Montenegro’s transmission system operator CGES and the European Bank for Reconstruction and Development (EBRD) have agreed a €15 million sovereign-guaranteed loan to upgrade part of a regional electricity transmission corridor and increase its transfer capacity from around 300 MW to 600 MW.
The financing will support reconstruction of Montenegro’s section of the Trebinje-Perućica-Podgorica-Vau i Dejes 220 kV corridor, strengthening transmission links with Bosnia and Herzegovina and Albania. The works will cover around 100 kilometres of transmission lines and include the installation of high-temperature low-sag conductors. The technology is designed to allow higher electricity flows without construction of an entirely new transmission corridor. The project is scheduled for completion by the end of 2028.
Renewable Expansion Increases Grid Requirements
The investment comes as Montenegro develops additional wind and solar generation capacity. Hundreds of megawatts of renewable projects are under development, increasing the importance of transmission infrastructure capable of absorbing, balancing and exporting additional electricity. Higher transfer capacity on the regional corridor could increase Montenegro’s ability to move electricity between neighbouring markets and strengthen its role in regional power trading.
Montenegro already has an undersea electricity interconnector with Italy. Additional capacity toward Bosnia and Herzegovina and Albania would provide further routes for electricity flows during periods of price differences between regional markets.
Grid Capacity for New Renewable Projects
The transmission upgrade is also intended to support the integration of additional renewable generation. Wind and solar projects can create periods of surplus production, requiring electricity to be consumed domestically, stored or exported. Limited network capacity can increase the risk of congestion and curtailment for renewable producers. Grid availability is also considered by banks and investors alongside generation resources, electricity prices and permitting when assessing renewable projects.
CGES is simultaneously preparing decisions related to major connection infrastructure. Its shareholders are expected to consider grid infrastructure for the planned Sinjajevina 1 and Sinjajevina 2 wind projects, which together represent approximately 403 MW of proposed capacity. Further renewable development will require infrastructure beyond the regional corridor upgrade, including substations, local connection facilities, digital grid systems, balancing capacity and potentially battery storage. Montenegro’s hydropower facilities provide flexibility to the electricity system, while the planned expansion of wind and solar capacity is expected to increase the requirements for balancing variable generation.
EBRD Financing and State Guarantee
The EBRD financing provides CGES with an international financial institution loan to accelerate the investment without placing the entire financing requirement on the company’s own cash flow or requiring an equivalent direct budget allocation. The sovereign guarantee provides additional security for the lender while creating a contingent liability for the state.
The economic benefits of the additional transfer capacity will depend on its use by new generation and cross-border electricity trading. At the same time, the development of renewable projects and transmission infrastructure must remain aligned to avoid generation capacity expanding faster than the network required to transmit it. Several renewable projects have already received environmental or connection approvals, while transmission projects generally require longer development periods than solar installations and can have schedules comparable with major wind projects.
Stronger Regional Electricity Links
The corridor upgrade also forms part of Montenegro’s broader integration with European electricity markets. As the country advances toward EU accession, it is expected to align more closely with European rules covering market coupling, balancing and electricity networks. Greater interconnection capacity can provide additional import options during supply disruptions or periods of weak hydrological conditions, while renewable producers gain additional routes for exports.
The investment will therefore affect transmission capacity for consumers, producers and electricity market participants as Montenegro expands its regional connections. The €15 million financing package is significantly smaller than the investment requirements associated with new power plants, wind farms and solar facilities, while the project will double the transfer capability of the targeted corridor from 300 MW to 600 MW.
