Serbia and Romania have taken a preliminary step towards developing the long-discussed Đerdap 3 pumped-storage hydropower plant, reviving a project that could become one of the most consequential investments in the region’s electricity system.
The two governments signed a memorandum in Bucharest providing for the exchange of technical information and closer institutional co-operation. Serbia intends to begin preparing spatial-planning documents and part of the project’s technical documentation during 2026, while a joint working group will oversee the exchange of data between the two countries.
The agreement is significant because Đerdap 3 cannot be developed as an exclusively Serbian undertaking. Its location on the Danube, and its potential interaction with the jointly operated Đerdap hydropower system, make Romanian participation essential for technical planning, water management and environmental approvals.
Serbia and Romania have managed the river’s energy and navigation infrastructure under bilateral arrangements dating from 1963. The existing Đerdap 1 and Đerdap 2 power stations demonstrate that the two countries can operate large cross-border assets, although a pumped-storage project would require a new commercial and regulatory framework.
Pumped-storage plants consume electricity when supply is abundant or prices are low, using it to move water to an elevated reservoir. That water is released through turbines when electricity demand and prices rise. The plant therefore functions as a large energy-storage system rather than a conventional source of continuous generation.
Such flexibility is becoming more valuable as Serbia and neighbouring markets add wind and solar capacity. Wind production can change sharply over several hours, while solar generation falls rapidly in the evening, often just as household consumption increases. A sufficiently large storage plant could provide balancing services, emergency reserves and peak-hour electricity while reducing the need to curtail renewable plants during periods of excess production.
The commercial case, however, will depend on factors that remain undisclosed. The memorandum does not establish the final capacity, construction cost, ownership structure, electricity-market arrangements or financing model. It should therefore be treated as a pre-investment agreement rather than a construction decision.
Serbia has already completed preliminary studies and received six submissions after inviting companies to express interest in the project. Those offers are being evaluated within the framework of Serbia’s strategic energy co-operation with the United States. The process may help Belgrade identify potential developers, technology suppliers and financiers, but it does not remove the need for a binding agreement with Romania.
For private investors, the central question is how Đerdap 3 would earn its return. Revenue could come from buying and selling electricity at different times, providing balancing services to the transmission system, maintaining reserve capacity or receiving regulated availability payments. Electricity-price arbitrage alone may not be sufficient to finance an asset with a large initial cost and a construction period potentially extending over many years.
The project will also face environmental and engineering scrutiny. Reservoir design, geological conditions, Danube water levels, downstream navigation and effects on protected areas could materially alter both the schedule and the capital requirement. Transboundary consultation would add another layer to the permitting process.
The memorandum forms part of a broader Serbian-Romanian energy agenda. The countries are also working on a gas interconnector with planned capacity of at least 1.6bn cubic metres a year. Serbia expects to complete its 13.1-kilometre section between Mokrin and the Romanian border in 2027, creating access to Romania’s BRUA gas corridor. Electricity-transmission investments under the Northern Corridor programme are intended to add about 500MW of cross-border capacity.
Together, those projects point towards a more integrated regional energy market. But Đerdap 3 will become investable only when Serbia and Romania move beyond data exchange and settle the project’s size, revenue model, ownership and allocation of construction risk.
