EPS: CBAM Strips 600 Megawatts From Power Exchange
Serbian Association of Energy Engineers report: the EU's CBAM carbon tax has cost EPS about 600 megawatts of exchange supply since January, and major projects have overrun budgets by up to 85 percent.
The EU’s Carbon Border Adjustment Mechanism, known as CBAM, has stripped about 600 megawatts of supply from Serbian state power utility EPS’s offering on the electricity exchange since the mechanism took effect on January 1, 2026. That is one of the findings of the report “Electric Power Industry of the Republic of Serbia 2025,” presented by the Association of Energy Engineers of Serbia on September 3 at the Palace of Science.
“CBAM did not just bring a worse price, it took away about 600 MW of supply on the exchange,” the report’s conclusions state. Since the start of the year, the EU mechanism has imposed a mandatory charge on carbon dioxide emissions for goods imported into the Union’s market that rely on coal, and EPS still gets most of its output from lignite fired power plants.
Output Stable Over the Long Run, but the 2022 Crisis Not Forgotten
The report, presented by professor Nikola Rajakovic, PhD, and Ilija Batas Bjelic, PhD, shows that Serbia’s total electricity output has generally held stable over the past decade and more, ranging between 33 and 38 terawatt hours a year. The highest figure was recorded in 2016, at 36.8 terawatt hours, and the lowest in 2022, at 31.1 terawatt hours, when EPS was hit by a crisis driven by poor management, poor coal quality and equipment failures. By 2023, output had already recovered to 37.7 terawatt hours. Consumption over the same period has stayed within a narrower range, between 34 and 35 terawatt hours a year.
The generation mix in 2025 remains dominated by lignite, at around 70%. Hydropower plants, whose output depends on hydrological conditions, account for about 26%, wind power has reached a share of 3.8% (as recently as 2017 wind was practically absent from the mix), while solar power remains marginal but has posted significant growth for a second year running.
“The bill has started coming due for a delayed or failed transition,” Rajakovic said, summing up the report right at the start of the presentation.
”EPS Is in a Bad Situation”
Batas Bjelic was more direct in his assessment of the company that supplies electricity to most of Serbia.
“EPS is in a bad situation, and if it is in a bad situation, then so are Elektromreza Srbije and Elektrodistribucija Srbije, which depend on it”
the report’s author said at the presentation at the Palace of Science. According to the report, EPS’s biggest hopes currently rest on opening the Radljevo coal mine, which should reduce or eliminate the need for coal imports. The report also points to a problem in that the generation mix is not developing in step with changing consumption patterns, in which summer peaks tied to air conditioning use are becoming as pronounced as winter ones.
“We still aren’t trying to get rid of coal, we’re taking the path of least resistance and importing coal from abroad,” Batas Bjelic said, adding that Serbia’s domestic carbon dioxide tax of four euros per ton remains about twenty times below the market value of that levy in the European Union.
Project Costs Overrun Plans by Up to 85%
The section of the report dealing with major investment projects shows that energy costs, much like in other parts of the economy, have generally run above their original budgets:
- the Bistrica pumped storage hydropower plant cost 15% more than announced
- the Kostolac B3 unit exceeded its budget by 18%
- the Djerdap 3 pumped storage hydropower plant cost as much as 85% more
“We can see the state has been borrowing quite a lot, but we can also see that lessons from the financial sector need to be applied to energy,” Batas Bjelic said. According to the report, investment across the entire energy sector, from electricity to the oil and gas industry and heating, will need to reach between 15 and 20 billion euros by 2030, since this decade, it states, is decisive for achieving a decarbonized energy mix by 2050.
On nuclear energy, often raised in public debate as a solution, energy expert Zeljko Markovic said in the discussion following the presentation that Serbia could, at best, expect to start producing nuclear energy only around 2040. The Association of Energy Engineers’ position is that nuclear power can serve as a backup option, but that the focus should stay on domestic resources: water, wind, sun, biomass and waste, along with energy storage and green hydrogen.
No Oversight Through Parliament, Institutions’ Representatives Absent
The report’s authors also warn of a problem with the availability of data from energy companies. “The untimely publication of a reduced volume of data points to a wish to partly hide it. Presenting losses without technical studies undermines the credibility of EMS, EDS, the Energy Agency and the Ministry of Mining and Energy. An urgent expert review is needed,” the report concludes.
At the presentation itself, Batas Bjelic went a step further, arguing that oversight of the sector is lacking even at the highest level.
“We are also missing expert oversight through the National Assembly. We have a situation where one player has a below market price, but ends up making a serious profit”
he said, explaining that state owned energy companies need better control over how funds are spent.
No representatives of the Ministry of Mining and Energy, EPS or Elektromreza Srbije, the transmission system operator, attended the report’s presentation at the Palace of Science. In the discussion that followed, Goran Djukic, head of the Energy Committee of Srbija Centar, focused his assessment on staffing decisions in the sector: “Quackery and quasi energy expertise have brought us to where we are. I have no wish to be the governor of the National Bank of Serbia, but economists like to dabble in energy, so we’ve had energy ministers with no connection to energy. We need to put the profession back in the hands of professionals,” Djukic said.
The report on the power sector comes a month after we wrote about a 2.3% drop in industrial output in July, another sign that the domestic economy is heading into autumn with a slowdown on multiple fronts, from factories to the energy sector that supplies them.
