Montenegro’s renewable energy sector is positioned as a key component of its economic strategy, yet its actual contribution remains significantly underutilized. The country benefits from advantageous geographical conditions and natural resources, but the development of installed renewable capacity has been hindered by regulatory challenges, limitations in grid infrastructure, and complex financing issues.
Currently, hydropower constitutes approximately 60% of the total installed generation capacity, particularly during years with favorable hydrological conditions. However, the variability in hydropower output poses risks associated with climate change, necessitating a move towards diversification. Solar and wind energy resources present viable alternatives for this diversification. Conservative assessments suggest that Montenegro’s technically feasible renewable energy potential exceeds 1.5 GW, while the current installed capacity for non-hydro renewables is only in the range of hundreds of megawatts.
The financial landscape for renewable projects is becoming increasingly attractive. For instance, the capital expenditure required for utility-scale solar installations ranges between €600–750 per kilowatt, whereas onshore wind projects typically require €1.2–1.4 million per megawatt, contingent on specific site conditions. The levelised cost of electricity generated from these new projects is competitive with that of imported energy, especially when factoring in carbon pricing and associated transmission costs.
Despite these economic incentives, the advancement of project pipelines remains sluggish. Permitting processes often take more than 24 months, which can diminish investor returns. Additionally, grid connection capacity, particularly in coastal and northern regions of Montenegro, is limited, compelling developers to consider phased or scaled-down project implementations. This situation results in a paradox where there is significant theoretical potential juxtaposed with slow execution rates.
From a broader economic standpoint, renewable energy development transcends mere energy supply considerations. It serves as a means to reduce dependency on electricity imports, which can exceed €100 million annually during dry years. Furthermore, it offers opportunities for electricity exports during surplus periods, contributing positively to the national balance of payments.
For Montenegro, expediting the deployment of renewable energy sources is not merely an environmental initiative but a crucial economic strategy. Delays in this area may heighten vulnerability to fluctuating energy markets and impede alignment with EU energy and climate policies that are increasingly shaping investment opportunities.
