Overview
Electric power generation is a key sector of economic activity in BiH. Electric power is primarily generated in coal-fired thermal and large-scale hydro power plants, and the country is a net exporter of electrical energy. The generating capacity is about 17,000 GWh. BiH historically had a comparative advantage in electricity, particularly because of its natural hydropower resources and coal reserves. However, as the EU looks to implement a carbon border tax and phase out financing for new fossil fuel projects, BiH needs to develop a strategic plan to transition away from coal. BiH is in the process of finalizing a National Energy Climate Plan (NECP) to address energy efficiency, renewables, greenhouse gas emissions reductions, new interconnections, and research and innovation. An approved NECP with a clearly laid out decarbonization strategy is also a prerequisite for BiH to secure further access to international and EU financing in the energy sector. In the long run, the World Bank estimates that BiH’s energy sector would require more than $6 billion in investment for modernization, life extension, and new generation facilities for the power generation and coal mines sectors.
BiH country has significant reserves of brown coal and lignite. The official estimates on total reserves of coal in BiH are around 5 billion metric tons, out of which the exploitation reserves are estimated to be around 2 billion metric tons. Reserves of iron ore deposits are estimated at 653 million metric tons; zinc and lead at 56 million metric tons; and bauxite at 120 million metric tons. There are two aluminum and aluminum oxide processing plants situated near bauxite mining operations. Annual coal production is approximately 13 million metric tons, both via open pits and casts. In recent years, coal production has lagged, and some thermal power plants have turned to coal imports in order to maintain output.
BiH has significant renewable energy potential, particularly in hydropower and wind power capacity. Hydropower provided 29 percent of the country’s total electricity production in 2024 and there is room for additional growth. Recently, solar and wind power plants have emerged but remain a small percentage of the overall energy mix at about 6 percent. According to a study conducted by the German government, BiH could generate up to 2000 MW of wind energy per year, primarily in the areas of Livno, Tomislavgrad, Mostar, and Trebinje. This nascent industry still faces several regulatory and financial challenges.
After the 1992-1995 war, the once-unified power generation system in BiH was divided into three vertically integrated companies split along geographic/ethnic lines. The three government-owned electric power generation and distribution companies are:Elektroprivreda BiH (EPBiH), Elektroprivreda Republike Srpske (ERS), and Elektroprivreda Hrvatske Zajednice Herceg Bosna (EPHZHB). The companies were created along ethnic/geographic lines rather than for technical reasons, and there are significant generation disparities between them:
Table: 2024 BiH Electricity Generation Mix
| Energy Type | Hydro | Thermal | Wind |
|---|---|---|---|
| EPBiH | 20 percent | 80 percent | 2 percent |
| EPHZHB | 89 percent | 0 percent | 11 percent |
| EPRS | 29 percent | 71 percent | 0 percent |
Although BiH has taken significant steps toward the liberalization of the electricity market, including establishing an independent regulator and competitive market processes, the internal electricity market is not yet fully transparent and ready to join the regional electricity market. BiH has also been slow to implement reforms to make the power sector more attractive, efficient, transparent, independently regulated, and free from corruption, or address structural issues such as extensive permit and contract processes, antiquated incentive systems, and inadequacies in the transmission system. A new BiH electricity law that would set up a power exchange and enable market coupling as one of the preconditions for BiH to secure an exemption from the full effects of the EU’s Carbon Border Adjustment Mechanism (CBAM), set to go into effect on January 1, 2026. That law has passed the second reading in the House of Representatives and will now go to the House of Peoples for approval.
Leading Sub-Sectors
- Desulphurization equipment/technology
- Emission control equipment and systems
- Generation equipment for hydro and thermal (coal) power plants
- Generation equipment for wind and solar farms
- Energy efficiency
- Heavy mining equipment, including bulldozers, tractors, excavators, surface mining conveyor systems, and heavy trucks, for coal mining
- Coal for use by thermal power plants
Opportunities
BiH’s electrical grid has suffered from decades of neglected maintenance and a lack of investment. BiH’s transmission company Elektroprenos BiH (TransCo) is investing around $22 million for the modernization and upgrading of its telecommunication system, with the aim of improving cross-border trade through better management of the transmission network. The project will facilitate the purchase and installation of a new telecommunication system for the entire transmission network in BiH; the delivery and installation of backup power supplies for substations; reconstruction of data centers; and provide advisory services for the Project Implementation Unit. The European Bank for Reconstruction and Development (EBRD) is also providing corporate loans to TransCo in the amount of around $53.5 million to improve the reliability of the electricity transmission system, reduce network loss, and facilitate the connection of planned renewable energy installations.
