Montenegro’s energy transition is bringing the future of the Pljevlja thermal power plant into focus, with EPCG examining carbon-capture technology, solar generation, battery storage and heating infrastructure as part of a broader approach to the country’s electricity supply.
The challenge extends beyond replacing coal-fired generation with renewable capacity. Montenegro must also maintain system stability, dispatchable electricity supply and affordable power procurement while expanding solar and wind generation and managing its dependence on regional electricity markets.
Pljevlja remains the country’s main thermal-generation asset and supplies a substantial share of its firm domestic electricity output. Decisions concerning the complex therefore have implications for generation planning, network operations, investment and security of supply.
EPCG Examines Options for the Pljevlja Complex
EPCG is pursuing several initiatives that could influence the future use of the Pljevlja area and its energy infrastructure.
One cooperation agreement covers an assessment of carbon-capture technology at the thermal power plant. A separate initiative involving the European Bank for Reconstruction and Development (EBRD) and the Pljevlja coalmine examines the potential development of solar generation and battery storage on former mining land.
The latter initiative also includes district-heating and thermal-storage concepts, broadening the scope beyond electricity generation to encompass heating infrastructure. Together, these initiatives address different elements of the transition, including emissions management, renewable generation, electricity storage and the use of existing industrial sites.
Regional Electricity Prices Highlight Supply Risks
The potential implications of changes to Montenegro’s thermal generation capacity are illustrated by electricity prices in neighbouring markets. Hungary traded above €263/MWh, Serbia at around €261/MWh, and Romania and Bulgaria close to €250/MWh.
Greater reliance on imported electricity during periods of low hydropower and renewable output could expose Montenegro to higher procurement costs under such market conditions.
The Italy–Montenegro interconnector provides access to an additional electricity market, but it does not remove all supply risks. Italian electricity prices can also rise, transmission capacity can become constrained, and shortages may occur simultaneously across several interconnected markets. Maintaining security of supply therefore requires a combination of domestic generation, flexible resources, storage and access to external electricity supplies.
Different Technologies Provide Different System Services
Solar and wind generation can reduce exposure to fuel costs and carbon emissions, but their output varies with weather conditions. Their contribution to the electricity system consequently differs from that of thermal generation, which can provide output on demand within its technical operating limits.
Hydropower remains an important part of Montenegro’s electricity portfolio because reservoir-based plants can provide dispatchable renewable generation.
Battery storage can deliver rapid balancing services and shift electricity between different hours. However, battery duration matters: installations designed for short-term balancing cannot necessarily cover prolonged periods of low renewable production.
Interconnectors enable electricity imports when external supply and transmission capacity are available, while thermal power plants provide firm generation but face increasing environmental, regulatory and financing pressures. These differences make the combination of technologies and their respective operating capabilities central to electricity-system planning.
Solar and Storage Projects Require Integrated Planning
The potential development of solar generation on former mining land in the Pljevlja region offers an opportunity to consider renewable capacity alongside existing industrial sites and grid infrastructure Project assessments also need to account for the future operating profile of the thermal power plant, local heating requirements, transmission capacity and the proposed battery installation’s size and duration.
Storage design must reflect its intended function. A battery developed primarily for intraday electricity trading has different operating requirements from one intended to support system adequacy during periods of constrained supply. The assessment of carbon capture at Pljevlja also involves more than determining whether emissions can technically be captured. Relevant considerations include full lifecycle costs, the additional energy required by the technology, infrastructure requirements and the thermal unit’s remaining economic life. The overall configuration must be assessed in terms of its ability to produce competitive electricity while meeting Montenegro’s environmental and security-of-supply objectives.
Financing Depends on Transition and Reliability
The future of Pljevlja raises two interconnected financing questions: whether the coal complex can remain economically and environmentally viable, and whether Montenegro can develop sufficient replacement flexibility to reduce its dependence on thermal generation without increasing electricity-system risks.
International financial institutions and commercial banks will increasingly distinguish between investments that prolong fossil-fuel dependence and projects that support the energy transition. At the same time, financing for new renewable generation depends on confidence that the electricity system can remain stable and accommodate additional output.
Engineering assessments will need to cover grid stability, dispatch requirements, operating reserves, storage duration, transmission reinforcement, heating infrastructure, plant availability and renewable generation profiles.
Project commissioning schedules are also important. Delays to new generation, batteries or transmission infrastructure could leave Montenegro with reduced supply flexibility if existing thermal capacity becomes unavailable before replacement assets are operational. The sequencing of investments will therefore be a key consideration in managing the transition from coal towards a lower-carbon electricity system.
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