The initial plans for the construction of a dam on the Iskar date to as early as 1900-1901, immediately after the building of the Pancharevo Hydroelectric Power Plant.

In 1921, the idea was once again brought up, but its accomplishment failed due to the municipality's inability to indemnify the residents of the neighbouring villages of Gorni Pasarel, Shishmanovo and Kalkovo.

Topographic photographs and a geological assessment regarding the dam were made and observations of the Iskar's water level at Pasarel were conducted in 1932-1941 in order to build what was initially called the St Peter's Reservoir (named after the monastery in Dolni Pasarel which was supposed to be near the reservoir).

Work on the projects for an Iskar water power system commenced in early 1948 in the newly established Energohidroproekt.

Preparatory works began in 1949, the main construction was carried out in the end of 1950, the water power system being officially opened on 6 September 1954.