EPCG pushes back Perućica A8 hydro unit commissioning to 2028 after procurement review runs long

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 contractor selection still tied up in an extended procurement review, the project is now effectively pushed into 2028—an outcome that underlines how even mature hydro modernization efforts in Southeast Europe are increasingly exposed to international compliance requirements and industrial bottlenecks.

Tender evaluation extends; KfW oversight shapes timeline

EPCG said the tender process for fabrication, delivery, installation and commissioning of the new A8 turbine-generator unit remains under evaluation months after bids were opened in September 2025. The utility attributed the extended review to what it described as a significantly more demanding process than anticipated, citing both the volume and complexity of technical documentation submitted by bidders and the requirement to run procurement under the supervision and procedural standards of German development bank KfW.

Two European-led bids were submitted. 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 added that its technical evaluation commission is still preparing its technical assessment report. That report must then be reviewed by KfW before financial offers can be formally opened and a final contractor selected. EPCG now expects contract activation during mid-2026, compressing construction into roughly 24 months and removing any possibility of commissioning during 2027.

Capacity gains remain significant for Montenegro’s renewable system

The A8 expansion is presented by EPCG as one of Montenegro’s most strategically important modernization investments within its existing renewable generation fleet. Once completed, the additional unit is expected to raise installed capacity at the Perućica complex from 307 MW to approximately 365.5 MW, while adding up to 50 GWh of annual electricity production capacity after system optimization.

Beyond nominal output growth, EPCG framed Perućica modernization as relevant to Montenegro’s long-term decarbonisation approach. Hydropower remains central to balancing domestic generation and supporting future integration of larger solar and wind portfolios. As regional electricity systems move toward higher renewable intermittency and more volatile intraday market dynamics, flexible hydro assets such as Perućica become more valuable—not only for domestic supply but also for balancing needs across interconnected markets.

Delay intersects with supply-chain pressure and EU-backed financing

For EPCG, the postponement arrives amid simultaneous efforts including aggressive solar deployment, transmission modernization and broader portfolio decarbonisation. The utility faces additional pressure to maintain stable domestic generation capacity amid shifting hydrology patterns, regional market volatility and increasing cross-border balancing requirements.

EPCG also pointed to ongoing global supply-chain pressures affecting major electromechanical equipment procurement, including component availability constraints and cost inflation. Those issues have become more common across European hydropower, grid and renewable infrastructure projects since 2022—particularly for large rotating equipment, transformers, turbine systems and power electronics.

Financing conditions further elevate the project’s strategic importance. EPCG secured a EUR 40 million loan agreement with KfW in September 2024 for 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.

Broader implications for market flexibility in Western Balkans

The delayed A8 commissioning has implications beyond EPCG’s own generation portfolio. It affects Montenegro’s future market flexibility, reserve positioning and renewable integration capacity at a time when Southeast Europe’s electricity market is undergoing structural transformation driven by EU decarbonisation policy, renewable expansion and market coupling dynamics.

EPCG noted that additional flexible hydro capacity is increasingly valuable across the Western Balkans electricity system as solar generation grows in Serbia, Montenegro and Albania. Combined with expanding cross-border electricity trading and negative pricing episodes in neighboring EU-connected markets, this trend increases demand for dispatchable balancing generation—making hydro flexibility an asset that can help monetize intraday volatility and cross-border price spreads.

While EPCG said it expects the extended evaluation period will ultimately secure higher-quality technical solutions and equipment standards, the revised schedule highlights how strategic energy-transition infrastructure across Southeast Europe is becoming dependent on complex international financing structures, European procurement compliance frameworks and industrial supply-chain resilience.