The Hydropower system Senj 2 is the largest strategic energy project in the Republic of Croatia. With the implementation of the project through two phases of expansion, the Hydropower system Senj 2 will become part of the existing hydroelectric power system of the undersized Hydropower system Senj on the rivers Lika and Gacka, which would increase the share of peak and regulation energy. Project investor, Hrvatska elektroprivreda d.d. is the largest investor in hydropower and renewable energy sources in the Republic of Croatia. The first phase of the extension of the Hydropower system Senj 2 includes the construction of the Hydropower system Kosinj: the Kosinj reservoir, the Hydroelectric plant Kosinj and the reconstruction of the Hydroelectric power plant Sklope, while the second phase of the extension includes the construction of the Hydroelectric power plant Senj 2: the Hydroelectric power plant Senj 2, the compensation pool Gusić polje 2, the supply system from Gusić polje to the Hydroelectric power plant Senj 2. It is estimated that first phase of the extension would contribute an average of 232 GWh of electricity per year, i.e. 22% more electricity, while the second phase of the extension would contribute an average of 92 GWh of electricity per year, i.e. 7% more electricity, which together the average annual amount is 324 GWh of electricity, that is, 31% more electricity compared to the current state of construction of the Hydropower system Senj. Given that the project is an extremely important part of the energy policy of the Republic of Croatia and will greatly contribute to the country's energy security in increasingly demanding times, this paper analyzes its economic and energy potential. Although the energy and economic significance of the project is huge, it will have an irreversible impact on the environment. Also, given the significantly changed macroeconomic conditions, primarily higher inflation that increases project costs by as much as 30%, this paper analyzes in more detail the economic and energy aspects of its realization. According to the results of the economic-financial analysis, the Hydropower system Senj 2 project is profitable despite the challenges, but with a longer investment return period, while in macroeconomic terms it will contribute to positive multiplier effects for the Croatian economy.