Novi Sad relaunches €7.6 million geothermal heating tender

Novi Sad municipal utility Novosadska toplana has relaunched a procurement worth about €7.6 million for the first phase of the Toplana Mišeluk heating project, as the city moves ahead with plans for a hybrid low-carbon district energy system.

The project is designed to support a new heating network with a long-term capacity of up to 30 MW. The first phase combines groundwater heat pumps, solar technology and natural-gas boilers, making it a hybrid energy system rather than a conventional geothermal plant.

The renewed tender comes after the earlier procedure was cancelled on September 29, 2026, when all submitted bids were found unacceptable. Companies now have until December 3 to submit offers under the revised procurement.

Hybrid heating system for Mišeluk

According to the tender details, the initial phase includes a water-to-water heat pump with a minimum heating capacity of 415 kW, using groundwater at around 16°C and a flow of 7 litres per second.

The system will also include a 1 MW gas boiler and another gas-fired unit rated at 4 MW, plus thermal storage tanks of 100 and 200 cubic metres. Hybrid photovoltaic-thermal panels are also part of the plan, producing both electricity and usable heat.

Further expansion is planned later, depending on demand in the area. The utility says the eventual goal is a system capable of reaching 30 MW.

Project economics will depend on operating costs

The project’s business case is likely to depend on more than the installed capacity. For a heating system like this, electricity prices, gas procurement terms, maintenance costs and actual operating hours will all affect the final economics.

Heat pumps need electricity to extract low-temperature heat, while gas boilers provide backup and peak-load capacity. In practice, the financial outcome will depend on how much heat each technology delivers over the year, not just on the nominal capacity of the equipment.

That is why the project’s performance will need to be measured through annual heat output, fuel use, efficiency and maintenance requirements. If electricity costs rise or operating efficiency falls, the economics weaken. If solar generation and thermal storage reduce electricity consumption, the system becomes more competitive.

Maintenance is part of the contract

The new procurement also includes 10 years of heat-pump maintenance and servicing, together with design, equipment supply, construction, testing and commissioning for the first phase.

That matters because it ties long-term performance to the initial contract. The contractor will not only build the facility but also remain responsible for part of its operation and upkeep.

For a municipal utility, this approach can reduce some operational risk, but only if the contract clearly defines performance standards, response times and remedies if the system underperforms.

The relevant indicators will include seasonal efficiency, electricity consumption per unit of heat delivered, equipment availability and the reliability of the groundwater system.

Why the first tender failed

The first procurement round, launched in July 2026, was cancelled after the submitted bids did not meet the required conditions. The available information does not specify whether the issue was price, technical compliance or another procurement requirement.

Even so, the failed first round shows how difficult it can be to turn a technically ambitious energy plan into a workable contract. A system combining heat pumps, gas boilers, solar panels and storage needs a contractor that can coordinate civil, mechanical, electrical and control engineering.

The current tender value of about €7.6 million applies only to the first phase and should not be read as the full cost of the eventual 30 MW project.

Phased development in a growing area

The Mišeluk project is also linked to urban development in Novi Sad and parts of Petrovaradin. The heating system is being planned in stages so that infrastructure can match expected demand as new residential and commercial buildings come online.

A temporary containerised boiler installation of around 1 MW is expected to serve early consumers during 2027 and 2028, before the permanent facility is completed.

This phased model reduces the risk of building too much capacity too early, but it also depends on how quickly the area develops. If construction moves more slowly than expected, the plant may run below capacity. If demand grows faster, additional investment may be needed sooner.

For investors and lenders, the key question is whether the project can deliver measurable reductions in fossil-fuel use while keeping operating costs under control. That will determine whether it can serve as a model for other Serbian municipalities looking to modernize district heating.

With bids due by December 3, the next milestone is whether Novi Sad can secure a contractor for the first phase and move the project beyond the failed initial tender.