North Macedonia has dismantled two small hydropower plants in the Lesnica valley, establishing a significant precedent for energy assets located inside protected areas.
The removal of Pena 84 and Pena 85 from Šar Mountain National Park is the country’s first known permanent dismantling of operating or developed small hydropower infrastructure following years of rapid concession-based construction.
The works included the removal of generating equipment, pipelines and associated infrastructure. Authorities plan to continue by dismantling remaining concrete structures, removing pipeline sections along the Pena River and restoring the natural river corridor.
The decision reflects the changing risk profile of small hydropower in the Western Balkans. Projects were historically supported because they provided renewable generation and attracted private investment with relatively modest construction budgets. Their limited individual output, however, has increasingly been weighed against their cumulative effect on river flows, biodiversity and protected habitats.
The management plan for Šar Mountain National Park prohibits new hydropower construction in all protection zones. The Lesnica valley is also associated with areas proposed for inclusion in the Natura 2000 and Emerald ecological networks, making restoration relevant to North Macedonia’s environmental alignment with the European Union.
For investors and lenders, the dismantling demonstrates that possession of a concession, permit or historical approval may not protect an asset from later environmental enforcement. Projects situated in ecologically sensitive locations face exposure to licence withdrawal, rehabilitation obligations, stranded construction costs and reputational risk.
That risk extends to banks financing hydropower portfolios. Environmental due diligence must examine cumulative river-basin effects rather than assessing each plant in isolation. Minimum ecological flows, fish migration, pipeline routes, construction access and the reliability of hydrological studies require continuous monitoring throughout the operating period.
The case also raises questions about responsibility for decommissioning costs. A bankable small-hydro framework should define whether restoration is funded by the concessionaire, the state, an environmental guarantee or a dedicated reserve accumulated during operations.
North Macedonia’s decision does not eliminate a role for hydropower. Reservoir and larger flexible plants remain valuable to a system integrating solar and wind. It does, however, weaken the investment case for low-output diversion projects in protected mountain rivers, particularly where ecological damage is disproportionate to annual generation.
The removal of Pena 84 and Pena 85 turns environmental compliance from a permitting-stage issue into a full-life-cycle financial obligation. Developers can no longer assume that completed construction makes an environmentally disputed asset permanent.
