The joint venture will explore the hydro generation capacity of Nisava river in the Pirot region, eastern Serbia, the TV channel reported, but gave no further details.
The municipality has chosen around 40 locations for mini hydropower plants with total estimated capacity of 45 megawatts (MW), Pirot TV said.
Serbia's state-owned power monopoly Elektroprivreda Srbije (EPS) last year also announced plans to build a mini hydropower plant in the region as part of a larger programme, seeking to raise the share of renewable energy sources in the ex-Yugoslav republic.
The combined installed capacity of Serbia's power plants is 8,355 MW, including 5,171 MW at coal-fired plants, 353 MW at gas-fired plants and 2,831 MW at hydro plants under the latest data available from the EPS.
Decotra (www.decotra.it) aims to connect Italy's economy with countries of southeast Europe, primarily in the power generation sector, but also in the sectors of gas, water, environment, waste treatment and transportation, it said on its website.