The accelerated push by Serbia and Republika Srpska to advance the Buk Bijela hydropower project is once again placing Montenegro at the center of a complex regional energy, environmental, and political equation—one that combines €200–400 million scale energy investment with potentially irreversible ecological trade-offs.
A cross-border energy project moving forward without Montenegro
The Buk Bijela hydropower plant, planned on the upper Drina River near the Montenegro border, is being developed jointly by Serbia and Republika Srpska through a dedicated entity under the “Upper Drina Hydropower System”. The project is valued at more than €200 million, with financing expected from the utilities of both entities and potentially Chinese-backed funding structures.
Construction formally began with a foundation stone in 2021, and current activity suggests renewed momentum as environmental assessments are being updated and project structuring continues.
From a system perspective, Buk Bijela is not a standalone asset but part of a broader cascade on the Drina River, including Foča (44 MW), Paunci (43 MW), and Sutjeska (44 MW)—bringing total planned capacity to 224 MW and annual generation to approximately 871 GWh.
Individually, Buk Bijela itself is expected to deliver roughly 93–118 MW depending on the final design iteration, with annual production in the range of 320–350 GWh.
Strategic logic: Hydro as baseload in a volatile power market
For Serbia and Republika Srpska, the strategic rationale is clear.
Hydropower remains one of the few dispatchable, low-carbon baseload sources available in the region. In a market increasingly shaped by volatile gas prices and intermittent renewables, assets like Buk Bijela provide:
• Grid stability and balancing capacity
• Reduced exposure to imported gas
• Long-term low marginal cost electricity
Within the SEE power market context—where price spreads and congestion are widening—such assets carry strong system value, particularly when integrated into cross-border balancing and ancillary services markets.
Montenegro’s position: Zero energy gain, high environmental exposure
The central controversy lies in Montenegro’s asymmetric exposure.
According to project documentation and expert analysis, Buk Bijela would not contribute electricity to Montenegro’s system, as the plant will operate within the energy frameworks of Serbia and Republika Srpska.
At the same time, critics argue that Montenegro could bear environmental consequences—particularly in relation to:
• The Tara River canyon, a UNESCO-protected site
• Biodiversity and hydrological systems linked to Tara and Piva
• Tourism assets tied to one of Europe’s deepest canyons
Environmental experts warn that earlier project versions could have submerged 12–18 km of the Tara canyon, while even revised designs remain controversial due to incomplete transparency on hydrological impacts.
The project would also transform parts of the Drina basin into a ~30 km reservoir system, altering river dynamics at a regional scale.
Two competing narratives: “No impact” vs systemic risk
The project debate is sharply polarized.
On one side, official environmental impact assessments—backed by project developers and energy companies—conclude that there will be no significant cross-border environmental impact on Montenegro, including no effect on Durmitor National Park or the Tara River beyond existing hydropower influence.
On the other side, environmental groups and independent experts argue that:
• Key hydrological parameters remain insufficiently disclosed
• Cumulative impacts of cascade development are underestimated
• UNESCO status of protected areas could be jeopardized
This divergence reflects a broader issue in SEE infrastructure development: environmental assessments vs cumulative ecosystem risk, particularly in river basin projects.
Legal and political uncertainty still unresolved
Despite renewed momentum, the project is not fully de-risked.
A major unresolved issue is the legal dispute over concession rights within Bosnia and Herzegovina, which has already been flagged by the Constitutional Court and remains unsettled.
This creates hesitation among potential contractors—including Chinese engineering firms—who are reportedly cautious about entering a project with unresolved legal status.
At the same time, Montenegro itself is institutionally divided:
• The government has previously stated it will not participate in the project
• Parts of the political majority and energy sector stakeholders have expressed support or openness
• Regulatory engagement from Montenegrin institutions has been described as limited or inconsistent
Energy transition vs environmental constraint
Buk Bijela sits at the intersection of two competing regional priorities:
Energy security and decarbonisation
vs
Environmental protection and tourism-driven economies
For Serbia and Republika Srpska, the project aligns with a broader strategy of expanding domestic generation capacity and reducing import dependency.
For Montenegro, the calculus is fundamentally different. The country’s economic model is heavily dependent on:
• Tourism (especially eco and nature-based segments)
• Environmental branding
• EU accession alignment, including biodiversity protection
This creates a structural tension: participation in regional energy projects could strengthen energy security but undermine the very assets that define Montenegro’s economic positioning.
Investment perspective: High system value, high ESG risk
From an investor standpoint, Buk Bijela illustrates a classic SEE infrastructure profile:
• Moderate CAPEX (~€200–400 million)
• Strong long-term generation value
• Low operating costs once commissioned
But it is offset by elevated risk layers:
• Cross-border environmental disputes
• Legal uncertainty within BiH
• ESG scrutiny from EU institutions and lenders
In an era of tightening ESG compliance—particularly under EU frameworks—projects with unresolved environmental questions face increasing financing constraints.
Regional signal: Hydropower returns to the strategic agenda
What the Buk Bijela case ultimately signals is a broader shift.
After a decade dominated by solar and wind expansion, hydropower is returning to the strategic agenda in Southeast Europe, driven by the need for system stability and flexible generation.
However, unlike earlier development cycles, new hydro projects are now entering a far more complex environment—where:
• Environmental constraints are stronger
• Public opposition is more organized
• EU regulatory alignment is more demanding
A project advancing without full regional consensus
The current trajectory suggests that Buk Bijela will continue progressing, driven by Serbia and Republika Srpska, even without Montenegro’s participation.
This creates a new regional reality: infrastructure with cross-border impact but without cross-border alignment.
For Montenegro, the issue is no longer whether the project proceeds—but how to position itself in relation to it, balancing environmental protection, diplomatic engagement, and long-term energy strategy.
What is unfolding is not just a hydropower project, but a test case for how Southeast Europe manages the next generation of infrastructure—where energy security, capital deployment, and environmental limits increasingly collide.
