Battery storage can effectively capture short-term market volatility, but south-east Europe still faces a significant shortage of long-duration flexibility. This is why pumped-storage hydropower projects such as Đerdap 3, Čebren and Bistrica are returning to the centre of regional energy and trading discussions. These facilities are far more than grid-security investments. They have the potential to become powerful trading assets capable of arbitraging multi-hour and multi-day price spreads, firming renewable generation portfolios and reducing exposure during periods of weak renewable output.
The need for such infrastructure is becoming increasingly evident. Power systems across south-east Europe remain vulnerable to hydrological conditions, coal plant availability, import dependence and transmission constraints. While solar capacity is expanding rapidly throughout the region, solar-dominated systems require storage solutions that extend beyond the midday-to-evening balancing cycle. Wind generation can fluctuate for several consecutive days, while dry years can significantly increase reliance on imports. In this environment, pumped-storage hydropower provides a deeper and more resilient flexibility layer than conventional lithium-ion battery systems.
Serbia’s Đerdap 3 is widely regarded as the most strategically positioned project in the region. Located on the Danube upstream from Đerdap 1, it would be integrated into one of the Balkans’ most important hydroelectric corridors. Romania has been evaluating the project, and unofficial discussions have included possible participation by Hidroelectrica. A storage facility at this location could have a substantial impact on power price spreads and trading opportunities between Serbia, Romania, Hungary and Bulgaria.
North Macedonia’s Čebren project is equally significant within a smaller national market. With proposed capacity ranging from 333 MW to 458 MW and annual electricity generation estimated at 1–1.2 TWh, the facility could help transform the country from a market primarily exposed to imports into a provider of regional flexibility services. Serbia’s Bistrica project, which includes planned reversible turbine units, would further strengthen the region’s growing flexibility portfolio.
For energy traders, pumped-storage assets create multiple revenue streams. They can purchase electricity during low-price periods and sell during peak-price hours, provide balancing services, hedge renewable generation underperformance, support capacity adequacy requirements and offer firming products for long-term PPAs. In addition, they benefit from significantly longer operational lifetimes and much greater storage depth than most battery technologies currently deployed in the market.
The main obstacle remains financing and project execution. Pumped-storage developments require complex permitting procedures, water-use approvals, extensive civil engineering works and long investment payback periods. Nevertheless, the market case is becoming increasingly difficult to ignore. South-east Europe’s renewable expansion will eventually face limitations unless sufficient long-duration storage capacity is introduced. For regional trading desks, pumped hydro is likely to become one of the most valuable flexibility assets in the coming energy transition.