Montenegro’s electricity transmission operator CGES is preparing for a major expansion of its infrastructure portfolio, with the balance-sheet value of newly classified assets expected to reach €214 million by the end of 2028 as the country increases renewable capacity, strengthens regional electricity links and integrates further into the European power market.
According to projections included in the CGES management report for 2025, the value of assets classified as “new assets” is forecast at €111.7 million in 2026, rising to €170.5 million in 2027 and €214 million in 2028. The figure represents the projected cumulative balance-sheet value of recently commissioned and developing infrastructure rather than investment spending during 2028 alone. Between 2026 and 2028, the new asset category is expected to increase by €102.3 million, or approximately 91.6 per cent.
New Infrastructure to Become Majority of Fixed Assets
CGES expects the total value of its fixed assets to increase from €334 million in 2026 to €382.9 million in 2027 and €417.5 million in 2028. Existing assets are projected to decline in carrying value from €222.3 million to €203.5 million, mainly due to depreciation, while newly developed infrastructure becomes the main driver of balance-sheet growth.
By 2028, new assets are expected to account for approximately 51 per cent of CGES’s total fixed-asset base, compared with around 33 per cent in 2026. The shift reflects the scale of grid modernisation required to support new renewable generation, electricity transit and additional cross-border connections.
Transmission Network Supports Renewable Growth and Regional Trade
CGES operates approximately 1,550 kilometres of transmission lines across the 400 kV, 220 kV and 110 kV levels, together with 29 substations, one 220 kV switchyard and approximately 4,465 MVA of transformation capacity.
The network connects major generation facilities including:
- Pljevlja thermal power plant
- Piva hydropower plant
- Perućica hydropower plant
- Krnovo wind farm
- Možura wind farm
The system also provides inland transmission support for the 600 MW first pole of the Montenegro–Italy submarine interconnector, which has strengthened Montenegro’s position as a regional electricity transit route.
Profit Declines During Investment Period
CGES reported €20.99 million net profit in 2025, following €24.83 million in 2024 and a record €35.7 million in 2023. Revenue from international electricity markets, including electricity transit and commercial use of the Italian interconnector, supported financial performance while reducing pressure on domestic transmission tariffs.
The company expects significantly lower net profit during the main investment cycle:
- 2026: €1.4 million
- 2027: €1.7 million
- 2028: €1.6 million
The decline is not linked to falling revenues. Total income is forecast to rise from €68.4 million in 2026 to €70.9 million in 2027 and €71.8 million in 2028. EBITDA is expected to increase from €12.8 million to €14.3 million over the same period. The EBITDA margin is projected to improve from approximately 18.7 per cent in 2026 to nearly 20 per cent in 2028, although depreciation, financing costs and regulatory adjustments will limit net earnings.
Debt Expected to Increase With Capital Programme
CGES expects net debt to rise from €17.8 million in 2026 to €59.1 million in 2027 and €91 million in 2028. Long-term liabilities are projected to increase from €44.2 million to €91.5 million, while the projected cash balance at the end of 2028 is €500,000. Based on the forecast figures, net debt would increase from approximately 1.4 times EBITDA in 2026 to around 6.4 times EBITDA in 2028. CGES ended 2025 with approximately €40.4 million in outstanding loans.
The largest exposures included:
- €22.37 million remaining under an EBRD facility related to the Lastva–Čevo transmission project
- €13.15 million outstanding under an NLB loan
EBRD Financing Supports Transmission Projects
In March 2026, CGES secured a new €15 million loan from the EBRD for rehabilitation of the 220 kV transmission corridor connecting Bosnia and Herzegovina, Montenegro and Albania.
The project covers the route through:
- Trebinje
- Perućica
- Podgorica
- Vau Dejës
The investment is intended to improve network reliability, reduce technical losses and strengthen cross-border transmission capacity. Another major project is the conversion of the Brezna substation from 110/35 kV to 400/110 kV.
The project has an estimated value of approximately €36 million, including:
- €28 million EBRD financing
- €6.5 million EU grant
The upgraded substation is expected to enable connection of up to 400 MW of wind and solar capacity and reduce transmission losses by approximately 13 GWh annually. CGES estimates that avoided losses could generate savings of more than €1 million per year and reduce carbon emissions by approximately 6,000 tonnes.
