Coal generation in South-East Europe shifts to “managed decline” as utilisation stays weak

Coal-fired power still underpins reliability in South-East Europe, but its future is increasingly shaped by structural decline rather than a rebound. For investors and operators, the key question is no longer whether coal can compete on day-to-day economics, but how long it can remain useful within a shrinking operating footprint.

Week 16 output near multi-month lows

In week 16, coal generation in the region totaled 4,477 MW. That was a modest week-on-week increase, yet it stayed close to the lowest levels recorded since mid-2025. The improvement came alongside better short-term revenues—supported by higher power prices and relatively stable fuel costs—but overall utilisation remained subdued.

Serbia leads, while other markets drag

Serbia was the largest contributor to regional coal output, accounting for roughly 38–40% of generation. During the week, Serbian production rose by 292 MW. However, declines in other markets—including Slovenia and Montenegro—offset those gains, keeping the broader regional trend negative.

Year-on-year decline points to structural drivers

The downward trajectory is clearer in year-on-year terms: coal generation across South-East Europe was 673 MW lower than in the same period of 2025. The source attributes this to a mix of factors, including increased renewable penetration, environmental constraints and shifting market dynamics.

Baseload value remains, but competitiveness erodes

Coal plants continue to provide baseload power and system stability, particularly when renewable output is low. But their role is increasingly confined to specific operating windows rather than sustained running. Rising carbon costs are also weighing on long-term economics; EUA prices were cited at €74.9/t, further eroding coal’s competitiveness.

Operators move toward managed decline

The idea of “managed decline” is gaining traction as operators aim to maximise remaining value while preparing for eventual phase-out. That approach includes optimising maintenance schedules, reducing operating hours and exploring options such as conversion or repurposing.

Reliability challenge for policymakers

For policymakers and system operators, the central challenge is balancing reliable electricity supply with environmental targets. The source notes that in the absence of sufficient flexible capacity, coal plants are likely to stay in the system longer than expected—though with declining utilisation—meaning planning decisions will need to account for both reliability needs and tightening emissions economics.