Montenegro’s state-controlled power utility EPCG has acknowledged that the long-planned commissioning of the new A8 generating unit at the Perućica hydropower plant will not take place in 2027 as previously announced, with the startup now effectively pushed into 2028 following delays in the contractor selection process for one of the country’s most important hydro modernization projects.
The postponement highlights the increasingly complex execution environment facing strategic energy infrastructure projects across Southeast Europe, where procurement procedures, supply-chain constraints, financing conditions and technical compliance requirements are extending delivery timelines even for comparatively mature hydroelectric assets.
According to EPCG, the tender process for fabrication, delivery, installation and commissioning of the new A8 turbine-generator unit at the Elektroprivreda Crne Gore Perućica hydropower plant remains under evaluation months after bids were opened in September 2025. The utility stated that the review process has proven significantly more demanding than originally anticipated because of the volume and complexity of the technical documentation submitted by bidders and the requirement to conduct the procurement under the supervision and procedural standards of German development bank KfW.
Two European-led bids were submitted under the tender. One came from a consortium comprising Voith Hydro GmbH & Co KG, Končar and Elnos, while the second was filed by Slovenia-based Litostroj Power.
EPCG said the technical evaluation commission is still preparing its technical assessment report, which must then undergo review by KfW before financial offers can be formally opened and a final contractor selected. The utility now expects contract activation during mid-2026, effectively compressing the construction timeline into approximately 24 months and eliminating the possibility of commissioning during 2027.
The A8 expansion project represents one of the most strategically important modernization investments within Montenegro’s existing renewable generation fleet. Once completed, the additional unit is expected to increase installed capacity at the Perućica hydroelectric complex from 307 MW to approximately 365.5 MW, while adding up to 50 GWh of annual electricity production capacity after system optimization.
Beyond the nominal capacity increase, the project carries broader implications for Montenegro’s electricity market structure and long-term decarbonisation strategy.
Hydropower remains the backbone of Montenegro’s domestic electricity system and continues to provide the balancing flexibility necessary for future integration of larger solar and wind portfolios. In practice, projects such as Perućica modernization are becoming increasingly valuable as regional electricity systems move toward higher renewable intermittency and more volatile intraday market dynamics.
For EPCG, the delay comes at a particularly sensitive moment. The utility is simultaneously pursuing aggressive solar deployment, transmission modernization and broader portfolio decarbonisation while facing growing pressure to maintain stable domestic generation capacity amid changing hydrology patterns, regional market volatility and increasing cross-border balancing requirements.
The Perućica modernization program also reflects a wider regional trend in Southeast Europe where utilities are prioritizing refurbishment and optimization of legacy hydro assets rather than relying exclusively on greenfield generation expansion. Existing hydro infrastructure offers comparatively faster permitting pathways, lower environmental opposition risks and more predictable grid integration characteristics than many new generation projects.
However, the Perućica delay also demonstrates how even refurbishment-based projects are increasingly exposed to broader European industrial bottlenecks.
EPCG specifically referenced ongoing global supply-chain pressures, component availability constraints and cost inflation affecting major electromechanical equipment procurement. Those pressures have become increasingly common across European hydropower, grid and renewable infrastructure projects since 2022, particularly for large rotating equipment, transformers, turbine systems and power electronics.
Financing conditions add another layer of strategic importance to the project. EPCG secured a EUR 40 million loan agreement with KfW in September 2024 for the Phase III reconstruction and expansion of Perućica, with repayment structured over 15 years, including a five-year grace period. Total KfW-linked modernization financing for the Perućica complex now exceeds EUR 83 million across multiple rehabilitation phases.
The project therefore sits within a much broader European-backed decarbonisation and infrastructure modernization framework rather than being a standalone turbine replacement.
From a regional market perspective, additional flexible hydro capacity is becoming increasingly valuable across the Western Balkans electricity system. The rapid growth of solar generation in Serbia, Montenegro and Albania, combined with expanding cross-border electricity trading and negative pricing episodes in neighboring EU-connected markets, is materially increasing the value of dispatchable balancing generation.
That trend is particularly important for Montenegro because hydro flexibility increasingly functions not only as domestic generation but also as a regional balancing and trading asset capable of monetizing intraday volatility and cross-border price spreads.
The delayed A8 commissioning therefore has implications extending beyond EPCG’s own generation portfolio. It also affects Montenegro’s future market flexibility, reserve positioning and renewable integration capacity at a time when the broader Southeast European electricity market is undergoing structural transformation driven by EU decarbonisation policy, renewable expansion and market coupling dynamics.
While EPCG continues to insist that the extended evaluation period will ultimately secure higher-quality technical solutions and equipment standards, the revised timeline underscores how strategic energy-transition infrastructure across Southeast Europe is becoming increasingly dependent on complex international financing structures, European procurement compliance frameworks and industrial supply-chain resilience.
