The European Bank for Reconstruction and Development (EBRD) has approved a €300 million (US$321 million) financing package to help support Serbia’s electricity sector.

The funds will be channelled to national electricity utility Elektropriveda Srbije (EPS) to improve its liquidity position.

The project will support the government’s strategy to decarbonize the electricity sector, phase out coal by 2050, develop the regulatory framework for the launch of renewable energy auctions and incentivize their rollout, and ensure both energy security and sustainability of supply.

Energy minister Dubravka Djedovic and finance minister Sinisa Mali attended the signing of the loan and guarantee agreements in Belgrade. Signing on behalf of EBRD were Matteo Colangeli, director, regional head of the Western Balkans, and Grzegorz Zieliński, director, head of energy forEurope.

Djedovic comments: “In accordance with Serbia’s aspirations to achieve the decarbonization of the energy sector by 2050, Serbia's energy mix will have to gradually include an increasing share of energy from renewable sources. Achieving these goals is not possible without sustainable financing.”

The EBRD will also provide project-related technical cooperation to EPS, including support for the development of a decarbonization strategy and action plan; reforms to strengthen the company’s corporate governance and managerial capacity; implementation of climate-risk reporting in line with Task Force on Climate-Related Financial Disclosures (TCFD) recommendations; and programmes for corporate and human capital development, including retraining workers currently employed in the coal industry, promoting female talent, and attracting highly skilled employees.

Financing for technical cooperation projects is expected to be provided by international donors, multi-donor funds or the EBRD.

While large-scale hydro power plants provide about 30% of Serbia’s energy generation, intermittent renewables, such as wind and solar, make up less than 3% and have the potential to help the country develop substantial new, clean domestic energy supply.

Since 2020, the EBRD has been working with the Serbian authorities and industry stakeholders to develop renewable energy auctions through a sizeable technical assistance programme funded by the Swiss State Secretariat for Economic Affairs.

No part of the €300 million loan will be used for EPS’s existing coal assets. The financing will be provided in two tranches and will be guaranteed by the Ministry of Finance on behalf of the Serbian state.

To date, the EBRD has invested almost €8 billion in Serbia. In 2022 alone, it provided €650 million, of which more than three-quarters went to projects in the private sector.