Montenegro’s firmest near-term hydroelectric investment commitments are tied to existing infrastructure: a €40 million KfW financing package for Perućica and a construction contract of about €6.8 million for Otilovići. Larger dams and pumped-storage schemes are progressing through studies, technical work and discussions with potential partners, but still require further decisions before construction can proceed.
For state-controlled Elektroprivreda Crne Gore (EPCG), rehabilitation, equipment purchases and work at existing reservoirs could support expenditure over the next several years. Proposed large hydropower and pumped-storage projects represent a separate, longer-term expansion pipeline. Their announced capacities and preliminary cost estimates do not yet constitute financed construction programmes.
That difference shapes the opportunities available to contractors and investors. The more immediate projects have identifiable financing, procurement or construction steps. Larger developments must still turn studies into agreed designs, environmental approvals and capital commitments.
Perućica financing and Otilovići contract support near-term work
At Perućica, the KfW loan finances installation of an eighth generating unit rated at 58.5 MW and outstanding construction work from the plant’s second rehabilitation phase. The package therefore covers more than the turbine-generator addition. Montenegro’s government approved borrowing for it in April 2026.
Plant director Radovan Đukanović said in late August that procurement remained an important step and that he expected a contract by the end of 2026. Under the timetable he outlined, design and equipment manufacturing would start in early 2027, with implementation taking approximately 24 months from contract signing. Depending on contracting and delivery, that sequence implies completion around late 2028 or in 2029; it is not a confirmed commissioning date.
The additional unit is expected to produce approximately 50 GWh a year, although actual generation would depend on hydrology and plant operation. Its 58.5 MW rating measures added generating capability, not annual electricity output. Greater turbine capacity could also help EPCG use water that would otherwise be spilled and move generation into higher-price periods, increasing the plant’s operating flexibility as renewable capacity grows.
At Otilovići, EPCG signed a turnkey contract with Vigoris Ecotech in January 2026. Worth €6.795 million excluding VAT, it covers design, civil works, equipment supply and installation, testing and commissioning. The plant will use an existing dam and reservoir; its initial specifications called for 3.2 MW of capacity and approximately 11 GWh of annual generation.
By October, equipment procurement and manufacturing, geological preparations and adaptation of existing infrastructure were under way. The main design was still being reviewed and technically reconciled 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 subsequent estimate of around 12.35 GWh a year showed that technical parameters were still being refined.
Otilovići has nevertheless moved beyond feasibility work, with a contractor, agreed delivery structure and identifiable implementation sequence. Rehabilitation at operating plants adds to the investment programme without amounting to construction of entirely new generating capacity. Perućica’s broader modernization runs through 2027 and covers units, controls and associated infrastructure, while EPCG has valued the completed second phase of Piva modernization at about €10.8 million. Such work supports plant availability, efficiency and operating life.
Kruševo moves through engineering and financing discussions
The proposed large dams have a different financial scale. A government infrastructure investment programme gives indicative values of approximately €160 million for Kruševo and €315 million for Komarnica. These are planning estimates of potential construction scale, not committed budgets.
Kruševo, downstream of the existing Piva hydropower plant, is among EPCG’s leading development priorities. The conventional configuration used for planning envisages approximately 82 MW of capacity and annual generation of about 170 GWh. EPCG contracted the Jaroslav Černi Institute for project preparation and geological investigations in late 2024, and field investigations began in 2025; dam construction has not started.
Cooperation with EDF has become part of Kruševo’s development work. During 2026, activity has centred on studies, technical development, regulatory requirements and preparations for a possible joint development arrangement. EPCG management has said geological results and technical documentation are being used to determine an optimal solution before moving towards a construction agreement.
The European Investment Bank has identified Kruševo as a potential financing opportunity, giving the project a prospective lender but not a committed loan, agreed financing structure or financial close. EPCG and its partners are also examining pumped-storage options. That choice matters because a pumped-storage project would have different economics from the conventional plant described by the current reference figures.
Pumped storage uses electricity to move water to a higher reservoir, then generates power when the water is released. Its investment case depends on price spreads, storage duration, pumping efficiency, grid services and the ability to shift electricity from low-price to high-price hours, rather than annual generation alone. The quoted 82 MW, 170 GWh a year and €160 million should therefore not be read as final specifications for a pumped-storage scheme.
An investment decision would require EPCG to bring together revised engineering, capital costs, hydrological assumptions, operating scenarios and financing. Kruševo is now an active development project rather than only a periodically discussed hydro concept. Approval of a preferred configuration, committed financing and construction arrangements remains the decisive step.
Komarnica requires a new environmental assessment
Komarnica remains Montenegro’s other major dam proposal. Current planning documents retain approximately 172 MW of capacity and expected annual generation of up to 213 GWh. Environmental constraints around the Komarnica canyon make its development path more complicated.
The earlier environmental assessment procedure ended after EPCG withdrew its application in May 2025. Continuing the project would require a new environmental impact assessment, so an updated feasibility study alone could not take it directly into construction. A revised design would have to satisfy 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. Its management has said 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 design, environmental mitigation, access infrastructure, grid connection and financing terms.
Komarnica is consequently a strategic option rather than a clearly committed construction 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 and smaller projects expand the development pipeline
A separate partnership with Masdar has added to Montenegro’s storage plans. In July 2026, Masdar and EPCG announced that they would explore more than 400 MW of pumped-storage hydropower within broader cooperation on renewable energy, storage and hybrid projects. The arrangement brings an international energy investor into the development pipeline, but it is not investment approval for a specific 400 MW plant.
Sites, reservoir layouts, storage duration, pumping capacity, grid needs, capital costs and financing structures remain to be defined. The economics will also depend on regional electricity-market conditions. Montenegro’s expanding solar and wind portfolio, its submarine interconnector with Italy and closer integration with neighbouring power markets could increase the value of flexible hydro generation.
Low-priced or surplus renewable electricity could be used for pumping, with stored energy released during evening peaks or regional supply shortages. That role could shift EPCG’s hydro fleet from primarily producing electricity towards providing a wider range of flexibility and storage services. Any investment case would still need detailed hourly-market modelling, rather than capacity figures alone.
Smaller developments 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, but design, investment budgeting and financing work remain before construction can be regarded as committed.
Projects remain at different investment stages
The clearest near-term activity is at Perućica A8, Otilovići and existing-plant modernization. Their financing, contracts or procurement plans provide a basis for engineering, equipment, supervision and construction work through the second half of the decade. Kruševo is the leading candidate for a subsequent large new hydro investment if cooperation with EDF and potential international lenders results in a viable technical and financial structure.
At Kruševo, geological investigations, engineering choices and financing discussions have advanced, but a construction contract still requires an approved technical solution and committed capital. Komarnica faces the additional need to restart its environmental process around an acceptable design, making its implementation timetable less certain. The Masdar pumped-storage cooperation remains a development platform rather than a committed portfolio of construction projects.
Montenegro’s initial investment activity is therefore concentrated on refurbishment, additions to existing facilities and smaller plants, rather than a broad programme of large dam construction. A later phase involving Kruševo, pumped storage and potentially Komarnica depends on studies, environmental reviews and partnerships leading to final investment decisions. For contractors, investors and lenders, projects using existing infrastructure and backed by identified financing offer the clearest route from engineering to procurement; the scale of any larger expansion will depend on bankable projects, not announced megawatts.