Montenegro has seen its electricity import expenses decrease to less than €42 million in 2026, a substantial drop from approximately €182 million in 2025. This reduction is attributed to the recovery of domestic electricity generation following the extensive reconstruction of the Pljevlja thermal power plant.
Energy Minister Admir Šahmanović indicated that this notable decline is reflective of a more robust domestic electricity balance after the country faced an unusually high reliance on imports last year. The reduction of around €140 million underscores how sensitive Montenegro’s trade and utility finances are to the availability of significant generating assets.
The Pljevlja thermal power plant was offline for a considerable duration during 2025 due to reconstruction and environmental upgrades, which led the electricity utility EPCG to increase its demand from regional markets. This situation left the company vulnerable to fluctuating wholesale electricity prices and cross-border supply constraints, particularly during a period when hydrological conditions were crucial for Montenegro’s predominantly hydro-based energy generation.
With the Pljevlja plant now operational, EPCG’s exposure to these market pressures has decreased significantly. The lower import costs are expected to enhance cash flow and mitigate the risk of absorbing costly wholesale purchases into the utility’s financial statements.
This improvement also positively impacts Montenegro’s trade balance, as imported electricity has been one of the more volatile items in its import portfolio. However, it does not resolve the underlying structural challenges facing the country.
Montenegro continues to depend on a mix of coal, hydropower, and electricity imports, with generation levels fluctuating based on rainfall, plant availability, and market dynamics. In response, the government is accelerating efforts to develop renewable energy sources.
Minister Šahmanović announced that Montenegro has issued 65 urban-technical conditions for solar and wind projects, with around 10 large projects considered likely to advance toward implementation. The disparity between these figures highlights challenges in overcoming land use, planning, grid access, financing, and permitting issues.
The market is increasingly discerning between announced capacities and projects that are capable of moving into construction phases. Grid capacity remains a primary consideration for developing new wind and solar plants at scale without adequate transmission and balancing capabilities.
This necessity has led to projects involving CGES, battery storage solutions, and new cross-border connections becoming as critical as generation itself. The government has reiterated its plans for a second subsea electricity cable linking Montenegro and Italy. The existing interconnector already provides direct access to the Italian market and integrates into the broader Balkan electricity corridor.
A second cable could significantly enhance Montenegro’s strategic position in regional electricity trading if it is supported by new renewable generation and improved domestic transmission capabilities. However, investment viability hinges on more than just export potential; Montenegro must first establish reliable generation capacity and flexibility to manage its energy system without excessive dependence on imports.
The stark contrast between the €182 million import bill in 2025 and less than €42 million in 2026 illustrates this need for stable supply security alongside reduced expenditure. While electricity imports can be economically beneficial within an integrated regional market when they are cheaper than domestic production, issues arise when imports become necessary due to insufficient domestic capacity, exposing buyers to volatile market prices.
The current improvements also reflect a regained sense of supply security alongside decreased costs. Hydropower remains a significant variable; although Montenegro possesses considerable hydro capacity, dry years can lead to sharp declines in production, resulting in volatility distinct from coal outages. Renewables may help diversify energy sources but introduce their own variability challenges.
The government is also working on mandatory oil-product reserves, with Minister Šahmanović noting that approximately 40% of the required target has been achieved so far. The final system aims to secure enough reserves for 90 days of supply, contributing to a comprehensive energy security strategy.
Current household electricity prices are expected to remain stable as long as EPCG’s import expenses stay low. However, any return to significant imports due to droughts or major plant outages could complicate this stability.
The country is concurrently preparing for an energy transition in Pljevlja through a €50 million World Bank-supported district heating program, aimed at reducing pollution and supporting the municipality’s gradual move away from coal dependency. This creates a complex policy balance as Montenegro still relies on Pljevlja for avoiding substantial electricity imports while planning for a future where the plant’s role diminishes.
The contrasting import figures from 2025 and 2026 clearly illustrate this tension: close to €182 million spent on imports when Pljevlja was largely unavailable versus over three-quarters less with recovering domestic supply. The strategic goal is not merely to phase out coal generation but also to ensure sufficient replacement generation, storage, transmission capacity, and flexibility so that Montenegro does not revert to high import levels when Pljevlja eventually exits the system permanently.
The current balance of electricity supply for 2026 appears significantly stronger. The forthcoming challenge lies in whether Montenegro can leverage this opportunity to convert part of its renewable project pipeline into operational assets before facing another outage or market disruption that could elevate import costs again.
