Kosovo on Wednesday signed a deal with US power generator ContourGlobal for the construction of a 500-megawatt coal-fired power plant that aims to provide energy independence for the Balkan country.

"This project will represent the largest foreign investment in Kosovo's history," said the US ambassador to Kosovo, Greg Delawie, at the signing ceremony.

Kosovo's government said ContourGlobal would provide 30 percent of the total cost of building the "Kosova e Re" (New Kosovo) plant, worth about 1.3 billion euros ($1.5 billion). The US firm will also be "responsible for arranging debt financing".

The plant will replace the decades-old Kosovo A plant and cover nearly half of Kosovo's electricity demand, with the aim of reducing Kosovo's dependency on "unpredictable energy prices in the regional market", according to the government statement.