Coal in Serbia is primarily an electricity-security issue. The country does not operate a large export-oriented mining industry, and its coal has limited value in international markets. Instead, low-grade lignite from the Kolubara and Kostolac basins is transported directly to nearby thermal power plants that supply much of Serbia’s electricity.
This integrated system has supported domestic generation and reduced dependence on imported fuel. It has also created a difficult transition. Serbia cannot substantially reduce lignite mining without replacing the power plants that consume it, strengthening the grid and adding enough reliable generation to meet demand during winter and periods of low hydropower output.
Coal therefore remains both the foundation of the existing power system and the largest obstacle to its decarbonisation.
Kolubara Connects Mining Directly to Serbia’s Largest Power Plants
The Kolubara Basin, southwest of Belgrade, is the centre of Serbian lignite production. Large open-cast mines supply the Nikola Tesla thermal power plants near Obrenovac, which form the country’s most important electricity-generating complex.
Coal from Kolubara is moved through a dedicated system of conveyors, processing facilities and railway deliveries. The close relationship between mine and power station means that fuel quality and mining performance directly affect electricity production. The system cannot easily replace domestic lignite with imported coal because the plants were designed around the characteristics of the local fuel.
Kolubara lignite has a relatively low calorific value and can contain high levels of moisture, ash and other unwanted material. Mining operations must therefore remove large volumes of overburden and manage coal quality before the fuel reaches a power plant. Selective extraction and homogenisation are important because inconsistent coal can reduce plant efficiency or disrupt boilers and coal-handling equipment.
Several mining fields have been developed over time as older areas approach depletion. Serbia’s energy strategy identifies further investment in replacement capacity, including Field E and Radljevo. These projects are intended to maintain fuel supply while the electricity system gradually moves toward greater use of renewable energy.
The Kolubara region is also economically dependent on mining. Elektroprivreda Srbije, or EPS, and its contractors support thousands of workers in extraction, maintenance, transport and power generation. This makes the pace of change a regional employment question as well as an energy-policy decision.
Kostolac B3 Extends the Life of Serbia’s Lignite System
Serbia’s second major lignite centre is the Kostolac Basin in the east of the country. The Drmno open-cast mine supplies the Kostolac thermal power complex, which is operated by EPS.
The addition of the 350 MW Kostolac B3 unit has given this part of the coal system a larger role. The unit was transferred to EPS in December 2024 and progressed through trial and commissioning activity during 2025. Built with Chinese financing and engineering involvement, it represents one of Europe’s most recent additions of new lignite-fired capacity.
Kostolac B3 was developed to provide additional domestic generation and replace part of the output lost as older units become less reliable or leave service. Its operation requires sufficient production from the Drmno mine, where investment has been directed toward increasing extraction capacity and preparing new mining areas.
The project shows the tension within Serbia’s energy policy. The country is expanding wind and solar generation and has adopted long-term decarbonisation plans, but it has also invested in a new lignite unit designed to operate for decades. The government’s position is that electricity security cannot depend on renewable capacity alone until additional storage, balancing resources and grid infrastructure are available.
Kostolac B3 may strengthen short-term supply, but it also increases the importance of emissions compliance and raises the risk that a large thermal asset could become increasingly expensive under future carbon-pricing rules.
Coal Quality and Plant Reliability Are Closely Connected
Serbia’s dependence on lignite became especially visible during the electricity crisis of late 2021 and 2022. Problems involving wet, low-quality coal, mining conditions and equipment failures contributed to major interruptions at the Nikola Tesla power plants. EPS had to increase electricity and coal imports at a time of high European energy prices.
The disruption demonstrated that a domestic resource does not automatically guarantee secure electricity. Reliable coal generation requires advance removal of overburden, stable mine faces, adequate stockpiles, maintained transport systems and power plants capable of handling variable fuel quality.
EPS has since invested in mine operations, plant maintenance and environmental equipment. Serbia’s energy strategy also calls for selective extraction and improved coal homogenisation in Kolubara. These measures are intended to provide fuel with more consistent characteristics and reduce stress on generating units.
