Montenegro’s renewable energy acceleration framework has triggered debate over land rights, environmental procedures and infrastructure planning as the country prepares major grid investments to connect new wind and solar capacity.
The discussion centres on amendments to the Law on the Use of Energy from Renewable Sources and related changes to spatial planning and construction legislation. The Save Brezna civic initiative argues that the revised framework gives developers broader legal advantages while reducing protections for private property, water resources and rural areas. The amendments adopted by parliament introduce faster procedures for planning, environmental screening and construction related to wind farms, solar plants, storage facilities and associated grid infrastructure.
Brezna substation becomes key renewable connection point
Brezna, located in north-western Montenegro, is undergoing transformation from a local 110/35 kV substation into a 400/110/35 kV transmission node designed to support up to 400 MW of additional renewable capacity.
The upgrade is financed through a €28 million sovereign-guaranteed loan from the European Bank for Reconstruction and Development (EBRD), supported by Western Balkans Investment Framework grants. The project includes €6.4 million reported for implementation and a previous €1.1 million technical-assistance allocation. The works include installation of two 300 MVA transformers, expansion of the substation and integration into Montenegro’s planned 400 kV transmission ring and the wider Trans-Balkan corridor.
The upgraded facility is expected to reduce electricity network losses by around 13 GWh annually, with an estimated value exceeding €1 million per year based on recent wholesale electricity prices. The investment is also expected to lower emissions by approximately 6,000 tonnes of CO₂. Brezna will therefore serve both as a national transmission investment and as a connection point for privately developed renewable projects. The distinction between public infrastructure and private generation assets has become a central issue in discussions surrounding the legal framework.
Bijela wind farm linked to wider grid development
The largest renewable project associated with the Brezna area is Alcazar Energy Partners’ 118.8 MW Bijela wind farm, planned mainly in the municipality of Šavnik, with smaller project components extending towards Nikšić, Plužine and Kolašin. The project is expected to include 17 turbines, internal roads, underground cables, a project substation and a 110 kV transmission line connecting the facility to Brezna.
The Environmental Protection Agency approved the project’s environmental impact assessment in February 2026. Planned annual electricity production is approximately 350 GWh, corresponding to an estimated capacity factor of about 33.6%. Alcazar acquired the project from local developers Simes Inženjering and Sistem MNE in 2023. The investment has been estimated at $200 million, equivalent to approximately €165 million–€185 million depending on procurement timing and exchange-rate movements. The project company, Vjetro Park Bijela, is controlled by Alcazar’s second investment vehicle.
A connection agreement with transmission system operator CGES was signed in September 2024. Discussions on a potential power-purchase agreement with state utility EPCG began after a memorandum signed in January 2025. Alcazar has indicated that its total investment programme in Montenegro could reach $500 million, with Bijela forming part of a broader portfolio strategy.
Land compensation and ownership concerns
Residents involved in the Save Brezna initiative claim that land is already being acquired or placed under long-term restrictions for the wind project and related infrastructure. The group alleges that some proposed payments amount to only tens or hundreds of euros for rights lasting 30 years. Compensation levels depend on parcel type, affected area, ownership records and whether agreements involve acquisition, leasing or easements.
The issue raised by residents concerns the difference between the economic scale of renewable projects and the impact on individual properties. A landowner may retain formal ownership while facing restrictions from transmission easements, access roads or turbine safety zones that limit future construction, tourism or agricultural use.
The amendments do not remove ownership rights or compensation obligations. A public-interest declaration does not automatically constitute expropriation, and legal procedures for establishing easements or acquiring land remain subject to compensation and review. The revised framework changes the balance of the permitting process by introducing a presumption that certain renewable projects serve public interest objectives.
Renewable legislation aligned with EU approach
Article 11e of the amended renewable-energy framework places renewable plants, grid connections, related network infrastructure and storage systems under a presumption of overriding public interest, public health and safety. The provision follows the direction of the EU’s revised Renewable Energy Directive, RED III, which requires EU member states to presume that renewable generation and related infrastructure serve overriding public interest objectives until climate neutrality is achieved.
The EU framework allows exceptions where projects create significant environmental impacts that cannot be mitigated or compensated. Member states may also limit application of the presumption by location, technology or technical characteristics. Protected areas, Natura 2000 obligations, water protection rules and species assessments remain subject to legal requirements.
Montenegro is not currently an EU member, and Save Brezna disputes the government’s position that immediate adoption of these RED III-related provisions was required by Energy Community obligations or the EU Growth Plan. Existing reform commitments are more closely connected with RED II alignment, renewable auctions, prosumer development and faster permitting procedures. Montenegro may choose earlier alignment, but the framework includes both acceleration mechanisms and environmental safeguards.
Faster screening procedures raise assessment questions
Article 11d introduces decision deadlines of 45 days, or 30 days for smaller projects and repowering activities, within designated renewable acceleration areas. The deadlines relate to environmental screening decisions determining whether a full project-level assessment is required, rather than replacing a complete environmental impact assessment with a 30- or 45-day procedure.
The effectiveness of accelerated procedures depends on earlier strategic environmental assessments covering settlements, water resources, forests, agricultural areas, protected habitats, migration routes, geological conditions, cultural heritage and cumulative impacts. This issue is particularly relevant in Brezna because the planned development extends beyond the Bijela wind farm.
EBRD documentation identifies Bijela, the proposed 195 MW Dubrovska–Duži solar project, the 240 MW Somina solar project and expansion of the Gvozd wind complex among projects connected with wider grid development. Their combined nominal capacity exceeds the stated 400 MW integration capability of the upgraded substation. While projects are at different development stages and may not operate simultaneously at full output, the combined impact of roads, substations, transmission routes and construction activity requires cumulative assessment.
