The renewable-energy partnership between Masdar and Elektroprivreda Crne Gore (EPCG) has advanced into a defined development pipeline, with their equally owned joint venture signing agreements covering two solar projects and more than 400 MW of potential pumped-hydropower storage.
The development agreements include the 115 MW Štedim solar project, the 35 MW Krupac solar project and pumped-storage hydropower capacity exceeding 400 MW. The two solar developments have a combined capacity of 150 MW. Based on regional construction costs of approximately €600,000 to €800,000 per MW, their indicative investment requirement is estimated at €90 million to €120 million. The estimate excludes major transmission reinforcement, land costs and financing costs incurred during construction. At Montenegro’s expected solar resource, the two projects could produce approximately 210 GWh to 240 GWh of electricity annually.
Their commercial value will depend on the timing of grid connections and the share of generation sold at wholesale market prices. Solar generation across the Balkans is becoming increasingly concentrated during midday hours, increasing the potential for lower realised electricity prices and curtailment as regional generation capacity expands. The pumped-storage component introduces a different operating model. A facility exceeding 400 MW could store electricity when prices are low and release it during evening demand peaks, dry periods or periods of regional electricity scarcity. Depending on storage duration, reservoir engineering and underground construction requirements, investment costs for the pumped-storage component could range from approximately €600 million to more than €1 billion.
Development of pumped-storage capacity is expected to require a longer preparation period than the solar projects. Geological studies, water rights, environmental assessments, grid modelling and civil engineering can take several years before a bankable construction decision is reached.
The project’s revenue structure would need to incorporate energy arbitrage, balancing services, capacity value and cross-border electricity trading, rather than relying solely on a single power-purchase agreement.
Montenegro’s electricity connection with Italy is a key component of the portfolio. Dispatchable renewable electricity exported through the subsea interconnector can reach a deeper and generally higher-priced market than Montenegro’s domestic market. The value of physical electricity exports will depend on transmission availability, auction costs and competing electricity flows from the Western Balkans.
A 12-to-18-month delay in grid connection could reduce the equity return on the solar projects by approximately 1.5 to 3 percentage points, depending on leverage and whether debt continues accruing interest before commercial operation. The pumped-storage project could accommodate a longer development schedule, although the absolute exposure to interest accrued during construction would be considerably higher.
