The collaboration between Masdar and Elektroprivreda Crne Gore (EPCG) has transitioned from a broad political vision to a concrete project pipeline. The joint venture, equally owned by both entities, has formalized development agreements for the 115 MW Štedim solar project and the 35 MW Krupac solar project, alongside plans for over 400 MW of pumped-hydropower storage.
The two solar projects will collectively yield 150 MW of capacity. Based on current regional construction costs estimated between €600,000 and €800,000 per MW, the total investment required for these projects is projected to be in the range of €90 million to €120 million. This estimate excludes expenses related to significant transmission upgrades, land acquisition, and financing during the construction phase.
With Montenegro’s anticipated solar resources, this portfolio is expected to generate approximately 210–240 GWh annually. The commercial viability of these projects will be influenced by the timing of their connection to the grid and the extent to which their output is sold in wholesale markets. As solar energy production becomes more concentrated during midday hours across the Balkans, there is an increasing risk of lower prices and potential curtailment as regional capacity continues to grow.
The inclusion of pumped-storage facilities is set to alter the economic dynamics of the overall portfolio. A pumped-storage facility with a capacity exceeding 400 MW could utilize low-cost electricity during off-peak hours and supply it during peak demand periods or times of scarcity. Depending on various factors such as storage duration and reservoir engineering, capital expenditures for this component could range from approximately €600 million to over €1 billion.
However, developing pumped storage typically involves a longer timeline than solar projects. The necessary geological studies, water rights acquisition, environmental assessments, grid modeling, and civil engineering can take several years before a construction decision can be made. Revenue generation for these projects will need to integrate energy arbitrage, balancing services, capacity value, and cross-border trading rather than relying solely on a single power-purchase agreement.
A key commercial advantage for this portfolio is Montenegro’s connection to Italy via a subsea interconnector, which allows for dispatchable renewable electricity to access a larger and generally more lucrative market than Montenegro alone. The actual export value will depend on factors such as transmission availability, auction costs, and competition from other Western Balkan flows.
It is estimated that a delay of 12 to 18 months in grid connection could diminish equity returns on the solar projects by around 1.5 to 3 percentage points, contingent on leverage and whether debt incurs interest before the projects commence commercial operations. While pumped storage may accommodate a longer development schedule, its interest-during-construction exposure would likely be significantly higher.
