Renewable energy sources play an increasingly important role in the world energy production and they have became more common and profitable compared to rising oil and other energy sources prices. One of the most important energy sources is water because of its ecological purity and absence of major emissions of harmful substances. The use of renewable energy sources reduces the need for usage of harmful fossil sources. Globally, the expansion of the energy production using renewable sources is an imperative that will determine further directions of economic development and ecological sustainability. Encouraging the construction of an increasing number of renewable, unstable energy sources such as wind power and solar power a need for regulation in the power system also grows. Therefore, it is necessary to build a hydro power plan in Croatian power system that can provide auxiliary services and enable greater acceptance of energy from renewable sources. Evaluating multifunctional hydroengineering and hydroelectric infrastructure facilities is becoming more complex. The remained unused Croatian hydropotential requires a more complex approach than it has previously been carried out and with that goal, we are concucting detailed cost-effectiveness analysis with regard to all the benefits and costs of building such hydroelectric power plant. In addition to the estimate of investment and construction costs, we are defining the business model of realization of the investment. In the sensitivity analysis, three key parameters are identified on which depends the investments cost-effectiveness: 1) investment costs, 2) average annual power generation and 3) electricity prices. Three of the observed factors are also three major project risks. Financial rating criteria of the project are current net value, internal rate of return and return time which indicate the justification for the construction of this hydro power plant given that the power plant exclusively produces peak energy. The construction of the hydro power plant increases the security of the system and is expected to make a significant contribution to the provision of services to the power system and to ensure balancing energy. Usage of the remaining hydropower during its construction would also be important for launching and realization of the national investment cycle.