An overview of energy developments across the region. For full analytical coverage — including project-level detail, regulatory tracking, and investment intelligence — subscribe to our Daily Briefings and Monthly Strategic Digest.
As EU accession funds become increasingly conditional on faster reform, Western Balkans governments are being pushed to make energy choices that are as much about geopolitical alignment as economics. Kosovo’s stalled government formation turned gas supply into an explicit political bargaining chip, while a regional heatwave pushed the whole of Southeast Europe deeper into thermal generation and import dependence, even as renewable capacity continues to expand.
Energy Policy and Regulatory Direction
Across the region, EU accession funding is increasingly being used as a lever to force faster reform, and the political cost of delay is becoming explicit. Bosnia and Herzegovina was warned that continued slow progress on environmental alignment could cost it more than 900 million EUR from the Growth Plan.
Kosovo’s protracted government formation has already resulted in a financial penalty from Brussels (being deprived of money from the Growth Plan), and energy policy has become a key bargaining chip among the parties needed to build a governing majority.
Montenegro, by contrast, remained broadly on track to unlock further EU support, illustrating how divergent political stability across the region is starting to translate directly into divergent access to reform financing.
This dynamic is most pronounced in Kosovo, where the choice between American LNG and continued reliance on coal has become entangled in the process of forming a new government. Washington continued pressure on Pristina to join a regional LNG initiative, framing cooperation as a precondition for future investment, while the outgoing Kosovo government has instead floated domestic coal gasification as a cheaper, faster alternative. Several of the parties needed to form a governing majority have made acceptance of the American gas project a condition of their support, turning what would elsewhere be a technical energy-mix decision into the central test of the country’s foreign alignment. With roughly 90% of Kosovo’s electricity still coming from two aging coal plants, the outcome of this political standoff will shape the country’s import dependence and its emissions trajectory for years to come.
This same choice between geopolitical alignments is being made in other countries. Bosnia and Herzegovina’s Republika Srpska continued to deepen its energy ties with Russia, with its energy minister traveling to Russia to discuss new gas supply arrangements and industrial cooperation, while the country’s Federation half pursued the EU-linked reform agenda. The divergence illustrates a fault line running through several Western Balkan states: national governments increasingly negotiate energy policy as two, sometimes contradictory, tracks rather than a single coherent strategy.
Infrastructure and Projects
Hydropower-rich countries are moving from planning to early execution of large pumped-storage projects meant to absorb the region’s growing solar and wind capacity.
Belgrade has agreed to begin sharing technical information with Bucharest on the potential development of RHE Đerdap 3, with preparatory works also due to start this year on a Bistrica.
Regional grid operators have explicitly cited both as the kind of flexible, dispatchable assets the Southeast European system will need to keep pace with variable renewable growth.
Cross-border gas infrastructure continued to advance within the set timeline. The interconnector linking North Macedonia to the Greek gas network, which will open a route to Mediterranean LNG supply and Caspian gas via the Trans-Adriatic Pipeline, reported that the vast majority of land acquisition and pipeline-laying milestones had already been met, with completion still targeted for next year.
Battery storage is emerging throughout the region. Croatia is finalizing new legislation that will this autumn, for the first time, set out how standalone battery projects are charged for grid access, a gap regulators across the region have identified as one of the biggest barriers to battery storage investment.
Similar projects are moving forward in Serbia, and in Bosnia and Herzegovina’s Republika Srpska, where authorities have put land up for tender specifically requiring a combined solar-and-storage development. The common thread is that storage is shifting from policy discussions to bankable projects, even as the grid connection queues remain backlogged.
Despite this build-out of new capacity, several of the region’s legacy coal power plants remain in serious financial difficulty, complicating the transition math.
Montenegro’s state power utility disclosed its worst financial result in this century, a loss of 92 million EUR, compounded by a governance standoff that has repeatedly delayed the shareholders’ meeting.
In Republika Srpska, a recent change of ownership at a mining and coal-fired plant “Ugljevik” has not resolved the economics, with the operator’s own business plan projecting losses over the next two years.
These cases underline a pattern across the region: state utilities are expected to fund both a just transition for coal workers and new investment in flexibility and renewables, without adequate financial support for implementation.
Energy Markets, Prices, and Investment Climate
Cross-border electricity trade across Southeast Europe weakened even as consumption surged, forcing countries to rely more heavily on domestic thermal generation; coal, gas, and lignite output rose sharply to fill the gap. Serbia briefly swung from net exporter to net importer, while Croatia’s summer import dependence continues to run close to half of total consumption, a level regulators and industry groups increasingly describe as a structural rather than seasonal problem.
The investment bottleneck is no longer interest – but grid capacity. Serbia alone has a 18 GW backlog of connection requests spanning both transmission (12 GW) and distribution networks (6 GW). Developers in dialogue with Belgrade span a broad mix of regional and international investors in renewable energy, underscoring that capital is available; what is scarce is bankable grid capacity to absorb it.
A sharp jump in global oil prices this month, driven by renewed tensions in the Middle East, moved through the region’s fuel pumps within days, from Tirana to Belgrade to Pristina, prompting a scramble of government responses.
Serbia extended its export restrictions on crude and fuel products while simultaneously cutting excise duties to cushion consumers, Albania’s authorities suspended their own price-monitoring mechanism just as prices began climbing again, and several governments now face the same dilemma: to absorb the shock through the budget, or pass it through to consumers already contending with elevated inflation.
This is a reminder that despite the renewable energy build-out, the region’s transport and heating sectors remain acutely exposed to global oil price swings that are completely outside its control.
EU and Global Context
Brussels is preparing to unveil a new electrification strategy this month aimed at cutting EU oil and gas consumption by 2040, a signal that accession candidates will face a rising bar for decarbonization even as they struggle with today’s basics.
Nuclear power continued its resurgence, with Slovakia on track to become the world’s most nuclear-reliant electricity system, a contrast to the Western Balkans, where nuclear ambition remains at the stage of training the first generation of engineers.
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