Montenegro’s hydropower sector is progressing through a combination of existing-plant modernization, smaller contracted developments and preparations for large-scale storage projects, although several major schemes have yet to secure binding financing or enter construction.
The most advanced investments include €40 million in KfW-backed financing for Perućica, the €6.795 million Otilovići hydropower project and rehabilitation of existing facilities. Larger developments, including Kruševo, Komarnica and more than 400 MW of planned pumped-storage capacity, remain at different stages of technical preparation, environmental assessment and partner negotiations.
Perućica Modernization and Otilovići Development
State-controlled Elektroprivreda Crne Gore (EPCG) has secured a €40 million financing package from KfW for modernization of the Perućica hydropower plant, including a new 58.5 MW eighth generating unit.
The upgrade is expected to increase annual electricity production by approximately 50 GWh and improve the plant’s flexibility in managing available water and generating power during higher-value market periods. The implementation schedule envisages contract award by the end of 2026, followed by design and equipment manufacturing in 2027 and approximately two years of implementation, potentially allowing completion in 2028–2029.
Another project is Otilovići, near Pljevlja, where EPCG signed a turnkey agreement with Vigoris Ecotech worth €6.795 million excluding VAT in January 2026. The approximately 3.2 MW facility will use the existing dam and reservoir. Equipment procurement, design and preparatory work have progressed during 2026, with major civil works expected in 2027, subject to permitting.
Kruševo Emerges as a Major Development Candidate
The proposed Kruševo hydropower project envisages approximately 82 MW of capacity, annual generation of around 170 GWh and an indicative investment of €160 million. Geological investigations and technical studies are progressing, while cooperation between EPCG and EDF has expanded to cover engineering, project development and potential implementation.
The European Investment Bank (EIB) has also identified Kruševo as a potential financing opportunity. However, no binding construction loan or financial close has been announced. EPCG is additionally assessing whether Kruševo could form part of a wider pumped-storage development. Such a configuration would require analysis of electricity-price differences, pumping costs, storage duration and potential revenue from balancing services.
EPCG and Masdar Explore More Than 400 MW of Storage
EPCG and Masdar agreed to explore the development of more than 400 MW of pumped-storage projects under a broader renewable-energy partnership.
The proposed capacity could support Montenegro’s integration of additional wind and solar generation and its use of transmission connections with neighbouring electricity markets and Italy. The 400 MW remains a development target, rather than confirmed construction capacity or a fully financed investment programme.
Komarnica Remains Subject to Environmental Procedures
The proposed Komarnica hydropower plant is designed for approximately 172 MW of capacity and annual generation of up to 213 GWh, with an indicative investment value of around €315 million. Its environmental assessment procedure was terminated after EPCG withdrew its application in 2025. A new environmental procedure is required before the project can progress towards construction. Consequently, Komarnica remains at an earlier development stage than Kruševo, despite continuing to feature in Montenegro’s long-term energy plans.
