Montenegro is set to expedite the development of renewable energy projects, aligning its power sector with European Union regulations and aiming to attract private investment in solar, wind, and energy storage. Proposed amendments to the Law on the Use of Energy from Renewable Sources would implement a faster permitting process for selected projects, reduce environmental screening timelines, and elevate renewable energy initiatives to a public-interest status.
The draft legislation includes measures for identifying areas suitable for renewable energy development and designating zones for accelerated project implementation. It also recognizes renewable energy projects, including grid connections and energy storage solutions, as having significant public interest. This legislative move is part of a broader reform of Montenegro’s energy laws, following the adoption of its first standalone Renewable Energy Law in August 2024, which aligns with the EU’s Renewable Energy Directive.
Under the new amendments, projects located in designated accelerated development areas will benefit from expedited deadlines for determining whether a full Environmental Impact Assessment Study is necessary. The standard review period will be reduced to 45 days, while smaller projects up to 150 kW will have a 30-day deadline for assessments.
The proposed changes also aim to prioritize renewable energy use within the public sector. State and local authorities would be mandated to ensure that public buildings utilize a greater share of renewable energy compared to private facilities. Additionally, new or renovated public buildings are expected to integrate renewable energy production and sustainable heating and cooling solutions wherever feasible.
A key aspect of the amendments is the designation of renewable energy projects as matters of prevailing public interest. This classification would facilitate priority in planning, construction, and operational processes for renewable power plants and their associated infrastructure. This approach aligns with EU policies that advocate for shortened permitting timelines and recognize such projects as critical to public interest.
The reforms also include provisions to lower electricity distribution costs for renewable energy communities and prosumers based on their reduction in reliance on transmission networks. This initiative aims to promote decentralized generation and collective self-consumption, which has been formally introduced into Montenegro’s legal framework through the 2024 law.
Montenegro’s electricity market is relatively small, serving approximately 396,000 customers with an annual demand around 3,000 GWh. In 2024, electricity production decreased by 15% year-on-year to 3,447 GWh due to unfavorable hydrological conditions. The country’s only coal-fired plant in Pljevlja is currently undergoing rehabilitation to comply with EU environmental regulations.
This reliance on hydropower and a single coal-fired plant underscores the necessity for diversifying the energy generation portfolio. Solar, wind, and storage are increasingly viewed not only as tools for climate policy but also as essential components for enhancing energy security and reducing imports.
Montenegro has initiated a transition from feed-in tariffs towards market-driven support mechanisms. In July 2025, with backing from the European Bank for Reconstruction and Development (EBRD), it launched its first renewable energy auction targeting 250 MW of solar capacity. This auction is part of a broader strategy aimed at fostering competitive bidding processes and attracting quality private investments into the power sector.
The initial auction faced challenges as none of the bids met the required criteria related to documentation and grid connection qualifications, leading to its cancellation. A new three-year incentive plan envisions further auctions: one for 250 MW of solar capacity and another for 200 MW of wind capacity, with expectations that successful projects will commence operations closer to the end of the decade.
Investor interest is reportedly increasing; in January 2026, Montenegro established a Renewable Energy Sources Association with EBRD and EU support. This association aims to unify voices among wind and solar developers regarding issues such as grid access and environmental regulations.
Moreover, there are indications of strategic interest in Montenegro’s renewables sector. The state utility EPCG has explored a joint venture with Abu Dhabi’s Masdar focusing on solar, wind, hydropower, battery storage, and hybrid projects aimed at fulfilling domestic demand while potentially exporting green electricity via an undersea connection to Italy.
The proposed amendments represent an intersection of three policy goals: EU integration, investment mobilization, and enhancing energy security. Since commencing EU accession negotiations in 2012, Montenegro has opened all 33 screened chapters with 16 provisionally closed; alignment within the energy sector remains pivotal in this process.
However, faster permitting alone may not resolve all obstacles faced by developers in Montenegro. Challenges such as grid capacity limitations, land-use planning complexities, environmental assessments, financing hurdles, and administrative capabilities within permitting authorities persist. While designating accelerated areas may alleviate individual project delays, it also increases state accountability in ensuring effective spatial planning and public consultation during initial mapping stages.
Montenegro is clearly transitioning from a renewables framework centered primarily on hydropower towards one that encompasses auctions, prosumers, energy communities, storage solutions, and more transparent project pipelines. If effectively implemented, these amendments could streamline permitting processes and convert growing investor interest into tangible generation capacity.
The ultimate test will be whether these new expedited procedures can shorten timelines while maintaining legal clarity. For stakeholders such as developers and financial institutions, the critical question remains whether Montenegro can establish a reliable permitting regime capable of supporting increased renewable energy production.
