Elektroprivreda Crne Gore (EPCG), Montenegro’s state-owned utility, has announced that it has incurred a cost burden of €333 million due to payments made to renewable energy producers under previous incentive schemes. This figure underscores the financial implications of contracts that were established during the administration of the former Democratic Party of Socialists.
The payments primarily relate to guaranteed electricity purchases from renewable energy projects, structured under feed-in tariff agreements. The costs are predominantly absorbed by EPCG and subsequently passed on to consumers through the electricity system.
A notable example includes the Možura Wind Farm, which generated 753,503 MWh of electricity, resulting in total payments of approximately €72.3 million. This translates to an average purchase price of about €96/MWh, while the same volume sold to end-users was valued at around €44–45/MWh. This discrepancy has created a negative spread exceeding €38.5 million within the domestic supply framework.
EPCG further indicated that despite the €333 million disbursed to privileged producers, the utility has only managed to generate approximately €140 million in downstream revenue from selling this electricity to consumers. This situation highlights a significant mismatch between procurement costs and regulated retail prices.
The existing contractual arrangements remain effective, with key agreements—especially for Možura—extending until 2031. This arrangement locks in above-market or administratively set tariffs for several additional years.
EPCG contends that this system has shifted market risk from producers to the public system, allowing renewable generators to secure guaranteed pricing while the utility bears the risk associated with fluctuations between procurement costs and regulated supply tariffs. The company also pointed out that while producers had the option to transition to market-based sales, most opted to remain with the guaranteed scheme due to its more stable returns.
The financial landscape is further complicated by market distortions experienced during the 2022 energy crisis. Although spot prices on exchanges like Hungary’s HUPX temporarily exceeded contracted tariffs, yielding a nominal positive spread of around €21.6 million, this benefit was largely isolated to that year. Excluding 2022 from consideration reveals a cumulative negative market comparison, reinforcing EPCG’s assertion that the current system lacks a sustainable market-oriented structure.
This situation within Montenegro’s energy transition framework reflects a broader regional trend where early renewable support initiatives—initially aimed at accelerating deployment—are now resulting in long-duration financial obligations, particularly in systems characterized by regulated end-user tariffs and limited wholesale market pass-through capabilities.
