Bosnia and Herzegovina’s dependence on hydropower creates an estimated €210mn swing in electricity-sector value between particularly wet and dry years, highlighting the financial exposure created by increasingly volatile hydrological conditions.
Large Bosnian hydropower plants produced an average of around 5.3 TWh/year over the past eight years, according to an analysis by energy expert Zijad Bajramovic cited in the report. Actual production can diverge sharply from that level depending on rainfall and river flows.
The scale of that variation is illustrated by the difference between 2023 and 2020.
Strong hydrology in 2023 lifted hydropower production to 6.4 TWh, around 21% above the eight-year average. That resulted in approximately 1.1 TWh of additional hydroelectricity, reducing the requirement for thermal generation and imports while increasing the volume available for export.
Using an assumed wholesale power value of €100/MWh, that incremental generation would have been worth around €110mn.
The opposite occurred in dry 2020, when hydro output fell to 4.3 TWh, around 19% below average. The resulting production deficit of approximately 1 TWh would represent about €100mn at the same wholesale price assumption.
The spread between the two years therefore reaches approximately 2.1 TWh, equivalent to around 40% of average annual generation from Bosnia and Herzegovina’s large hydro plants. Valued at €100/MWh, that translates into the estimated €210mn difference.
The actual financial consequences of poor hydrology can be greater than a simple valuation of lost production. When hydro output falls, utilities may have to replace relatively low-variable-cost generation with more expensive thermal production or imported electricity. That can weaken operating margins and cash flow at exactly the point when companies need additional investment in networks, generation and decarbonisation.
Conversely, strong hydrological years can materially improve trading positions, lower thermal dispatch requirements and create export opportunities.
The volatility underlines the strategic case for broadening Bosnia and Herzegovina’s generation portfolio. Additional wind and solar capacity could reduce the direct relationship between electricity availability and river flows, although growing variable renewable penetration would itself require greater flexibility.
Battery storage, flexible conventional generation and stronger regional interconnection would consequently become increasingly important alongside renewable development. The commercial issue is not simply increasing annual generation, but reducing the earnings volatility produced by a generation portfolio heavily exposed to one natural resource.
For Bosnia’s electricity companies, hydrology therefore remains both a production variable and a material financial risk factor, with annual movements capable of changing the sector’s power balance by terawatt-hours and its economic position by hundreds of millions of euros.
