Serbia Advances Đerdap 3 Hydropower Project With Six U.S. Firms Showing Interest

Serbia’s long-planned Đerdap 3 pumped-storage hydropower plant has entered a new development phase after six U.S. companies submitted expressions of interest for its potential construction and development. The project, estimated at 2,400 MW of installed capacity and an investment value of approximately €2.63 billion to €3 billion, is now undergoing qualification review following a public call that closed on 25 June 2026.

The procedure was launched through the U.S. Embassy in Belgrade under the framework of Serbia–U.S. strategic energy cooperation, making Đerdap 3 a key test for expanding cooperation between the two countries in major energy infrastructure projects. The cooperation framework was signed in Washington on 18 September 2024 by Serbian Foreign Minister and U.S. Under Secretary. Serbia presented the agreement as a foundation for cleaner energy development, long-term electricity security and stronger bilateral cooperation.

Pumped-storage facility planned on the Danube

Unlike conventional hydropower facilities, Đerdap 3 is planned as a reversible pumped-storage system designed to store electricity during periods of excess supply and generate power during periods of higher demand.

According to the project concept developed by Elektroprivreda Srbije (EPS), the facility would be located at the 1,007th kilometre of the Danube, using water from Đerdap Lake at an elevation of approximately 68 metres. During low-demand periods, electricity would be used to pump water into planned upper reservoirs Pesača and Brodica. During peak demand, stored water would flow back through turbines to generate electricity.

The planned development consists of three stages, with total reservoir water volume of 578 million cubic metres and an estimated energy storage capacity of approximately 484 GWh in the final phase. The full configuration would provide 2,400 MW of installed capacity.

Serbia seeks greater flexibility in electricity system

The project comes as Serbia works to expand renewable energy capacity while reducing pressure from its continued dependence on coal-based generation. Serbia’s 2024 Integrated Energy and Climate Plan targets a renewable energy share of 33.6% in gross final energy consumption by 2030, including a 45.2% renewable share in electricity generation.

Available electricity-generation data show that the transition remains incomplete. Ember’s 2025 country data indicate that Serbia produced 28% of electricity from low-carbon sources, while Serbian reporting based on Ember’s 2024 figures showed coal accounted for 62.9% of electricity generation. The difference between long-term targets and current electricity production highlights the role that large-scale storage could play in balancing renewable energy and improving grid flexibility.

Investment scale creates financing and commercial challenges

The estimated investment requirement places Đerdap 3 among the largest planned energy-storage projects in Southeast Europe. At €2.63 billion, the estimated capital expenditure would represent roughly €1.1 million per MW of installed capacity if the complete 2,400 MW configuration is developed. At €3 billion, the figure would approach approximately €1.25 million per MW, excluding financing costs, contingencies, grid upgrades, environmental mitigation measures, land requirements, access infrastructure, tunnels, electromechanical systems and possible cross-border requirements.

The project would represent a major capital allocation decision for Serbia’s energy sector, alongside other priorities including RHE Bistrica, grid reinforcement, renewable-energy projects, battery storage development, coal transition costs and EPS restructuring.

Development process to define final project structure

Despite the scale of the proposed project, Đerdap 3 remains in an early development stage. The public-call documentation foresees further feasibility work and FEED documentation to determine the final configuration, number of units, installed capacity and reservoir dimensions.

The initial development package is expected to include:

• conceptual design;
• preliminary design with feasibility study;
• geotechnical and hydrological studies;
• construction planning;
• environmental impact assessment (EIA);
• environmental and social impact assessment (ESIA).

The FEED phase is expected to last approximately 36 months, after which the selected supplier could potentially move toward construction, subject to final agreements. The project’s final size and implementation model remain open, with a potential first-stage development between 600 MW and 1,000 MW considered as one possible approach before a full-scale expansion to 2,400 MW.

Romania coordination remains key issue

Because Đerdap 3 would operate on the Danube, cooperation with Romania represents one of the central requirements for the project. Serbia and Romania already share the Đerdap 1 and Đerdap 2 hydropower systems, and Bucharest has an interest in ensuring that the new project does not negatively affect river flows, navigation or electricity production at the Iron Gates I and Iron Gates II facilities.

