Montenegro is taking significant steps to enhance its renewable energy sector as part of a broader strategy to align with European Union regulations and attract private investment in solar, wind, and energy storage projects. The government has proposed draft amendments to the Law on the Use of Energy from Renewable Sources aimed at streamlining the permitting process for renewable energy initiatives.
The proposed changes include establishing a faster permitting track for selected projects, reducing environmental screening timelines, and granting priority status to renewable energy projects in administrative procedures. This initiative is expected to facilitate the mapping of areas suitable for renewable development and designate specific zones for expedited project implementation.
This legislative move is part of a comprehensive overhaul of Montenegro’s energy framework, which began with the adoption of its first standalone Renewable Energy Law in August 2024. This law aligns with the EU’s Renewable Energy Directive and aims to introduce competitive bidding processes, power purchase agreements, and renewable energy communities.
Under the new amendments, projects located in designated accelerated development areas will benefit from reduced timelines for determining the necessity of a full Environmental Impact Assessment Study. Standard deadlines will be shortened to 45 days, while smaller projects up to 150 kW will have a 30-day deadline.
The draft legislation also emphasizes the role of public sector entities in promoting renewable energy usage. State and local authorities will be mandated to ensure that public buildings utilize a greater share of renewable energy compared to private structures, integrating renewable solutions into new or renovated facilities where feasible.
A key aspect of the proposed changes is designating renewable energy projects as matters of prevailing public interest. This designation would prioritize planning, construction, and operation processes for renewable power plants and their associated infrastructure, aligning with EU policies that support shorter permitting timelines.
Additionally, the amendments aim to lower electricity distribution charges for renewable energy communities and joint prosumers based on their reduction of transmission network usage. This provision is intended to promote decentralized generation and collective self-consumption, which was formalized in Montenegro’s 2024 law.
These reforms come at a critical time for Montenegro’s energy landscape. The country has approximately 396,000 electricity customers with an annual demand of around 3,000 GWh. In 2024, electricity production dropped by 15% from the previous year to 3,447 GWh due to unfavorable hydrological conditions. The Pljevlja coal plant, Montenegro’s only coal-fired facility, is currently undergoing rehabilitation to meet EU environmental standards.
This reliance on hydropower and a single coal-fired plant underscores the need for a diversified energy generation mix. Solar and wind technologies are increasingly viewed not only as tools for climate policy but also as essential components for enhancing energy security and reducing imports.
Montenegro is transitioning from feed-in tariffs towards more market-driven support mechanisms. In July 2025, with backing from the European Bank for Reconstruction and Development (EBRD), the country launched its first renewable energy auction targeting 250 MW of solar capacity. This auction is part of a broader initiative aimed at fostering competitive bidding and attracting quality private investment into the power sector.
Despite initial setbacks in previous auction processes—where bids failed to meet requirements—the government has outlined plans for future auctions that include a new three-year incentive scheme featuring additional solar and wind capacity auctions expected to come online by the end of the decade.
Investor interest appears to be growing as Montenegro established a Renewable Energy Sources Association in January 2026 with support from EBRD and EU partners. This association aims to unify voices among wind and solar developers on issues such as grid access and regulatory procedures.
Strategic partnerships are also emerging within Montenegro’s renewables sector. The state utility EPCG is collaborating with Abu Dhabi’s Masdar on potential joint ventures focusing on solar, wind, hydropower, battery storage, and hybrid projects aimed at meeting domestic demand while exploring export opportunities through undersea connections to Italy.
The proposed amendments reflect Montenegro’s commitment to three primary objectives: EU integration, mobilizing investments, and enhancing energy security. Since beginning EU accession negotiations in 2012, all 33 chapters have been opened with 16 provisionally closed; aligning the energy sector remains crucial in this process.
However, simply expediting permitting processes may not fully address existing challenges faced by developers in the region. Issues such as grid capacity constraints, land-use planning complexities, environmental assessments, financing hurdles, and administrative capabilities within permitting authorities continue to pose obstacles. While designated acceleration areas may alleviate some delays on a project basis, they also necessitate robust planning and consultation processes at earlier stages.
Montenegro’s trajectory indicates a shift away from a renewables framework centered predominantly on hydropower towards one that encompasses auctions, prosumers, energy communities, storage solutions, and clearer project pipelines. If effectively implemented, these amendments could enhance predictability in permitting processes and translate investor interest into tangible generation capacity.
The real test will lie in whether these accelerated procedures can effectively shorten timelines while maintaining legal clarity. For stakeholders including developers and financial institutions, the pressing question remains whether Montenegro can establish a reliable regime for permitting and grid connections that supports its renewable energy ambitions.
