Montenegro’s state-owned power utility, EPCG, has announced a significant delay in the commissioning of the new A8 generating unit at the Perućica hydropower plant. Originally scheduled for 2027, the startup is now projected for 2028 due to extended contractor selection processes critical to this major hydro modernization initiative.
This postponement highlights the complexities faced by energy infrastructure projects in Southeast Europe, where procurement procedures, supply-chain issues, financing conditions, and technical compliance requirements are prolonging delivery timelines even for established hydroelectric facilities.
EPCG reported that the tender process for the new A8 turbine-generator unit remains under evaluation months after bids were opened in September 2025. The utility indicated that the review has become more intricate than anticipated due to the volume and complexity of technical documentation from bidders and the necessity to conduct procurement under the oversight of German development bank KfW.
Two bids were submitted for this tender: one from a consortium including Voith Hydro GmbH & Co KG, Končar, and Elnos, and another from Slovenia’s Litostroj Power. EPCG noted that the technical evaluation commission is still preparing its assessment report, which requires KfW’s review before financial offers can be opened and a contractor selected. As a result, contract activation is expected in mid-2026, compressing the construction timeline to approximately 24 months and eliminating any possibility of commissioning in 2027.
The A8 expansion project is a key modernization investment within Montenegro’s renewable energy sector. Upon completion, it is anticipated to increase the installed capacity at Perućica from 307 MW to around 365.5 MW, contributing an additional 50 GWh of annual electricity production capacity following system optimization.
Beyond capacity enhancements, this project has broader implications for Montenegro’s electricity market structure and its long-term decarbonization strategy. Hydropower plays a crucial role in Montenegro’s electricity system, providing essential balancing flexibility for future integration of larger solar and wind energy sources. As regional electricity systems transition towards greater renewable intermittency and volatile intraday market dynamics, modernization projects like Perućica are increasingly valuable.
The delay in the A8 project comes at a critical time for EPCG, which is also pursuing aggressive solar deployment and transmission modernization while facing pressures to maintain stable domestic generation capacity amid changing hydrology patterns and regional market volatility.
The Perućica modernization reflects a broader trend in Southeast Europe where utilities prioritize refurbishing existing hydro assets over new generation expansions. Existing infrastructure typically offers faster permitting processes, reduced environmental opposition risks, and more predictable grid integration compared to new projects. However, this delay also underscores how refurbishment initiatives are vulnerable to wider European industrial bottlenecks.
EPCG cited ongoing global supply-chain challenges, component availability issues, and cost inflation affecting major electromechanical equipment procurement as contributing factors. These pressures have been prevalent across European hydropower and renewable infrastructure projects since 2022.
Financing conditions further complicate this project’s strategic importance. In September 2024, EPCG secured a EUR 40 million loan agreement with KfW for the Phase III reconstruction and expansion of Perućica, with repayment structured over 15 years including a five-year grace period. Total financing linked to KfW for the modernization of Perućica now exceeds EUR 83 million across various rehabilitation phases.
This project is part of a larger European-backed framework aimed at decarbonization and infrastructure modernization rather than merely replacing turbines. From a regional perspective, additional flexible hydro capacity is increasingly valuable within the Western Balkans electricity system as solar generation expands in Serbia, Montenegro, and Albania.
The delayed commissioning of A8 has implications beyond EPCG’s generation portfolio; it affects Montenegro’s future market flexibility and renewable integration capacity amid ongoing structural transformations in Southeast Europe’s electricity market driven by EU decarbonization policies.
While EPCG maintains that the extended evaluation period will lead to higher-quality technical solutions and equipment standards, the revised timeline emphasizes how strategic energy-transition infrastructure in Southeast Europe increasingly relies on complex international financing structures and resilient supply chains.
