline to ~50–60%.

• Long term (post-2027): If MG14 and the Romania link are realized and contracts secured, the Russian share could fall below 40%.

While Serbia’s diversification blueprint is robust on paper, the key challenge now is to contractually secure sufficient non-Russian volumes to fully utilize the available and planned capacities.

Oil – Diversifying Imports and Resolving the NIS Dilemma

The situation with oil is slightly better than the one with gas. Even before the start of the Ukraine war, in 2021, Serbia imported from Iraq (64%), Russia (23%), Kazakhstan (10%), and Norway (3%). Imports account for 80% of Serbian needs, while 20% is found domestically. While a quarter of imports from Russia is not ideal, the main problem is not quantity, but ownership. Serbia’s largest oil company is majority-owned by Russian entities.

Serbia’s progress in cutting its oil dependence on Russia started in 2022 (prohibition of the sea imports of Russian oil by the EU), but did not last. By 2023, loopholes were found, and NIS quietly started buying Russian crude again. At the same time, Belgrade secured a three-year transport deal through the JANAF pipeline (lasting until 2026) and could push forward plans for a new pipeline from Pančevo to Hungary (capacity ~5 million tons a year by 2027). But this line would actually hook Serbia into the Russian-dominated Druzhba system, deepening Moscow’s leverage rather than reducing it.

Moreover, ownership remains the core vulnerability. US potential sanctions forced the issue in 2023, with waivers tied to Gazprom Neft’s exit by January 2025. In September 2025, Gazprom formally transferred its direct 11.3% stake in NIS to another Russian entity, Intelligence, leaving Gazprom Neft with ~44.85% and the Serbian state ~29.87%. This reshuffle did little to dilute Russian influence. For years, NIS profits have been siphoned abroad to bankroll Moscow’s war in Ukraine, while reinvestment and spillover effect to the Serbian economy have been limited. Russia’s reluctance to sell its share is deliberate: by holding on, even under sanctions, it ensures that any pressure from the West hurts not only Moscow but also Serbia’s economy, effectively weaponizing its “friendship” to keep Belgrade dependent.

A lasting solution is a phased nationalization of Russian-held stakes in NIS, with the Serbian state retaining golden shares to safeguard strategic control, followed by partial privatization to trusted Western partners such as SOCAR, MOL, TotalEnergies, ENI, ExxonMobil, or Chevron. Backed by financiers like the EBRD and US DFC, this would embed NIS in Euro-Atlantic supply chains and deliver real energy independence. Pupin Initiative published that proposal in detail, and you can read the whole text here.

Renewable Energy Expansion: Tapping Serbia’s Green Potential

Diversifying energy sources does not stop at finding new oil and gas suppliers; it also means reducing reliance on fossil fuels overall. Serbia is blessed with significant renewable energy potential, and accelerating the green transition will both improve energy security and help meet EU climate targets. Currently, renewables from hydropower already play a large role, but untapped opportunities in wind and solar power could be game-changers for Serbia’s energy resilience.

Wind Power: From a Neglected Sector to Rapid Development

Wind energy in Serbia has quickly grown from almost nonexistent into one of the fastest-developing parts of the energy sector. The country’s geography, especially the Vojvodina plains and Danube corridor, provides strong natural potential, and international investors have already demonstrated confidence by financing the first large wind farms.

The government recognized this vast potential and began one of the crucial investment projects in the country. A great majority of the projects so far have been developed in partnership with trusted foreign partners from the EU, Gulf, and other allied states, with the backing of institutions such as the EBRD and IFC. This mix of capital and expertise is on the path to make wind the most dynamic renewable segment in Serbia. To fully unlock its potential, Serbia now needs to accelerate contracting and permitting, ensuring that its ambitious 2030 targets are met, thus hoping on a train to modernization.

Key Wind Projects in Serbia – Current Achievements and the Road Ahead

Solar Power – Harnessing an Underutilized Resource

Serbia’s solar energy sector is still nascent, but it holds considerable promise. With average solar irradiation in many parts of the country (especially in the south and east) in the range of 4.0–4.5 kWh/m²/day, the resource is strong enough to support utility-scale deployment. Over the past few years, Serbia has moved from virtually zero solar capacity to over 172 MW utility scale plus growing rooftop and prosumer installations (109 MW). As of mid-2025, cumulative solar capacity in Serbia has reached 281 MW. That suggests the sector is gaining traction, but still has far to go if it is to fulfill its potential.

The government’s 2030 renewables vision (3.5 GW of wind + solar) places solar as a key pillar alongside wind. Big moves are underway: EPS is planning a 1,000 MW solar project, foreign developers (e.g., UGT Renewables + Hyundai) are signing MoUs for multiple plants, and auctions are now including solar segments. But the country needs to pick up the pace: faster contracting, clearer PPAs, grid upgrades, and better permitting processes are essential if solar is to transition from pilot stage to mainstream generation.

