Montenegro’s most clearly defined hydropower investments are a €40 million KfW financing package for Perućica and a €6.8 million construction contract for Otilovići. Spending on upgrades to existing assets and smaller plants is taking shape, while larger dams remain at the investigation, design or partnership stage. Construction of those larger projects still depends on further decisions.
For state-controlled Elektroprivreda Crne Gore (EPCG), the pipeline has two investment horizons. Equipment procurement, rehabilitation and work at existing reservoirs could support spending over the next several years. Large new hydropower and pumped-storage projects offer a wider expansion opportunity, but their announced capacities and preliminary budgets are not yet financed construction programmes.
Contractors and investors assessing the next investment cycle can identify near-term opportunities through financing, procurement and construction milestones. The larger pipeline must still turn studies into agreed designs, environmental approvals and capital commitments. Those differences affect both the timing and the certainty of potential work.
Perućica and Otilovići provide near-term work
At Perućica, KfW’s €40 million loan covers a 58.5 MW eighth generating unit and outstanding construction work under the plant’s second rehabilitation phase. The package therefore finances more than the turbine-generator addition. Montenegro’s government consented to the borrowing in April 2026.
Financing has been identified, but procurement remained a key step in the timetable described by plant director Radovan Đukanović in late August. He expected a contract by the end of 2026, followed by the start of design and equipment manufacturing in early 2027. Implementation was expected to take approximately 24 months from contract signing, implying possible completion around late 2028 or in 2029, depending on contracting and delivery. That is an implied timetable, not a confirmed commissioning date.
Additional annual generation has been estimated at approximately 50 GWh. The eighth unit would add 58.5 MW of generating capability and improve operating flexibility, while actual output would still depend on hydrology and plant operation. Greater turbine capacity could help EPCG use water that would otherwise be spilled and move generation into higher-price periods. Its value therefore extends beyond the additional energy produced in a power system with a growing share of renewables.
At Otilovići, EPCG signed a turnkey agreement with Vigoris Ecotech in January 2026. The contract covers design, civil works, equipment supply and installation, testing and commissioning, and is worth €6.795 million excluding VAT. The plant will use an existing dam and reservoir. It was initially announced with 3.2 MW of capacity and annual production of approximately 11 GWh.
By October, equipment procurement and manufacturing, geological preparations and adaptation work around the existing infrastructure were progressing. The main design was still under review and technical reconciliation before a construction permit could be issued. Subject to permitting and site conditions, the contractor expected most civil works to take place in spring 2027. A later estimate put potential annual generation at around 12.35 GWh, indicating that some technical parameters were still being refined.
Otilovići has nevertheless moved beyond feasibility work: it has a named contractor, an agreed delivery structure and an identifiable implementation sequence. Rehabilitation of existing plants adds to this activity. Perućica’s wider modernisation programme runs through 2027 and covers generating units, controls and associated infrastructure. EPCG has separately valued the completed second phase of Piva modernisation at around €10.8 million.
Those investments support plant availability, efficiency and service life. They should not, however, be counted in the same way as construction of entirely new generating capacity.
Kruševo moves through technical and financing studies
The financial scale rises substantially for Montenegro’s proposed large dams. A government infrastructure investment programme gives indicative values of around €160 million for Kruševo and €315 million for Komarnica. These are estimates of potential construction scale, not committed project budgets. Kruševo, downstream of the existing Piva hydropower plant, has become one of EPCG’s leading development priorities.
The conventional Kruševo configuration used in planning provides for approximately 82 MW of capacity and about 170 GWh of annual generation. EPCG contracted the Jaroslav Černi Institute for project preparation and geological investigations in late 2024, and field investigations began in 2025. That work marked substantive project development, rather than the start of dam construction.
Cooperation with EDF has since become an important part of the project. Work in 2026 has focused on studies, technical development, regulatory requirements and preparation of a possible joint development arrangement. EPCG management has indicated that geological investigations and technical documentation will help determine the preferred technical solution before the parties move towards a construction agreement.
The European Investment Bank has also identified Kruševo as a potential financing opportunity. Its interest adds institutional support, but it is not a committed loan, an agreed financing structure or financial close. A final investment decision would require updated engineering, capital costs, hydrological assumptions, operating scenarios and financing arrangements.