Romania has moved toward discussions with Serbia on a memorandum of understanding for information exchange regarding Đerdap 3. Romanian authorities have sought assurances that the project will not disrupt existing hydropower operations or Danube navigation. The international nature of the Danube means that any future financing process will likely require a formal Serbian-Romanian framework covering hydrological impacts and operational coordination.

Environmental approvals will shape investment prospects

The project is planned within the wider Đerdap area, one of Serbia’s environmentally sensitive regions. Future approvals will need to address potential impacts related to reservoirs, tunnelling, access infrastructure, biodiversity, water management and cumulative effects on the Danube corridor.

The project is expected to require not only an EIA but also comprehensive ESIA documentation, public consultation procedures, biodiversity assessments, transboundary reviews and mitigation plans. These requirements will be important for attracting institutional investors and international lenders that increasingly apply strict environmental and social standards.

U.S. participation expands strategic importance

The involvement of U.S. companies has increased the strategic importance of Đerdap 3, although expressions of interest do not represent confirmed financing commitments. For the United States, the project provides an opportunity to participate in a major Balkan electricity infrastructure development at a time when energy storage, grid stability and flexibility are becoming central elements of energy transition strategies.

For Serbia, the project could support diversification of energy-sector partnerships involving U.S. companies, alongside existing cooperation patterns involving Russian energy links, Chinese infrastructure contractors and European financial institutions.

Storage market competition and revenue model remain central

The economic case for Đerdap 3 will depend on how effectively the project can generate value from multiple electricity-system services.

Battery storage technologies are expanding rapidly for short-duration applications such as frequency regulation and intraday trading. Their shorter construction timelines and declining costs make them competitors for several grid services. Đerdap 3 would instead rely on its large-scale storage duration, reservoir capacity and ability to support long-term electricity balancing.

The project would need a revenue structure based on more than wholesale electricity arbitrage. Potential value streams include capacity payments, reserve services, balancing-market participation, renewable integration, congestion management and regional flexibility services.

EPS faces major strategic decision

For EPS, Đerdap 3 could become either a major stabilising asset or a significant financial obligation. A successful model would require phased development, transparent procurement, reliable revenue mechanisms and cost-sharing between Serbia’s domestic electricity system and regional beneficiaries.

The project’s construction risks include geological conditions, tunnels, underground structures, reservoirs, hydraulic systems and electromechanical integration. These risks will need to be addressed through detailed FEED studies and realistic contractual arrangements. A fixed-price EPC structure alone would not remove risks related to subsurface conditions, contract variations, delays, performance requirements and construction interfaces.

Financing expected to require multiple sources

The financing structure is expected to involve a combination of state support, export-credit participation, development-finance institutions, commercial lending and contractor-linked financing.

Participation by U.S. companies could create access to potential American export-credit or development-finance instruments, but investors will still assess whether project revenues are secured and whether EPS or the Serbian state would carry financial obligations. Key financing questions include regulated capacity payments, commercial revenue sources, cross-border market opportunities and long-term electricity-system benefits.

Industrial competitiveness linked to future electricity demand

The strategic importance of Đerdap 3 also relates to Serbia’s plans to attract additional industrial investment, including manufacturing, mining, processing and electricity-intensive industries. As European carbon regulations increase pressure on exporters, companies are expected to place greater importance on reliable access to lower-carbon electricity.

Pumped storage alone does not create renewable electricity, but it can improve the usability and reliability of renewable generation by reducing volatility and supporting more predictable electricity supply. For Serbia, a large storage asset could strengthen the country’s ability to offer more stable electricity solutions to industries affected by European supply-chain requirements and carbon-accounting standards.

Regional electricity role could expand

Southeast Europe’s electricity market is undergoing changes as solar capacity grows, coal facilities age, hydrological conditions become less predictable and electricity markets become increasingly interconnected. A Serbian storage facility of Đerdap 3’s scale could potentially support electricity balancing across neighbouring markets, including Hungary, Romania, Bulgaria, Croatia, Bosnia and Herzegovina, Montenegro and Greece.

Its future value will depend on whether regional electricity-market structures allow cross-border flexibility services and recognise the wider system benefits of large-scale storage. The next phase of development will determine whether Đerdap 3 becomes a commercially viable regional energy asset. Key factors will include FEED studies, environmental approvals, Romanian coordination, procurement standards, financing arrangements and the creation of a sustainable market model.