Lastva–Čevo–Pljevlja Corridor Remains Strategic Priority
The wider Lastva–Čevo–Pljevlja transmission development has an estimated total value of approximately €119.7 million.
Parts of the system are already operational, including:
- Lastva–Trebinje 400 kV connection
- Lastva–Podgorica 400 kV connection
- Čevo–Brezna section
Completion of the corridor would improve use of the Italian submarine cable, strengthen voltage conditions and remove internal transmission bottlenecks between coastal, central and northern Montenegro. CGES estimates the completed system could reduce network losses by more than 52 GWh annually and support cross-border electricity flows of 500–1,000 MW, depending on regional network conditions.
Additional Transformer and Coastal Grid Investments
CGES is also installing two new 150 MVA autotransformers at the Podgorica 1 and Mojkovac substations. The contract value is approximately €4.5 million. The equipment will replace ageing transformers and improve supply security in two areas of the transmission network. The operator is also reconstructing the Budva–Lastva and Lastva–Tivat transmission lines, covering approximately 17 kilometres with an estimated investment of around €1 million. The project supports electricity supply reliability in coastal municipalities including Budva, Tivat, Kotor and Herceg Novi, where tourism activity, real estate development and seasonal demand are increasing pressure on the grid.
Renewable Projects Increase Need for Grid Capacity
CGES signed a connection agreement in June 2026 for the planned 88 MW Korita wind farm, a private investment valued at approximately €132 million and expected to enter operation in 2030. The company has also agreed connection infrastructure for the proposed 70 MW Tupan solar power plant. The planned 92.4 MW Njegovuđa wind farm near Žabljak would represent another significant generation connection, subject to environmental approval and a viable grid solution.
Together, these projects represent more than 250 MW of potential new generation capacity, excluding:
- Gvozd Phase 2
- 118.8 MW Bijela wind farm
- Distributed solar projects
- Additional wind and solar developments
Their combined output could exceed domestic demand during favourable weather conditions, increasing the importance of transmission capacity, storage, hydropower flexibility and electricity exports.
Grid Planning Faces Timing Challenges
Connection agreements do not guarantee project completion. Developers must still secure land rights, environmental approvals, construction permits, equipment contracts, financing and revenue arrangements. From CGES’s perspective, grid planning must advance before all generation projects reach financial close because substations and high-voltage transmission lines require longer development periods than many renewable facilities. The company must balance the risk of insufficient infrastructure, which could delay renewable projects and increase curtailment risks, against the possibility of building underused assets based on projects that do not proceed.
Asset Growth Requires Detailed Capital Planning
The projected €214 million new asset value by 2028 is presented as a consolidated category and is not divided among individual projects.
A detailed investment plan would typically identify:
- Annual capital expenditure
- Contract commitments
- Remaining project costs
- Financing sources
- Grant components
- Commissioning schedules
- Regulatory treatment
It would also distinguish replacement investment from expansion projects and separate CGES-funded assets from infrastructure initially financed by generators. In January 2026, CGES signed an agreement to acquire infrastructure built for the connection of the Krnovo wind farm, including the Brezna substation and associated 110 kV lines. Part of the double-circuit Krnovo–Brezna line is being transferred without compensation.
Financing Structure Relies on Long-Term Capital
CGES is expected to continue relying on long-term financing from institutions including the EBRD, EIB and commercial banks, supported by EU and Western Balkans Investment Framework grants. The company retained a significant share of previous profits to support investment.
From the €24.83 million profit in 2024, shareholders approved a €5 million gross dividend, leaving approximately €19.83 million in retained earnings. The projected cash balance of €500,000 in 2028 highlights the need for careful liquidity management during the construction cycle.
Transmission investments in Montenegro face challenges related to terrain, access roads, environmental procedures, land acquisition, weather conditions and equipment delivery schedules. The investment cycle will depend on timely completion of projects, regulatory recognition of new assets, continued international transmission revenues and access to long-term financing.
