Montenegro’s most tangible hydropower investment commitments are concentrated in the modernisation of existing facilities and the development of smaller plants. An existing €40 million KfW financing package for Perućica and a €6.8 million construction contract for Otilovići provide the clearest near-term indicators of spending. Meanwhile, larger dam and pumped-storage projects are progressing through technical investigations, design development and partnership negotiations, with construction still dependent on further approvals and investment decisions.
For state-controlled Elektroprivreda Crne Gore (EPCG), the emerging project pipeline offers two distinct investment horizons. Equipment procurement, plant rehabilitation and upgrades to existing infrastructure could sustain spending over the next several years. Larger hydropower developments and pumped-storage schemes offer a more substantial expansion opportunity, but their announced capacities and preliminary budgets do not yet constitute fully financed construction programmes.
This distinction is important for contractors, equipment suppliers and investors evaluating Montenegro’s next energy investment cycle. The most immediate opportunities are supported by identifiable financing arrangements, procurement milestones and construction contracts. Larger projects, by contrast, must still convert feasibility studies and technical investigations into approved designs, environmental clearances and binding capital commitments.
Perućica and Otilovići anchor near-term investment
At Perućica, a €40 million loan from KfW will finance the installation of a new 58.5 MW eighth generating unit, alongside outstanding construction work from the plant’s second rehabilitation phase. The financing therefore covers more than the additional turbine-generator alone. Montenegro’s government approved borrowing consent for the package in April 2026.
Although the project has an identified financing source, procurement remains a critical milestone. In late August, plant director Radovan Đukanović said he expected a contract to be signed by the end of 2026, allowing design work and equipment manufacturing to begin in early 2027. Implementation is expected to take approximately 24 months from contract signing.
This timetable points towards a potential completion window in late 2028 or 2029, depending on contracting, manufacturing and delivery schedules. It remains an indicative projection rather than a confirmed commissioning date.
The new unit is expected to provide approximately 50 GWh of additional annual electricity generation. The distinction between installed capacity and actual energy output is commercially significant: while the 58.5 MW unit would expand Perućica’s generating capability, annual production will continue to depend on hydrological conditions and plant operating requirements.
The benefits of A8 could extend beyond additional electricity generation. Increased turbine capacity may enable EPCG to use water that might otherwise be spilled and improve its ability to schedule production during periods of higher electricity prices. This additional flexibility could become increasingly valuable as renewable generation expands and power-market conditions become more variable.
At Otilovići, the project has progressed further towards implementation. EPCG signed a turnkey contract with Vigoris Ecotech in January 2026, covering design, civil engineering, equipment supply and installation, testing and commissioning. The agreement is valued at €6.795 million excluding VAT.
The project will use an existing dam and reservoir, limiting the need for an entirely new water-storage structure. Its initial specifications envisaged 3.2 MW of installed capacity and annual generation of approximately 11 GWh.
By October, equipment procurement and manufacturing, geological preparations and adaptation works around existing infrastructure were progressing. However, the main design was still undergoing review and technical reconciliation ahead of the construction permit.
The contractor expected the bulk of civil works to begin in spring 2027, subject to permitting and site conditions. A later estimate placed potential annual generation at approximately 12.35 GWh, suggesting that some technical parameters remained under refinement.
Otilovići has nevertheless moved well beyond the preliminary feasibility stage. It has a named contractor, an agreed delivery structure and a defined implementation sequence, making it one of the more concrete smaller hydropower investments in Montenegro’s current pipeline.
Rehabilitation of existing plants provides further support for EPCG’s investment programme. Perućica’s wider modernisation effort continues through 2027, covering generating units, control systems and associated infrastructure. EPCG has also valued the completed second phase of Piva hydropower plant modernisation at approximately €10.8 million.
These investments are intended to improve operational availability, efficiency and equipment lifespan. However, rehabilitation expenditure should be distinguished from the construction of new generation capacity, even where upgrades improve the performance of the existing fleet.
