Montenegro is advancing its energy transition, moving beyond traditional debates surrounding hydropower and coal to focus on solar energy and modernizing distribution grids. This shift aims to position the state-owned utility, EPCG, to manage renewable energy output more effectively through a potential virtual power plant model. While still in the early stages, the momentum for this transition is becoming increasingly evident.
A significant initiative in this transformation is EPCG’s solar project at the former steel complex in Nikšić. The Environmental Protection Agency of Montenegro has approved the expansion of the Zeljezara solar project, bypassing the need for a comprehensive environmental impact assessment. This development will feature a total installed capacity of 34.58 MW, comprising 21.21 MW on factory rooftops, 11.45 MW on land within the complex, and 1.92 MW from existing modules. The expected annual generation from this facility is approximately 46.6 GWh.
This project exemplifies a practical approach to repurposing industrial sites for renewable energy use. By converting the former steel site into a solar energy platform, EPCG aims to minimize regulatory hurdles and land-use conflicts while fostering a positive narrative around the redevelopment of heavy-industrial areas.
The Krupac solar initiative further enhances this effort. EPCG has initiated a tender for preparatory construction and engineering works valued at around €1.72 million, with an overall preparation phase projected to cost €6.7 million. The planned solar park near Lake Krupac is expected to have a capacity of 41.8 MW, spanning roughly 118 hectares, and aims for an annual output of about 62 GWh. Initial investment estimates for this project are around €28 million.
The combined efforts of the Zeljezara and Krupac projects may not single-handedly transform Montenegro’s electricity landscape but will establish a more credible foundation for domestic solar power generation. Montenegro’s strategic geographical position enhances its market potential, particularly due to its connectivity with Italy and neighboring countries such as Serbia, Bosnia and Herzegovina, Albania, and Kosovo. The value of Montenegrin solar energy will hinge on generation costs as well as how EPCG and CGES manage transmission access and timing.
EPCG’s exploration of a virtual power plant model is crucial in this context. A VPP would facilitate the coordination of distributed production, flexible demand, battery storage, and potentially prosumers as a unified portfolio. As solar energy penetration increases, this approach could shift value from mere generation volume to dispatchability—transforming midday solar output into higher-value products during peak demand periods or export opportunities.
The modernization of grid infrastructure is essential for supporting these initiatives. CEDIS has begun collaborating with AFD and EDF International Networks, receiving up to €290,000 in technical assistance to evaluate the distribution network and formulate recommendations for digitalization, automation, smart grid implementation, renewable integration, and long-term investment strategies. This program also encompasses planning for the reconstruction of six 35 kV substations and upgrades to numerous 10/0.4 kV facilities.
The success of Montenegro’s energy transition will depend not solely on increasing megawatt capacity but also on synchronizing solar development, grid modernization, VPP aggregation, export capabilities, and regulatory consistency. Ongoing legal disputes regarding cancelled small hydro concessions highlight potential risks to investor confidence when policy changes occur without a stable legal framework. By focusing on bankable permits, transparent grid regulations, and comprehensive system planning, Montenegro’s solar initiatives can aim to circumvent these issues.
EPCG is poised to evolve from being a conventional utility adding solar capacity to an operator managing a diverse portfolio within a strategically significant electricity system where every megawatt holds enhanced value through effective coordination and tradeability.
