Serbia and Romania have renewed cooperation on the proposed Đerdap 3 pumped-storage hydropower plant, signing a memorandum in Bucharest that launches a new phase of technical coordination for one of the region’s largest potential electricity infrastructure investments.
The agreement provides for the exchange of technical information and stronger institutional cooperation, while Serbia plans to begin preparing spatial-planning documentation and part of the project’s technical documentation during 2026. A joint working group will supervise the exchange of data between the two countries.
Cross-border coordination central to project development
The proposed facility cannot be developed solely by Serbia because of its location on the Danube River and its interaction with the jointly operated Đerdap hydropower system. Romanian participation is required for technical planning, water management and environmental permitting.
The two countries have jointly managed the Danube’s energy and navigation infrastructure under bilateral agreements dating back to 1963. The existing Đerdap 1 and Đerdap 2 hydropower plants demonstrate long-standing cross-border cooperation, although the development of a pumped-storage facility would require a new commercial and regulatory framework.
Unlike conventional generating stations, pumped-storage hydropower facilities consume electricity during periods of abundant supply or low market prices to pump water into an elevated reservoir. The stored water is later released through turbines when electricity demand and prices increase, allowing the plant to function as a large-scale energy storage system.
Growing renewable generation strengthens storage demand
The project gains importance as Serbia and neighbouring electricity markets continue expanding wind and solar generation. Wind output can fluctuate significantly over short periods, while solar production declines rapidly during evening hours when household electricity demand typically rises. A large pumped-storage installation could provide balancing services, emergency reserves and electricity during peak-demand periods, while reducing the curtailment of renewable generation when surplus electricity is available.
Despite the strategic significance of the memorandum, it does not determine the project’s final generating capacity, construction cost, ownership structure, electricity-market arrangements or financing model. The agreement therefore represents a pre-investment framework rather than a final investment or construction decision.
Project studies and investor interest continue
Serbia has already completed preliminary studies for the project and has received six submissions following an invitation for companies to express interest in participating.
Those proposals are currently being evaluated within the framework of Serbia’s strategic energy cooperation with the United States. The process may assist in identifying potential developers, technology providers and financing partners, although it does not replace the need for a binding bilateral agreement with Romania.
For investors, the project’s commercial viability will depend on its future revenue model. Potential income streams include electricity price arbitrage, balancing services for the transmission system, reserve-capacity services and regulated availability payments. Revenue generated solely from electricity trading may not be sufficient to support an asset requiring substantial upfront capital investment and a construction period that could extend over several years.
Environmental approvals and regional infrastructure plans
Development of Đerdap 3 will also require detailed environmental and engineering assessments. Reservoir design, geological conditions, Danube water levels, downstream navigation and impacts on protected areas could affect both the project schedule and overall capital requirements. Because of the cross-border nature of the development, transboundary consultation will form part of the permitting process. The memorandum is part of broader energy cooperation between Serbia and Romania.
The two countries are also advancing work on a gas interconnector with planned capacity of at least 1.6 billion cubic metres per year. Serbia expects to complete its 13.1-kilometre section between Mokrin and the Romanian border in 2027, providing access to Romania’s BRUA gas corridor.
In addition, electricity transmission investments under the Northern Corridor programme are expected to increase cross-border transfer capacity by approximately 500 MW. Further progress on Đerdap 3 will depend on Serbia and Romania reaching agreement on the plant’s capacity, ownership structure, financing model, revenue framework and allocation of construction risks beyond the current technical data exchange process.