Kruševo advances through technical studies and partnership negotiations
The financial scale increases significantly with Montenegro’s proposed large hydropower developments. A government infrastructure investment programme assigns indicative values of approximately €160 million to Kruševo and €315 million to Komarnica. These estimates illustrate the potential scale of future construction, but they should not be interpreted as approved or committed project budgets.
Kruševo, planned downstream from the existing Piva hydropower plant, has emerged as one of EPCG’s leading development priorities. The conventional configuration used in project planning envisages approximately 82 MW of capacity and around 170 GWh of annual electricity production.
EPCG contracted the Jaroslav Černi Water Institute in late 2024 to undertake project preparation and geological investigations, with fieldwork beginning in 2025. This marked a substantive step towards project development, although it did not signal the start of dam construction.
Cooperation with EDF has subsequently become an important part of Kruševo’s development strategy. During 2026, work has focused on technical studies, project development, regulatory requirements and preparations for a possible joint development arrangement.
EPCG management has indicated that geological investigations and technical documentation are being used to identify the most suitable technical solution before negotiations move towards a potential construction agreement. This stage is important because the selected configuration will determine the project’s engineering requirements, capital costs and operating economics.
There is also growing institutional interest in the project. The European Investment Bank (EIB) has identified Kruševo as a potential financing opportunity, strengthening its profile among prospective lenders. However, this interest does not yet amount to a committed loan, an agreed financing structure or financial close.
The technical concept is particularly important because EPCG and its partners are also examining the possibility of pumped-storage operation. If Kruševo moves towards such a configuration, its economic model would differ substantially from that of a conventional hydropower plant.
A pumped-storage facility uses electricity to pump water into a higher reservoir and later generates electricity by releasing that water through turbines. Its investment case therefore depends not only on annual generation but also on electricity-price spreads, storage duration, pumping efficiency, grid services and the ability to shift energy between lower- and higher-value periods.
Consequently, the currently quoted 82 MW capacity, 170 GWh annual generation and €160 million indicative value should be treated as reference parameters rather than settled specifications for a final pumped-storage project. Any substantial change in configuration could affect the relationship between installed capacity, annual output, storage capability and total investment requirements.
Before an investment decision can be made, EPCG and its partners will need to integrate updated engineering studies, capital-cost estimates, hydrological assumptions, operating scenarios and a credible financing structure into a consistent business case.
Kruševo has therefore progressed beyond periodic discussion of an older hydropower concept and is now an active development project. Its decisive transition will come when the preferred technical configuration, financing arrangements and construction commitments receive formal approval.
Komarnica remains constrained by environmental requirements
Komarnica remains Montenegro’s other major proposed hydropower development. Current planning documents retain a project of approximately 172 MW of installed capacity, with expected annual generation of up to 213 GWh.
Its development pathway is more complicated because of environmental constraints associated with the Komarnica canyon. The previous environmental assessment procedure was terminated after EPCG withdrew its application in May 2025. Any continuation of the project will therefore require a new environmental impact assessment procedure.
This prevents Komarnica from moving directly from an updated feasibility study into construction. A revised technical concept must demonstrate that the development can satisfy applicable environmental requirements and that any necessary mitigation measures, operating restrictions or design modifications remain economically acceptable.
EPCG has continued to retain Komarnica within its long-term development portfolio. Management has indicated that further work is needed to identify a solution that is both economically justified and environmentally acceptable.
The indicative €315 million project value should consequently be treated with caution. The final investment requirement could change significantly depending on the selected dam configuration, environmental mitigation measures, access infrastructure, grid connection and financing conditions.
Komarnica remains a strategic development option rather than a firmly committed investment project. Its next decisive milestone will be the preparation of a new technical and environmental proposal capable of meeting regulatory requirements and supporting a bankable financing case.
