Montenegro’s hydropower investment pipeline combines the modernisation of existing facilities, smaller contracted developments and preparations for larger generation and storage projects, with financing and construction commitments concentrated in a limited number of schemes.
State-controlled Elektroprivreda Crne Gore (EPCG) has secured €40 million in KfW financing for the next phase of modernisation at the Perućica hydropower plant. The investment includes a new 58.5 MW eighth generating unit, expected to increase annual electricity generation by approximately 50 GWh and improve the plant’s ability to use available water more flexibly and generate electricity during higher-value periods.
The implementation schedule envisages a contract award by the end of 2026, followed by design work and equipment manufacturing in 2027. Implementation is expected to take approximately two years, indicating potential completion in 2028–2029, provided procurement and construction remain on schedule.
The Perućica project builds on existing infrastructure, where permitting, grid connection and financing risks are generally lower than those associated with entirely new dams.
A similar approach underpins the Otilovići hydropower project near Pljevlja, for which EPCG signed a turnkey contract with Vigoris Ecotech. The agreement is worth €6.795 million excluding VAT and covers development of a plant with approximately 3.2 MW of capacity, using the existing dam and reservoir. Equipment procurement, design and preparatory activities have progressed during 2026. Major civil works are expected in 2027, subject to permitting.
Kruševo Advances Through Technical Studies and Partner Cooperation
Kruševo has emerged as Montenegro’s leading candidate for the next major conventional hydropower development. The project envisages approximately 82 MW of installed capacity, annual electricity generation of around 170 GWh and indicative investment of approximately €160 million. Geological investigations and technical studies are progressing, while cooperation between EPCG and EDF has expanded to cover engineering, project development and potential future implementation.
The European Investment Bank has also identified Kruševo as a potential financing opportunity. No binding construction loan or financial close has been announced. EPCG is additionally examining whether Kruševo could form part of a broader pumped-storage strategy, which would introduce a different set of economic considerations.
Pumped-storage projects depend on electricity-price spreads, pumping costs, storage duration and revenue from balancing and flexibility services. Their financial viability therefore requires detailed hourly modelling rather than calculations based solely on annual electricity generation.
Pumped Storage Programme Exceeds 400 MW
Montenegro’s storage development plans expanded in 2026 through an agreement between EPCG and Masdar to explore more than 400 MW of pumped-storage projects as part of a broader renewable-energy partnership.
The programme could support the integration of additional solar and wind capacity and the use of Montenegro’s transmission connections with neighbouring markets and Italy. The planned capacity remains a development target rather than committed construction capacity, with projects still requiring further development before they can be considered bankable investments.
Komarnica Requires a New Environmental Procedure
The proposed Komarnica hydropower plant remains at a more conditional stage of development than Kruševo. The project envisages approximately 172 MW of capacity, annual generation of up to 213 GWh and indicative investment of around €315 million. Its previous environmental assessment process was terminated after EPCG withdrew the application in 2025. A new environmental procedure would therefore be required before the project could advance towards construction.
Despite its continued inclusion in Montenegro’s long-term energy planning, this requirement leaves Komarnica less advanced than Kruševo. Montenegro’s near-term hydropower investment activity is consequently centred on Perućica’s eighth generating unit, the Otilovići development and rehabilitation of existing hydropower facilities. Progress towards a larger investment cycle depends on advancing Kruševo and pumped-storage concepts to the stage of final investment decisions, committed financing and construction contracts.
