Montenegro’s clearest hydropower investment commitments involve upgrades to existing plants and smaller projects. Near-term signals include a €40 million KfW financing package for Perućica and a €6.8 million construction contract for Otilovići. Larger dams are progressing through investigations, design work and negotiations with potential partners, but construction depends on further decisions.
For state-controlled Elektroprivreda Crne Gore (EPCG), the pipeline spans two investment horizons. Procurement, rehabilitation and work at existing reservoirs could support spending over the next several years, while large hydropower and pumped-storage projects offer scope for expansion. Their announced capacities and preliminary budgets do not yet amount to financed construction programmes.
Existing plants and smaller projects lead near-term activity
At Perućica, a €40 million KfW loan will fund a 58.5 MW eighth generating unit and outstanding construction work from the plant’s second rehabilitation phase. The financing therefore covers more than the additional turbine-generator. Montenegro’s government approved borrowing for the package in April 2026.
Procurement remained a key step in the timetable set out by plant director Radovan Đukanović in late August. He said he expected a contract to be signed by the end of 2026, with design and equipment manufacturing beginning in early 2027. Implementation is expected to take approximately 24 months from signing.
That schedule implies possible completion in late 2028 or 2029, depending on contracting and delivery, but it is not a confirmed commissioning date. Additional annual generation has been estimated at approximately 50 GWh. The 58.5 MW figure represents the unit’s generating capacity, while annual output will depend on hydrology and plant operations.
The A8 unit could also increase flexibility at Perućica. Additional turbine capacity could enable EPCG to use water that would otherwise be spilled and shift generation to periods of higher electricity prices. Its value therefore extends beyond the volume of additional energy.
At Otilovići, the project has advanced to a signed contract. In January 2026, EPCG agreed a turnkey arrangement with Vigoris Ecotech covering design, civil works, equipment supply and installation, testing and commissioning. The contract is valued at €6.795 million excluding VAT.
The plant will use an existing dam and reservoir. When first announced, it was planned with 3.2 MW of capacity and annual production of approximately 11 GWh. By October, equipment procurement and manufacturing, geological preparations, and adaptation work around existing infrastructure were under way.
The main design was still subject to review and technical reconciliation before a construction permit could be issued. 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, showing that some technical parameters were still being refined.
Otilovići has moved beyond feasibility, with a named contractor, an agreed delivery structure and an identifiable implementation sequence. Modernization of existing facilities adds to the investment activity. Perućica’s wider programme runs through 2027 and covers generating units, controls and associated infrastructure.
EPCG has separately put the completed second phase of Piva modernization at around €10.8 million. Such work supports availability, efficiency and plant life, but is distinct from building entirely new generating capacity. For contractors and investors, identifiable financing, procurement and construction milestones are the clearest near-term opportunities.
Large dam projects remain dependent on further development
The financial scale increases with Montenegro’s proposed large dams. A government infrastructure investment programme lists indicative values of around €160 million for Kruševo and €315 million for Komarnica. These are planning estimates that indicate potential construction scale, not committed project budgets.
Kruševo, downstream from the existing Piva hydropower plant, is one of EPCG’s leading development priorities. The conventional configuration used in project planning envisages approximately 82 MW of capacity and around 170 GWh of annual production. In late 2024, EPCG contracted the Jaroslav Černi Institute to prepare the project and carry out geological investigations, with field investigations beginning during 2025.
This work represents substantive 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 that 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 also identified Kruševo as a potential financing opportunity. That interest does not yet constitute a committed loan, an agreed financing structure or financial close.
EPCG and its partners are also examining pumped-storage options, which would have a different economic profile from a conventional hydropower plant. A pumped-storage facility uses electricity to pump water to a higher reservoir and generates electricity when that water is released. Its investment case depends on electricity-price spreads, storage duration, pumping efficiency, grid services and the ability to move electricity from lower-price to higher-price periods, rather than on annual generation alone.
The currently cited 82 MW capacity, 170 GWh annual generation and €160 million planning value are therefore reference parameters, not settled specifications for a final 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 become an active development project rather than a periodically discussed older concept, but approval of its preferred configuration, financing and construction arrangements remains a decisive step.
Komarnica is 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 ended after EPCG withdrew its application in May 2025. Any continuation requires a new environmental impact assessment procedure, so the project cannot proceed directly from an updated feasibility study to construction. A revised technical concept would need to demonstrate compliance with environmental requirements and show that mitigation measures, operating restrictions or design changes remain economically acceptable.
EPCG continues to include Komarnica in its long-term development portfolio. Management has said further work is needed to find a solution that is both economically justified and environmentally acceptable. The indicative €315 million value should be treated cautiously, as final costs could change substantially with the selected dam configuration, environmental mitigation, access infrastructure, grid connection and financing conditions.
Komarnica remains a strategic option rather than a clearly committed investment project. Its next decisive milestone would be a new technical and environmental proposal capable of meeting regulatory scrutiny and supporting a bankable financing case. More broadly, the large-project pipeline depends on turning studies into agreed designs, environmental approvals and capital commitments.
Pumped storage and additional smaller projects expand the pipeline
A separate partnership with Masdar has widened Montenegro’s storage-development ambitions. In July 2026, Masdar and EPCG announced plans to explore more than 400 MW of pumped-storage hydropower under a broader cooperation framework covering renewable energy, storage and hybrid projects. The announcement brings a major international energy investor into the country’s storage pipeline, but does not mean that a specific 400 MW plant has received investment approval.
Individual sites, reservoir arrangements, storage duration, pumping capacity, grid requirements, capital costs and financing structures remain to be defined. The economics of pumped storage will depend in particular on regional electricity-market conditions. Montenegro’s growing solar and wind portfolio, the submarine interconnector to Italy and deeper integration with neighbouring electricity markets could increase the value of flexible hydropower capacity.
Low-priced or surplus renewable generation could provide opportunities to pump water, while stored energy could be released during evening peaks or regional supply shortages. This could gradually broaden EPCG’s hydro fleet from an energy-production asset into a flexibility and storage portfolio. The investment case still requires detailed hourly-market modelling rather than reliance on headline capacity figures.
Smaller projects are also at the preparation stage. 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 further design work, investment budgeting and financing arrangements are needed before it can be considered committed construction.
Investment activity is advancing at different speeds
Montenegro’s hydropower projects are progressing at markedly different rates. The most concrete near-term activity is concentrated on Perućica A8, Otilovići and modernization of existing assets. Their financing, contractual or procurement arrangements are identifiable and are expected to support 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.
Komarnica is more conditional because its environmental process must be rebuilt around a technically acceptable project concept, leaving its implementation timetable less certain. The Masdar pumped-storage programme adds another potential element to Montenegro’s hydropower strategy, but remains a development platform rather than a committed construction portfolio. The emerging cycle is therefore led first by refurbishment, additions to existing infrastructure and smaller plants, while larger projects depend on studies, environmental reviews and partnerships reaching final investment decisions.
For contractors, investors and lenders, the difference between these stages is material. The most attractive opportunities over the next several years are expected to arise where existing infrastructure reduces development risk, financing has been identified and project sponsors can progress from engineering to procurement. The eventual scale of the broader transformation will depend on bankable projects, rather than announced megawatts.