Serbia’s Wind Sector Faces Balancing and Forecasting Challenges as Capacity Expands

Serbia has shown that utility-scale wind projects can be built, financed and connected. With the inauguration of Čibuk 2 in September 2026, the focus is increasingly on managing wind output after it enters the electricity market.

Čibuk 2 added 154 MW to the existing 158 MW Čibuk 1, creating a 312 MW wind complex in South Banat. Together, the projects represent more than €500 million of investment.

Serbia’s wider renewable auction programme has also mobilised significant investment. The European Bank for Reconstruction and Development (EBRD) says the first two competitive auctions allocated nearly 1,300 MW of wind and solar projects, including the Pupin and Čibuk 2 wind farms.

Forecasting and balancing exposure

For the first generation of Serbian wind projects, the main hurdles were permitting, financing and grid connection. As development continues, exposure to operational market risks is becoming more important. Wind output must be forecast before delivery, and the balancing responsible party bears the difference between nominated and actual positions under the applicable market rules.

Elektromreža Srbije (EMS) reports an average upward balancing-energy price used for specified risk and settlement calculations of €154.174/MWh for 2026, compared with €136.523/MWh in 2025. That figure is not the automatic imbalance cost for every wind farm, but forecast deviations can have material economic effects.

A project can produce exactly the annual volume assumed in its financing case and still face substantial balancing costs if actual hourly output repeatedly differs from its nominated schedule. In that situation, annual MWh may meet expectations while net cash flow falls short. Forecasting is therefore a commercial function, with weather predictions, turbine-level production models, real-time SCADA data and intraday trading capability all affecting revenue.

The closer traders can bring contracted positions into line with actual output before gate closure, the smaller the remaining imbalance exposure is likely to be. Managing several renewable assets in a portfolio can also reduce forecast error when deviations offset one another. That benefit, however, depends on the assets’ physical correlation.

Contracts, portfolios and settlement

Wind farms in the same meteorological region can deviate in the same direction at the same time. Serbia’s concentration of significant capacity in Vojvodina makes this a particularly relevant consideration. Balancing responsibility should therefore be assessed at contract level, including for power purchase agreements (PPAs).

Key contract questions include who submits nominations, who owns the forecasting model and who is authorised to trade intraday. Agreements should also specify who pays when measured output differs from the nominated position and how balancing costs are divided between the generator and trader. These terms can materially alter the economics of otherwise similar PPAs.

Transparency is especially important when a third-party trader or balancing responsible party controls settlement. Wind farm owners should be able to trace the process from forecast and nomination through measured output to balancing settlement. Without that visibility, imbalance can become a commercial cost that is difficult to audit.

Flexibility and financing considerations

EMS procures ancillary services and operates balancing arrangements that include frequency-related reserves and balancing activation, as detailed on the EMS website. For wind projects paired with storage, flexible portfolios or capable aggregators, the longer-term opportunity is to move from creating balancing requirements to supplying some of the flexibility needed to manage them.

That would require technical qualification, control systems and clear market rules. It also calls for a different approach to financing: balancing costs should no longer be treated as a minor, generic operating assumption. Lenders should review historical forecast-error distributions, trading arrangements, the quality of the forecasting provider and the contractual allocation of imbalance costs.

Lenders should also stress-test periods when adverse factors coincide. A wind farm could produce less than forecast while upward balancing energy is expensive; unexpectedly high output could instead arrive during a regional surplus period when prices are weak. The risk is asymmetric.

Market integration is increasingly important alongside generation. Serbia has demonstrated that wind can attract international investors and non-recourse financing. The next competitive advantage will come from operating these assets efficiently in a more liquid, volatile and increasingly regional electricity market: the challenge is to turn variable production into predictable cash flow.