Montenegro’s clearest commitments to hydropower investment centre on upgrades to existing assets and smaller plants. The strongest near-term signals are a €40 million KfW financing package for Perućica and a €6.8 million construction contract for Otilovići. Larger dam projects are progressing through investigations, design work and partner discussions, but construction remains subject to further decisions.
For state-controlled Elektroprivreda Crne Gore (EPCG), the pipeline presents two different investment horizons. Equipment procurement, rehabilitation and work at existing reservoirs could support spending over the next several years. Larger hydropower and pumped-storage schemes offer scope for expansion, but announced capacities and preliminary budgets do not yet constitute financed construction programmes.
For contractors and investors assessing Montenegro’s next energy investment cycle, the distinction lies in project milestones. The most immediate opportunities have identifiable financing, procurement and construction steps. Larger developments still depend on turning ongoing studies into agreed designs, environmental approvals and capital commitments.
Perućica, Otilovići and existing-plant work lead near-term activity
At Perućica, a €40 million KfW loan will fund the installation of a 58.5 MW eighth generating unit and remaining construction work from the plant’s second rehabilitation phase. The package therefore covers more than the additional turbine-generator. Montenegro’s government approved borrowing for the financing in April 2026.
The project has an identified financing source, while procurement remained a key timetable step in comments made by plant director Radovan Đukanović in late August. He expected a contract to be signed by the end of 2026, followed by the start of design and equipment manufacturing in early 2027. Implementation is expected to take approximately 24 months from signing.
That sequence suggests a possible completion window in late 2028 or 2029, depending on contracting and delivery, but it is an implied schedule rather than a confirmed commissioning date. Expected additional annual generation has been estimated at around 50 GWh. The 58.5 MW figure describes the unit’s generating capability, while annual production will continue to depend on hydrology and plant operation.
The A8 unit’s potential value extends beyond additional energy volumes. More turbine capacity could enable EPCG to capture water that might otherwise be spilled and shift output to periods of higher electricity prices. This could increase Perućica’s operational flexibility as the power system incorporates more renewable generation.
At Otilovići, the project has progressed further contractually. In January 2026, EPCG signed a turnkey agreement with Vigoris Ecotech covering design, civil works, equipment supply and installation, testing and commissioning. The contract is worth €6.795 million excluding VAT.
The project will use an existing dam and reservoir and was initially announced with capacity of 3.2 MW and annual production of approximately 11 GWh. By October, equipment procurement and manufacturing, geological preparations and adaptation work around existing infrastructure were advancing. The main design was still under review and technical reconciliation ahead of the construction permit.
The contractor expected most civil works to take place in spring 2027, subject to permitting and site conditions. A later estimate put potential annual generation at around 12.35 GWh, reflecting that some technical parameters were still being refined. Otilovići is beyond the feasibility stage, with a named contractor, an agreed delivery structure and an identifiable implementation sequence.
Rehabilitation of existing plants adds further substance to the investment cycle. Perućica’s wider modernization programme runs through 2027 and covers generating units, controls and associated infrastructure. EPCG has separately put the cost of the completed second phase of Piva modernization at around €10.8 million.
Such investment supports plant availability, efficiency and operating life. It is distinct from building entirely new generating capacity and should not be treated as equivalent to it.
Kruševo development depends on studies and partnership arrangements
The proposed large dams represent a substantially different financial scale. A government infrastructure investment programme assigns indicative values of around €160 million to Kruševo and €315 million to Komarnica. The figures signal the potential scale of future construction but remain planning estimates, not committed project budgets.
Kruševo, downstream from the existing Piva hydropower plant, has become one of EPCG’s leading development priorities. The conventional configuration used in project planning envisages approximately 82 MW of capacity and about 170 GWh of annual production. EPCG contracted the Jaroslav Černi Institute in late 2024 for project preparation and geological investigations, and field investigations began during 2025.
That work marked substantive project development, but not the start of dam construction. Cooperation with EDF has since become an important part of the project. During 2026, work has focused on studies, technical development, regulatory requirements and preparation of a possible joint development arrangement.
EPCG management has said geological investigations and technical documentation are being used to identify an optimal technical solution before the project moves towards a construction agreement. The European Investment Bank has identified Kruševo as a potential financing opportunity. That interest adds institutional backing, but is not a committed loan, an agreed financing structure or financial close.