EPCG and its partners are also examining pumped-storage possibilities, making the eventual configuration commercially important. Unlike a conventional hydropower plant, a pumped-storage facility uses electricity to pump water to a higher reservoir and generates power when that water is released. Its economics depend on electricity-price spreads, storage duration, pumping efficiency, grid services and the ability to shift electricity from low-price to high-price periods, not simply on annual generation.
The quoted 82 MW capacity, 170 GWh of annual generation and €160 million planning value are therefore reference parameters, not settled specifications for a final pumped-storage project. Kruševo has progressed beyond recurring discussion of an older hydro concept and is now an active development project. The decisive step remains approval of a preferred configuration, committed financing and construction arrangements.
Komarnica requires a new environmental assessment
Komarnica is Montenegro’s other major hydropower proposal. Current planning documents retain a project of approximately 172 MW, with expected annual generation of up to 213 GWh. Its development path is more complicated because of environmental constraints around the Komarnica canyon.
The previous environmental assessment procedure ended after EPCG withdrew its application in May 2025. Continuing the project would require a new environmental impact assessment procedure; an updated feasibility study alone would not allow it to proceed directly to construction. A revised technical concept would need to meet environmental requirements while keeping any mitigation measures, operating restrictions or design changes economically acceptable.
EPCG continues to include Komarnica in its long-term development portfolio. Management has indicated that further work is needed to find a solution that is both economically justified and environmentally acceptable. The indicative €315 million value could change substantially with the dam configuration, environmental mitigation, access infrastructure, grid connection and financing conditions.
Komarnica consequently remains a strategic option rather than a clearly committed investment programme. Its next decisive milestone would be a new technical and environmental proposal able to pass regulatory scrutiny and support a bankable financing case.
Pumped-storage plans expand the development pipeline
A separate partnership with Masdar has broadened Montenegro’s storage plans. In July 2026, Masdar and EPCG announced that they would explore more than 400 MW of pumped-storage hydropower under a wider cooperation framework covering renewable energy, storage and hybrid projects. The arrangement brings a major international energy investor into the country’s storage-development pipeline. It does not mean that a specific 400 MW pumped-storage plant has received investment approval.
Individual sites, reservoir arrangements, storage duration, pumping capacity, grid requirements, capital costs and financing structures remain to be defined. Pumped-storage economics are particularly sensitive to regional electricity-market conditions. Montenegro’s expanding solar and wind portfolio, the submarine interconnector to Italy and closer integration with neighbouring electricity markets could increase the value of flexible hydro capacity.
Low-priced or surplus renewable generation could create opportunities to pump water, with stored energy released during evening peaks or regional supply shortages. Such a role could gradually shift EPCG’s hydro fleet from primarily producing energy towards providing a wider range of flexibility and storage services. The investment case would still require detailed hourly-market modelling rather than reliance on headline capacity figures.
Smaller schemes are also in preparation. Rudnik uglja Pljevlja has proposed the 2.2 MW Durutovići hydropower plant, using existing water and diversion infrastructure. Planning and technical conditions advanced during 2026. Further design, investment budgeting and financing arrangements are needed before construction can be considered committed.
Investment commitments differ across the pipeline
Montenegro’s hydropower projects are advancing at different speeds. The clearest near-term activity centres on Perućica A8, Otilovići and upgrades to existing plants. Their financing, contracts or procurement structures point to continuing demand for engineering, equipment, supervision and construction services through the second half of the decade.
Kruševo is the leading candidate for the next large new hydro investment, particularly if cooperation with EDF and potential international lenders yields a technically and financially viable solution. Geological work, engineering choices and financing discussions have become commercially relevant. Its next decisive step is an approved technical solution supported by committed capital and a construction contract, rather than another announcement or preliminary study.
Komarnica is more conditional. Its environmental process effectively needs to be rebuilt around an acceptable technical concept, leaving its implementation timetable less certain. The Masdar pumped-storage programme adds a potentially significant element to Montenegro’s hydro plans, but remains a development platform rather than a committed construction portfolio.
A new hydropower investment cycle is beginning in Montenegro, though it is not yet a broad programme of large dam construction. Its first phase consists of refurbishment, additions to existing infrastructure and smaller plants. A second phase involving Kruševo, pumped storage and potentially Komarnica depends on converting feasibility studies, environmental reviews and partnerships into final investment decisions.
For contractors, investors and lenders, opportunities over the next several years are most clearly defined where existing infrastructure lowers development risk, financing has been identified and sponsors can move from engineering to procurement. Any larger transformation of Montenegro’s hydropower system will depend on bankable projects rather than announced megawatts.
