Serbian News: Serbia will strengthen energy security thanks to Azerbaijan's investments

The joint project with Azerbaijan to build a gas-fired power plant in Serbia fits into Belgrade's broader strategy of ensuring energy security and diversifying energy sources.

As reported by BAKU.WS with reference to Report, this is stated in an article by the Serbian publication Serbian News.

"The project to build a new gas-fired power plant with the support of Azerbaijani capital indicates a notable shift in the investment landscape of Serbia's energy sector amid growing electricity demand, EU pressure for decarbonization, and the need to modernize energy infrastructure," the publication writes.

It is noted that historically, Serbia's electricity system has largely relied on lignite-based generation, mainly managed by the state-owned company Elektroprivreda Srbije (EPS), with additional support from hydropower and limited gas capacity. Although this model long provided price stability, it has gradually lost its effectiveness under modern market realities and environmental standards. Aging coal infrastructure, rising carbon costs, instability in regional energy markets, and increasingly frequent disruptions have led to a structural supply deficit, especially during winter peaks and drought years.

"Under these conditions, gas generation is once again being considered as a key tool for stabilizing the energy system, rather than just as a supplementary energy source. Azerbaijan's participation in this process is part of Serbia's broader policy of diversifying gas supplies and reducing dependence on traditional sources. In recent years, Belgrade has actively invested in developing new gas interconnectors, expanding storage capacity, and concluding long-term gas supply contracts," the article states.

It is emphasized that Azerbaijan's participation, which already plays an important role in gas supplies to Europe through the Southern Gas Corridor, takes bilateral cooperation to a new level - from fuel supplies to direct participation in electricity production. This provides Serbia with a higher level of energy resilience and reduces dependence on traditional energy partners.

The relevance of the project, according to the article, is also driven by the steady growth in electricity consumption caused by industrial development, digitalization of the economy, and construction of data centers. "Despite the growing share of renewable energy sources, their instability and complexity of integration into the energy system require the availability of flexible generating capacity. A gas-fired power plant will allow rapid response to changes in demand and ensure stable operation of the energy system," notes Serbian News.

From a financial perspective, the project is expected to be implemented using a hybrid financing structure combining equity from Azerbaijani investors and long-term loans from regional and international financial institutions. At the same time, the key factor in attracting financing will be the availability of long-term power purchase agreements or state support mechanisms that ensure revenue stability.

"The geopolitical significance of the project is also substantial. The expansion of Azerbaijan's presence in the energy sector of Southeastern Europe corresponds to Baku's strategy of strengthening its role as a reliable energy partner for countries in the region. For Serbia, this cooperation opens additional opportunities for diversifying energy supplies and strengthening energy independence," the article states.

It is noted that the new gas-fired power plant will also improve the integration of renewable energy sources, increase the reliability of energy supply for industry, and reduce the risks of disruptions and price instability. This is especially important for energy-intensive industries and high-tech manufacturing, which require stable electricity supplies.

As a reminder, Azerbaijan and Serbia concluded an agreement the day before to build a gas-fired power plant near the city of Niš with a capacity of 350 MW of electrical and 150 MW of thermal energy. The document was signed during the visit of President of Azerbaijan Ilham Aliyev to Serbia.