The technical configuration is also under consideration as EPCG and its partners assess pumped-storage possibilities. A move towards pumped storage would give Kruševo a different economic profile from a conventional hydropower plant. Such a facility uses electricity to pump water to a higher reservoir and generates electricity when the water is released.
Its investment case would therefore depend not only on annual generation, but also on electricity-price spreads, storage duration, pumping efficiency, grid services and the ability to shift electricity from low-price to high-price periods. The currently cited figures of 82 MW, 170 GWh of annual generation and a €160 million planning value should be treated as reference parameters, not final specifications for a pumped-storage project.
An investment decision would require EPCG to bring together updated engineering, capital costs, hydrological assumptions, operating scenarios and a financing structure. Kruševo has moved beyond occasional discussion of an older hydropower concept and is now an active development project. The decisive transition will depend on approval of the preferred configuration, financing and construction arrangements.
Komarnica requires a renewed environmental process
Komarnica remains 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 is more complicated because of environmental constraints around the Komarnica canyon.
The previous environmental assessment procedure was terminated after EPCG withdrew its application in May 2025. Any continuation would require a new environmental impact assessment procedure. The project therefore cannot move directly from an updated feasibility study into construction.
A revised technical concept would have to show that the development can meet environmental requirements. It would also need to demonstrate that any mitigation measures, operating restrictions or design changes remain economically acceptable. EPCG has kept Komarnica in its long-term development portfolio, with management saying further work is needed to identify an economically justified and environmentally acceptable solution.
The indicative €315 million project value should be treated cautiously. The final cost could change substantially with the selected dam configuration, environmental mitigation requirements, access infrastructure, grid connection and financing conditions. Komarnica remains a strategic option rather than a clearly committed investment programme.
The next decisive milestone would be a new technical and environmental proposal that can pass regulatory scrutiny and support a bankable financing case. Until then, the project’s development path remains conditional on establishing an acceptable concept.
Masdar partnership expands the pumped-storage pipeline
A separate partnership with Masdar has broadened Montenegro’s storage ambitions. In July 2026, Masdar and EPCG announced plans to explore more than 400 MW of pumped-storage hydropower under a wider cooperation framework covering renewable energy, storage and hybrid projects. The announcement brings a major international energy investor into Montenegro’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 still need to be defined. The economics of pumped storage are particularly dependent on conditions in regional electricity markets.
Montenegro’s growing solar and wind portfolio, the submarine interconnector to Italy and greater integration with neighbouring electricity markets could increase the value of flexible hydropower capacity. Periods of low-priced or surplus renewable generation could create opportunities for pumping, while stored energy could be released during evening peaks or regional supply shortages. Over time, that could expand EPCG’s hydro fleet from primarily an energy-production asset into a broader flexibility and storage portfolio.
The investment case will still require detailed hourly-market modelling rather than reliance on headline capacity figures. Smaller projects are also moving through preparation. 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 further design work, investment budgeting and financing arrangements are needed before Durutovići can be treated as committed construction. The smaller project is therefore at a different stage from Otilovići, which has a contractor and an agreed turnkey delivery structure.
Projects are advancing at different stages
Montenegro’s hydropower pipeline is progressing at varying speeds. The clearest near-term activity centres on Perućica A8, Otilovići and modernization of existing assets. These projects have identifiable financing, contractual or procurement structures and could sustain 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 hydropower investment, particularly if cooperation with EDF and potential international lenders produces a technically and financially viable solution. Geological work, engineering choices and financing discussions have reached a stage with commercial relevance. The next decisive step is an approved technical solution backed by committed capital and a construction contract, rather than another announcement or preliminary study.
Komarnica remains more conditional, as its environmental process must be rebuilt around a technically acceptable project concept. That makes its implementation timetable less certain. The Masdar pumped-storage programme adds another potential layer to Montenegro’s hydropower strategy, but remains a development platform rather than a committed construction portfolio.
A new hydropower investment cycle is beginning in Montenegro, but it is not yet a broad wave of large dam construction. The first phase is driven by refurbishment, additions to existing infrastructure and smaller plants. A second phase potentially involving Kruševo, pumped storage and, eventually, Komarnica will depend on whether feasibility studies, environmental reviews and partnerships lead to final investment decisions.
That distinction is important for contractors, investors and lenders. Over the next several years, the most attractive opportunities are likely to be where existing infrastructure reduces development risk, financing has been identified and project sponsors can move from engineering into procurement. The eventual scale of the larger transformation will depend on bankable projects rather than announced megawatts.