From a regional perspective, northern and central Serbia (Vojvodina plains, river valleys) appear to be especially favorable sites with low environmental conflict and a solid solar yield. Mapping by The Nature Conservancy suggests that placing 100 selected sites (each around 10 MW) on low-conflict land could generate around 1 GW of solar with modest land impact.

Key Solar Projects in Serbia for the Future

According to some studies, the potential is indeed significant. Within the framework of the project “Smart Planning for Sustainable Development – Mapping Solar Potentials of Serbia, the available capacity only at the best-rated locations amounts to approximately 75 GW, which is actually enough to provide about 3.4 times more electricity than Serbia consumes in total. Yet, current development represents only a small fraction of the theoretical solar potential cited in the study, serving as a gateway, while Serbia’s solar infrastructure still needs to be built out and expanded in the coming years.

Hydropower – Modernizing the Backbone of Serbian Power

Hydropower remains Serbia’s renewable backbone, supplying around 30% of electricity in a typical year (10,500 GWh). The core assets are the Đerdap complex (1,605 MW total) on the Danube and medium plants on the Drina and Lim rivers (1,390 MW), with Bajina Bašta (614 MW) as Serbia’s only pumped-storage facility.

Serbia’s installed capacity is 3,015 MW, but the usable hydro potential is about 17,000 GWh/year (1,940 MW equivalent). The discrepancy solves the fact that hydro plants do not run at full capacity all year. In practice, average output is closer to 1,200 MW (62% of potential).

Current priorities are modernization (e.g., Đerdap 1 overhaul in 2023, Bajina Bašta rehab in 2022) and planned new capacities: the Upper Drina cascade (Buk Bijela, Foča, Paunci), Bistrica PSP (680 MW), and the conceptual Đerdap 3 PSP (2,400 MW).

In short, Serbia can sustain hydro as a 30–40% share of electricity generation by modernizing, adding flexible storage, and cooperating regionally, while new renewables scale up around it.

Key Projects

Policy Proposals for Energy Resilience

Building on the above analysis, Serbia should pursue a comprehensive set of policies to achieve energy resilience through diversification. The following proposals target supply security, infrastructure, and market reforms across both fossil fuels and renewables:

• Building alternatives through infrastructure: Serbia should cut single-supplier risk by fully using the Bulgaria–Serbia interconnector, while finalizing the Serbia–North Macedonia (MG14) link and agreeing on a Serbia–Romania interconnector to tap Black Sea flows. In parallel, expand storage, finish Banatski Dvor to 750 mcm, launch Tilva (350–500 mcm), and secure cross-border storage, so the country reaches EU-style (90 days of cover). The near-term objective is to lock in at least 0.4 bcm/y of Azeri gas and 0.3–0.6 bcm/y of LNG, pushing Russia’s share below 50–60% mid-decade and under 40% post-2027.

  
  

• Oil diversification and NIS restructuring: Belgrade should secure multi-year crude frameworks with a basket of non-Russian suppliers (Iraq, Kazakhstan, plus Norway/UAE spot) and raise strategic stocks to the IEA 90-day standard by adding crude tanks at Pančevo/Novi Sad. Resolve the core vulnerability, ownership, via a phased acquisition of Russian stakes in NIS (temporary state bridge), followed by a transparent strategic sale to trusted partners (e.g., SOCAR, MOL, Total, Exxon) with EBRD/DFC support, anchoring Serbia’s oil sector within Western supply chains and governance. Also, the state should retain the “golden shares”.

  
  

• Expand renewables fast and transparency as the key factor: The government needs to hold regular auctions where investors can win clear contracts to build new plants, while also fixing the delays in connecting them to the grid. Several wind farms are already planned (Pupin, Kostolac, Čibuk 2, Vetrozelena, Crni Vrh, and the large Samos project), alongside a 1,000 MW solar program from EPS and many smaller solar plants on rooftops and businesses. Hydropower will remain the backbone, but existing plants like Đerdap and the Drina-Lim cascade must be modernized. For stability, Serbia should build new pumped-storage plants such as Bistrica and prepare for a larger project at Đerdap 3, which can act as “batteries” to store renewable energy.

  
  

• Careful Choice of Partners: Serbia should work with trusted Western partners, such as the EBRD, EIB, KfW, the EU (WBIF/IPA), and the US DFC and ExIm, as they bring not only capital but also quality, standards, and transparency. By relying on these institutions and allies, Serbia can secure financing for pipelines, storage, grid upgrades, and renewable energy projects at lower cost and with greater reliability.

  
  

• Governance and execution: Serbia needs a strong system to deliver its energy transition. A dedicated Energy Security Taskforce should track progress monthly and report through public dashboards. The regulator (AERS) must run fair auctions, set transparent tariffs, and ensure timely grid connections. All major projects, including the NIS restructuring, should have strict anti-corruption safeguards and international arbitration rules to attract investors. Finally, the government must explain the plan and the importance of the matter clearly to the public. Short-term costs will bring long-term security and help Serbia move closer to the EU.