Masdar partnership expands Montenegro’s pumped-storage ambitions
A separate cooperation framework with Masdar has broadened Montenegro’s longer-term storage ambitions. In July 2026, Masdar and EPCG announced plans to explore more than 400 MW of pumped-storage hydropower capacity as part of a wider partnership covering renewable energy, storage and hybrid projects.
The announcement is strategically significant because it brings a major international energy investor into Montenegro’s developing electricity-storage sector. However, it does not mean that an individual 400 MW pumped-storage plant has secured investment approval or entered construction.
Specific locations, reservoir configurations, storage duration, pumping capacity, grid requirements, capital costs and financing arrangements still need to be established. The announced capacity represents a development ambition, not a confirmed construction portfolio.
The commercial potential of pumped storage will depend heavily on regional electricity-market conditions. Montenegro’s expanding solar and wind capacity, together with the submarine electricity interconnector to Italy and deeper integration with neighbouring markets, could increase demand for flexible generation and storage.
Periods of low electricity prices or surplus renewable production could create opportunities to pump water into upper reservoirs. Stored energy could then be released during evening demand peaks, periods of limited renewable output or regional supply shortages.
If developed successfully, these projects could gradually transform EPCG’s hydropower fleet from a predominantly electricity-generation portfolio into a broader flexibility, balancing and energy-storage platform. This could create additional value beyond conventional hydropower production.
The investment case will nevertheless require detailed hourly electricity-market modelling, realistic assumptions about operating cycles and a clear assessment of grid-service revenues. Headline megawatt figures alone cannot establish whether a proposed storage project will generate sufficient returns.
Smaller developments are also progressing through the preparation phase. Rudnik uglja Pljevlja has proposed the 2.2 MW Durutovići hydropower plant, which would use existing water and diversion infrastructure.
Planning and technical conditions advanced during 2026, but additional design work, investment budgeting and financing arrangements are still required before Durutovići can be treated as a committed construction project.
Montenegro’s hydropower pipeline points to selective investment, not a construction boom
Montenegro’s hydropower development pipeline is advancing at different speeds and levels of investment readiness. The most concrete near-term activity is concentrated around Perućica A8, Otilovići and the modernisation of existing generating assets.
These projects have identifiable financing, contractual or procurement structures and are positioned to sustain demand for engineering services, turbines, electrical equipment, construction work and project supervision through the second half of the decade.
Kruševo is the strongest candidate for Montenegro’s next major new hydropower investment, particularly if cooperation with EDF and engagement with prospective international lenders result in a technically and financially viable configuration. Geological investigations, engineering decisions and financing discussions are increasingly relevant to the project’s commercial prospects.
The next decisive milestone, however, is no longer another announcement or preliminary study. It is an approved technical solution supported by committed capital and a construction contract.
Komarnica remains more conditional, as its environmental assessment process must be restarted around a technically acceptable development concept. This makes its implementation timetable less certain and increases the importance of demonstrating that environmental compliance can be achieved without undermining project economics.
The Masdar pumped-storage programme adds another potentially important dimension to Montenegro’s long-term energy strategy, but it remains a development platform rather than a fully committed construction pipeline. Its ultimate contribution will depend on the selection of viable sites, detailed project design and investment approval.
Montenegro can therefore reasonably point to the beginnings of a new hydropower investment cycle, but the evidence does not yet support the conclusion that a broad wave of large dam construction is imminent. The first phase is being driven by refurbishment, additional capacity at existing facilities and smaller hydropower plants.
The second phase, potentially involving Kruševo, large-scale pumped storage and eventually Komarnica, will depend on whether technical studies, environmental reviews and international partnerships can be converted into final investment decisions.
For contractors, investors and lenders, the distinction is critical. The most immediate opportunities are likely to emerge where existing infrastructure reduces development risk, financing has already been identified and project sponsors can move from engineering into procurement.
The larger transformation of Montenegro’s hydropower system remains possible, but its ultimate scale will be determined by bankable projects, secured financing and approved construction programmes—not announced megawatts alone.
