Montenegro’s state-owned utility company, EPCG, has taken a significant step towards enhancing its renewable energy portfolio by signing an agreement with German turbine manufacturer Nordex. This partnership aims to develop the second phase of the Gvozd wind project, located near Nikšić, marking a strategic shift from single-project execution to a multi-phase renewable energy platform as the nation seeks to diversify its energy generation away from coal.
The initial phase of the Gvozd wind farm, which is currently under construction, has an installed capacity of approximately 55 MW. The addition of the second phase is anticipated to increase the total capacity to between 75–80 MW, contingent on the final configuration of turbines and grid integration specifics.
This new agreement builds upon an existing collaboration where Nordex is responsible for supplying turbines, overseeing their installation, and providing long-term maintenance under a 25-year service agreement. The first phase utilizes high-capacity turbines in the 6–7 MW class, reflecting a regional trend in Southeast Europe towards larger turbines that maximize output on limited sites.
Financially, the Gvozd project is structured as a phased investment. The initial development costs are estimated at around €80–85 million, while the second phase is projected to require an additional €20–30 million, bringing the total investment to over €100 million. Financing has been supported by multilateral institutions, enabling EPCG to enhance its capacity while maintaining balance sheet flexibility amidst concurrent investments in solar and hydro projects.
This phased approach minimizes execution risks and allows for shared infrastructure—such as grid connections and access roads—across both phases. It also aligns with the realities of permitting and financing cycles in Montenegro, where incremental developments are often more feasible than large-scale projects.
Upon completion, the Gvozd complex is expected to generate between 150–180 GWh annually, significantly contributing to Montenegro’s current wind energy output. This project will aid in reducing dependence on coal-fired power generation, particularly from the Pljevlja thermal plant, which continues to be a key component of the country’s energy supply but faces growing regulatory and environmental challenges.
The agreement further solidifies Nordex’s presence in Montenegro and strengthens its operations across Southeast Europe. As turbine suppliers increasingly collaborate with state utilities and regional developers, long-term service agreements have become essential for ensuring project viability, especially in smaller markets where operational reliability is crucial for lenders.
The expansion at Gvozd occurs during a period of transformation within regional power markets. The increasing integration of renewable energy sources across Southeast Europe is beginning to influence price dynamics, with wind generation playing a larger role in determining marginal prices during peak production periods. Additional capacity from projects like Gvozd is expected to enhance this trend, exerting downward pressure on prices during windy conditions while contributing to market volatility throughout intraday trading.
Montenegro’s interconnected position within the Balkan electricity grid adds a broader regional dimension to this project. Surplus energy produced during optimal wind conditions can be exported to neighboring countries such as Serbia, Bosnia and Herzegovina, and Italy via an undersea interconnector, thereby reinforcing Montenegro’s role as a flexible energy supplier within Southeast Europe.
The decision to advance with the second phase of Gvozd reflects EPCG’s strategic transition from being primarily a hydro-thermal operator to becoming a diversified renewable energy developer. Wind and solar projects are increasingly central to EPCG’s future plans, driven by decarbonization goals and evolving market conditions that favor renewable generation over fossil fuels.
The Gvozd project is emerging as a model for how EPCG—and potentially other state utilities in the Western Balkans—can effectively structure renewable investments: modular, backed by lenders, and integrated into regional trading frameworks. As construction progresses and financing for the second phase advances, Gvozd is poised to become one of Montenegro’s key energy assets, influencing both national energy security and the country’s role in an increasingly interconnected Southeast European power market.
