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Qabil Ashirov

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The gas-fired power plant that Azerbaijan plans to build in the Serbian city of Nis could become an important element of the country’s evolving energy system, with the €600 million project designed to generate 350 megawatts of electricity alongside 150 megawatts of heat from a total capacity of 500 megawatts. Beyond adding new generation capacity, the plant is significant because it would strengthen the reliability and flexibility of Serbia’s wider energy network at a time when the country is seeking to diversify its energy sources and reduce vulnerabilities in its electricity supply.

The project also gives Azerbaijan and SOCAR a role that extends well beyond simply supplying natural gas to the Serbian market. By participating directly in electricity generation, SOCAR would move further downstream into Serbia’s energy sector, creating a model in which Azerbaijani gas is not only exported as a commodity but is also used to generate electricity and heat within the country. That gives Baku a broader commercial stake in Serbia’s energy infrastructure while deepening the strategic dimension of the two countries’ growing energy relationship.

The governments of Azerbaijan and Serbia signed an agreement on the project in February, while SOCAR and Serbia’s state-owned electricity company EPS have since reached an agreement on the key principles governing the plant’s construction, development and operation. The final agreement is now being prepared, marking another step toward turning the project from a bilateral energy commitment into a long-term infrastructure investment that could expand Azerbaijan’s role in Serbia’s energy market.

As we know, SOCAR was known for many years only for the extraction and sale of oil and gas. Now this company cannot be called an ordinary oil company. SOCAR is now operating in all segments of oil and gas that can create added value. This enterprise, which will be built in the city of Niš, will add a new level to SOCAR's activities - electricity production.

Regarding the capacity of the enterprise, we should note that if it operates at full capacity, it will produce 350 megawatts of electricity, which means 3.1 terawatt-hours of electricity per year. Considering that Serbia's annual electricity consumption is about 30 terawatt-hours, we can say that the power plant in the city of Niš will meet about 10 percent of the country's needs.

As we mentioned earlier, this plant will also produce 150 megawatts of heat in addition to electricity. In more detail, the water used to produce electricity will not be wasted and will be used by homes and other enterprises. According to calculations, 150 megawatts of heat is equivalent to approximately 1.3 terawatt-hours of thermal energy, which will be able to benefit thousands of homes or enterprises.

All this will significantly increase Azerbaijan's position in both Serbia and Europe, indirectly through SOCAR. As we have already mentioned, SOCAR will no longer be just a Serbian gas exporting company, but will convert the gas it transports to Europe into electricity and heat, creating added value.

Considering that this plant to be built or new gas-fired power plants to be built in the future, will operate on gas imported from Azerbaijan, this will significantly strengthen Azerbaijan's position in both the Balkans and Europe. As is known, Serbia is an important partner of Azerbaijan in the Balkans, and Azerbaijan currently exports gas to 16 countries, 13 of which are in Europe. As a result of Russia's withdrawal from the European market and the tensions in the Middle East, Azerbaijan is becoming a reliable gas supplier to Europe, and the number of these countries is increasing year by year. Against the background of all this, Serbia's importance for Azerbaijan is increasing.

The Nis power plant also points to a broader shift in Azerbaijan’s approach to the European market. Europe, increasingly viewed by Baku as a premium and strategically important market, is no longer simply a destination for Azerbaijani exports. Instead, Azerbaijan is seeking to build longer-term commercial relationships by moving further into European energy infrastructure and creating investments that can anchor its presence in the region for decades.

That strategy is particularly visible in SOCAR’s expansion beyond the traditional gas-supply business. The company has been developing power-generation assets for years, including the Central Anatolia Combined-Cycle Gas Turbine Power Plant in Türkiye and the Petkim RES project, while energy infrastructure in Azerbaijan’s liberated territories has also become an important part of the country’s expanding generation portfolio. The Nis project therefore represents less of a departure than the next step in an existing strategy, which means Azerbaijan is increasingly seeking to capture value by participating directly in the infrastructure that produces and distributes it.

If completed as planned, the Nis plant would mark SOCAR’s first power-generation project in Europe and could provide a template for further expansion. The significance of the project, therefore, extends beyond its 500-megawatt capacity or its €600 million price tag. It could serve as an entry point for SOCAR into Europe’s power-generation market, creating opportunities for similar investments in other countries and reinforcing Azerbaijan’s ambitions to become a longer-term energy partner rather than simply another supplier to the continent.