Grid capacity remains central investment issue
By late 2024, CGES had signed six renewable connection agreements representing approximately 1,327 MW of planned wind and solar capacity.
The planned capacity exceeded Montenegro’s existing conventional generation fleet and required additional grid reinforcement, export capacity, storage solutions and congestion management. The Brezna upgrade forms part of that response, but additional 400 kV lines, system studies, protection systems, balancing arrangements and network reinforcement remain necessary.
Montenegro’s electricity consumption is measured in several terawatt-hours annually. An additional 400 MW of renewable capacity could generate approximately 900 GWh–1.2 TWh each year depending on the technology mix.
Such production could reduce reliance on the 225 MW Pljevlja thermal power plant and increase export potential, while also creating periods of significant electricity surplus during strong renewable generation conditions. The submarine cable connection with Italy, regional interconnectors and market coupling provide export options, but available cross-border capacity remains limited and influenced by renewable production across neighbouring markets.
Solar auction and storage economics
Montenegro’s first solar auction was designed for up to 250 MW of capacity, with projects eligible from 400 kW. The ceiling price was set at €65/MWh, with a 12-year market-premium or contract-for-difference structure. The quota may be expanded by up to 20%, adding another 50 MW under specified ranking conditions.
Based on current construction costs, 250 MW of utility-scale solar would require approximately €138 million–€175 million in capital expenditure, excluding exceptional grid reinforcement or difficult terrain conditions. At annual production of around 400 GWh and a price near €65/MWh, gross contracted revenue would reach approximately €26 million annually. Operating costs estimated at €10,000–€15,000 per MW per year, together with land, balancing, insurance and asset-management expenses, could result in project EBITDA of around €21 million–€23 million before financing.
A 100 MW/200 MWh battery system would require indicative investment of €50 million–€80 million at €250–€400 per kWh, excluding unusually expensive connection works. Storage projects would depend on multiple revenue sources, including energy arbitrage, balancing services, congestion management and potential capacity payments.
Bijela wind project financial outlook
Using an assumed capital cost of €175 million, annual net production of approximately 330–335 GWh after technical losses and availability adjustments, and an electricity price of €68/MWh, Bijela could generate annual revenue of about €22.5 million–€22.8 million.
Operating expenditure estimated at €4.5 million–€5 million would leave EBITDA near €18 million. With project debt covering around 65–70% of capital expenditure at an all-in interest rate of 5.5–6.5%, the base case could support an equity internal rate of return of approximately 10–12%, depending on turbine procurement, financing structure, contract arrangements and tax treatment.
An upside scenario with capital expenditure closer to €165 million, production near 345–350 GWh and realised prices of €73–€75/MWh could increase annual revenue to approximately €25 million–€26 million and EBITDA above €20 million–€21 million. The estimates are indicative financial scenarios rather than company guidance.
Connection delays represent project-finance risk
The Brezna expansion remains under implementation, with main works expected to begin during 2027 following procurement procedures. If a wind farm is completed before transmission infrastructure becomes operational, developers could face debt costs and fixed expenses without electricity revenues. For an assumed debt balance of €115 million–€125 million, a one-year delay at a 6% funding cost would create approximately €7 million–€7.5 million in additional interest expenses before accounting for commitment fees, guarantees, insurance and equipment preservation.
A 12-month grid delay could reduce an equity internal rate of return from approximately 11–12% to around 8.5–10%. An 18-month delay could lower returns towards 7–9%. The risk increases if turbine warranties, power-purchase milestones or financing availability periods expire before grid connection.
Bank requirements extend beyond national permits
The amended construction framework reportedly introduces Article 74a, allowing certain renewable installations to proceed through notification and technical documentation without a conventional building permit. Such an approach is suitable for rooftop solar, small prosumer systems and standardised low-risk installations. Large renewable projects involving high-voltage equipment, major foundations, mountain roads and extensive land areas require additional distinctions.
International lenders continue to require environmental and social documentation regardless of domestic permitting rules.
Financing packages from institutions such as EBRD, the European Investment Bank or commercial banks generally require land-acquisition documentation, stakeholder engagement, biodiversity studies, livelihood-restoration measures and grievance mechanisms. Unresolved land disputes can delay access, increase legal risks and affect financing conditions.
Community benefits remain part of project structure
A framework combining accelerated procedures with sensitivity mapping, public grid-hosting information and community protections has been proposed by critics of the current approach. Compensation mechanisms could account for both acquired rights and reductions in remaining property value through independent valuation and appeal procedures. Revenue-sharing models could provide additional local benefits. Allocating 1% of Bijela’s annual gross revenue would represent approximately €230,000–€260,000 annually for affected communities. A payment of €2,000 per installed MW would generate almost €238,000 per year.
The project has been presented as creating more than 700–800 construction jobs, although operational employment after commissioning is expected to be limited. Long-term local benefits would depend on land payments, municipal revenues, infrastructure improvements, continued agricultural access and community programmes.
Montenegro expands renewable investment pipeline
Montenegro’s renewable development plans include existing wind capacity at Krnovo and Možura, the EPCG-backed Gvozd project, planned solar auctions and the connection to Italy. A recent spatial assessment identified around 650 MW of wind potential and up to 15.6 GW of theoretical solar potential in areas considered to have relatively low environmental and social conflict.
The assessment indicates that Montenegro has alternative locations for renewable development and that project selection can prioritise areas where grid access, biodiversity, ownership conditions and community acceptance have already been examined. Brezna is expected to become a key transmission point for several hundred megawatts of additional renewable generation. Its commercial performance will depend on coordinated grid construction, project financing requirements and the ability of renewable developments to address land and permitting challenges.