However, much of Serbia’s coal fleet is old. Several units at Nikola Tesla and other thermal plants were built during the Yugoslav period and require continuing reconstruction. Spending on maintenance can extend their useful lives, but it cannot remove the long-term challenge of replacing aging capacity.
This is why Serbia’s coal transition cannot be judged only by mine reserves. The condition of the power stations, transmission system and replacement generation will determine how quickly lignite use can fall without creating new reliability risks.
Pollution Rules Are Increasing the Cost of Coal Generation
Serbian lignite produces substantial carbon dioxide emissions and has historically been associated with high sulphur dioxide, particulate and nitrogen oxide emissions. Thermal plants also create large quantities of ash that must be stored and managed.
EPS has installed or developed flue-gas desulphurisation systems and other pollution-control equipment at major generating sites. These investments can sharply reduce local air pollutants when fully operational, but they increase the cost and complexity of maintaining older plants.
Serbia is a member of the Energy Community and is gradually aligning its energy market and environmental framework with European Union rules. This creates pressure to comply with limits on power-plant emissions and to introduce a domestic carbon-pricing system compatible with the EU Emissions Trading System.
The EU Carbon Border Adjustment Mechanism also matters because electricity exported from Serbia to the EU may face carbon-related costs. Coal-intensive electricity can therefore become less competitive even before Serbia joins the EU carbon market directly.
Industrial exports are affected as well. Serbian producers of steel, cement, aluminium and fertiliser may face higher costs when the carbon intensity of the electricity they consume is included in the calculation of their products’ emissions. Coal policy is consequently linked to the competitiveness of the wider economy.
Serbia Plans to Reduce Coal Without Setting an Immediate Exit
Serbia’s Energy Sector Development Strategy to 2040 does not propose an abrupt closure of coal mining and thermal generation. It places energy security ahead of a fixed early phase-out date and allows some coal units to operate at lower output or remain available as reserve capacity.
At the same time, the strategy projects a major change in the electricity mix. Renewable energy is expected to account for approximately 45% of electricity production in 2030 and 73% in 2040. Wind and solar capacity would rise substantially, supported by hydropower, pumped storage, batteries and stronger regional connections.
Under the transition scenario, demand for brown coal and dry lignite is expected to fall to around half its 2021 level by 2040. Coal use in households, public buildings, private facilities and district-heating systems is intended to end after 2040. The remaining role would be concentrated in electricity security and reserve generation.
Achieving that reduction will require more than renewable-energy construction. Serbia must add balancing capacity, improve transmission and distribution networks, develop electricity storage and manage periods when wind, solar and hydropower output are limited. Energy efficiency will also be important because reducing demand can lower the amount of replacement generation required.
Mining Regions Will Determine the Pace of the Transition
The closure or contraction of coal mines would have concentrated effects in Kolubara, Kostolac and other mining communities. Employment, municipal revenue and local businesses are closely connected to EPS operations.
Serbia adopted a just energy transition plan to begin preparing affected regions for economic change. The process includes workforce training, social planning and the development of alternative industries. The scale of the task will depend on how quickly coal production declines and whether new investment reaches mining municipalities before employment begins to fall.
Mine sites may also create opportunities for redevelopment. Reclaimed land, grid connections and former industrial areas could support solar power, energy storage, manufacturing or other economic uses. These projects would need to be planned alongside mining operations rather than after closure.
For now, Serbia continues to invest in replacement mine areas and coal-related infrastructure because its thermal plants remain essential to the grid. The transition will therefore involve a long period in which lignite production and renewable development operate at the same time.
Serbia’s coal use will decline only as replacement power becomes dependable. The decisive issues will be the speed of renewable construction, the availability of storage and balancing resources, the reliability of aging thermal units and the ability of mining regions to build new sources of employment. Until those elements are in place, domestic lignite will remain central to the country’s electricity system.