BiH is looking for opportunities to upgrade its Yugoslav-era coal-fired plants, which will age out of their useful life in the next 15 years, and to build new infrastructure, primarily in hydro and wind power but also in coal. Chinese and Russian companies have expressed interest in many power generation projects but only two have been successfully completed. In 2016, the Chinese company Dongfang International Corporation completed construction of the Stanari coal-fired power plant in the RS. The project was a collaboration of the Chinese Development Bank (CDB), the energy company EFT Group, Dongfang International Corporation, and the RS government. The CDB provided EFT Group with a structured loan of $455 million, accounting for 65 percent of the project’s total estimated cost of $715 million. Chinese state-owned companies Power Construction Corporation of China (POWERCHINA) and China General Technology (Group) Holding Co., Ltd (GENERTEC) invested in the construction of Ivovik wind farm of 84 MW installed capacity, which was completed under the auspices of the Belt and Road Initiative. Construction of Ivovik, the largest renewable energy project in BiH to date, was completed in 2023 and the project entered its trial operation phase in 2025.
In January 2023, the RS Government granted the ETMAX company from Banja Luka a 50-year concession for the construction and use of the Nevesinje solar park, a project worth KM 880 million ($483 million). The total power of the solar park will be 500 megawatts, and it will be made up of one power plant of 200 and six power plants of 50 megawatts. The RS Government awarded in March 2020 a 50-year concession for the construction and use of a solar power plant in the Bileca municipality to EFT International Investments Holding Limited, based in London. The power plant will have an installed capacity of 60 MW and an estimated annual production of 84 GWh. The estimated value of the investment is EUR 53 million ($62 million). The RS Government also awarded in October 2020 to the Public Utility Elektroprivreda RS a concession for the construction of a solar power plant in the city of Trebinje, with an installed capacity of 100 MW and an average annual production of 147.7 GWh. Estimates of the investments are around KM 134 million ($86 million). All three concessionaires are interested in cooperating with potential partners from the United States as investors, or with suppliers of technology and equipment for planned solar parks.
In November 2019, the Federation energy ministry launched its first competitive round for bidding on oil and gas exploration and exploitation licenses at four blocks in the Dinaric and Panonian basin regions. According to estimates of the geology institute of the Federation, the territory of the Dinaric Alps could potentially contain deposits of about one billion barrels of oil. However, there has been little investor interest in pursuing these licenses.
In 2021, the share of natural gas in BiH was approximately 3 percent of total available energy with the majority used to heat homes in the winter in Sarajevo. Gazprom is BiH’s only natural gas supplier through BiH’s single pipeline, which is connected to Serbia and TurkStream. The Federation has long expressed interest in building a second pipeline, the Southern Interconnection, to connect to Croatia’s gas network to diversify and increase its gas supply. The U.S. government financed and EBRD completed a feasibility study on the pipeline in 2020 and a project law on the Southern Interconnection was passed by the FBiH Parliament and entered into force in February 2025. To overcome political disagreements over who would control the project, the U.S. Embassy proposed in November 2025 that a U.S. company design, build, finance, and operate the pipeline via a concession.
A technical working group has been formed to move the project forward as U.S. companies express interest in the project. In parallel, the RS government has plans to build an additional natural gas pipeline with Serbia called the New East Interconnection, again connected to TurkStream. While the draft agreement for the RS project has been approved by the Council of Ministers, there has been no publicly available feasibility study and project details remain nontransparent. Both interconnections are pending the conclusion of bilateral agreements with Croatia and Serbia, respectively. BiH lacks a state-level legislative framework and regulatory body in the gas sector which would enable the necessary investment in natural gas as a transition fuel to reduce its reliance on coal.