Bosnia’s ERS faces financial strain as small-scale solar surges and generation misses targets

ERS, the utility company in Bosnia and Herzegovina, is seeing its power system reshaped by a fast-growing base of small-scale solar. The number of connected solar installations has reached around 2,200 units, and nearly 1,900 new systems were added to the distribution network over the past year—pushing total installed solar capacity beyond 450 MW.

For investors and market participants, the key development is not only the pace of renewable integration but also how it is interacting with an underperforming generation backdrop and mounting financial pressure. Even as solar expands, ERS reported that total electricity production in 2025 came in below expectations.

Renewables rise while 2025 generation falls short

Total production reached 4,366 GWh in 2025, which was 143 GWh under the planned level. Output from both coal-fired power plants and hydropower facilities declined versus projections: coal generation fell by 2.8%, while hydropower output was down 3.48% compared with expected figures.

At the same time, ERS said the distribution network delivered historically low losses of 8.54%, pointing to improved efficiency on the wires even as supply performance lagged. The contrast underscores a system that is getting better at delivering electricity but still struggling to meet production targets.

Regulated supply deficit driven by low prices

ERS also highlighted structural challenges in consumption and procurement. Customers used a total of 3,831 GWh, split between public supply and market-based procurement.

The regulated supply segment generated an estimated financial deficit of around €30 million, which materially contributed to ERS’s overall negative financial result. Company executives linked the losses to low electricity prices—described as among the lowest in Europe and in the region—and said tariff alignment with neighboring markets could have changed the outcome.

In their assessment, selling electricity at price levels similar to utilities such as EPBiH or Serbia’s EPS would have produced substantial profits rather than deficits.

Hydrology adds another layer of losses; 2026 targets uncertain

Financial pressures were further intensified by unfavorable hydrological conditions. ERS estimated an additional annual loss of around €28 million tied to water-related constraints.

Looking ahead to 2026, ERS officials expect that production targets may also remain unmet. They cited reduced output from the Ugljevik thermal power plant as one factor, while noting that improved water inflows could partially offset some of the shortfall.

Drina hydropower plans under review alongside solar growth

Despite near-term uncertainties in generation performance and profitability, ERS indicated that long-term development plans are still being considered. There is interest in constructing three hydropower plants on the Drina River—Rogatica (113 MW), Tegare (112 MW), and Dubravica (87 MW).

A potential ownership structure discussed includes majority participation by EPS, with stakes held by ERS and a partner from the Federation of Bosnia and Herzegovina. The proposed setup points to a possible cross-border cooperation model for future hydropower development as Bosnia’s generation mix evolves alongside rapid small-scale solar expansion.