More than €2.2 million in grant funding has been allocated for energy-efficiency improvements in Montenegro’s hotel sector through a programme involving the European Union, the Ministry of Tourism, the Ministry of Energy and Mining, the Eco Fund and other institutional partners. A new public call worth €500,000 is planned for September 2026, with updated conditions intended to allow a wider group of tourism companies to participate.
The programme is designed to support investments that reduce energy consumption in hotels through measures such as renewable energy installations, building upgrades and more efficient operating systems.
Grant programme expected to mobilise additional investment
The €2.2 million allocation is intended as a catalyst for larger hotel retrofit investments by combining public support with owners’ equity, commercial lending and supplier financing. Depending on the grant contribution level, the existing funding could support significantly higher total investment volumes.
At a 20 per cent grant rate, the €2.2 million could correspond to approximately €11 million in total retrofit projects. A 30 per cent contribution would support around €7.3 million, while a 40 per cent grant level would enable projects worth approximately €5.5 million. The exact leverage effect depends on programme rules and eligible costs assigned to individual beneficiaries. The planned September 2026 call could generate an additional €1.25 million to €2.5 million in hotel-sector investment under grant assumptions ranging from 40 per cent to 20 per cent.
Tourism sector faces changing operating conditions
The energy-efficiency programme comes as Montenegro’s tourism industry experiences changes in visitor patterns. In 2025, Montenegro recorded 2.73 million tourist arrivals and approximately 15.37 million overnight stays. Arrivals increased by 4.7 per cent, while overnight stays declined by 1.5 per cent, indicating higher visitor numbers but shorter average stays.
Shorter visits increase operational pressure on hotels because cleaning, laundry, guest turnover and booking costs become larger relative to each occupied night. Energy costs represent one of the major controllable expenses for hotels operating cooling systems, hot-water facilities, kitchens, laundry services, pools and spas.
Solar investment gains importance for coastal hotels
Montenegro’s coastal hotels experience the highest electricity demand during summer months, when occupancy, air conditioning, water pumping and food-service activities reach peak levels. This seasonal pattern coincides with strong solar production potential, creating opportunities for hotels to install photovoltaic systems for their own electricity consumption.
A memorandum signed between the Ministry of Tourism and state-owned utility Elektroprivreda Crne Gore (EPCG) aims to encourage solar installations at tourism facilities. The initiative could support a broader investment model combining energy audits, rooftop solar systems, grid approvals, financing and performance monitoring. A coastal hotel with suitable roof space, parking areas or additional land could install a photovoltaic system with several hundred kilowatts of capacity.
An illustrative 300-kilowatt solar system could require between €240,000 and €330,000 in investment, depending on equipment, structural requirements, connection conditions and whether battery storage or solar parking canopies are included.
At an estimated coastal production rate of 1,350 to 1,550 kilowatt-hours per installed kilowatt annually, such a system could generate approximately 405 to 465 megawatt-hours per year. Based on avoided electricity costs of €0.12 to €0.18 per kilowatt-hour, annual gross savings could reach approximately €49,000 to €84,000 before maintenance costs, financing expenses, curtailment and differences between self-consumed and exported electricity.
Energy audits and operational measures remain essential
Solar generation is only one part of hotel energy-efficiency investments. Existing properties can often achieve faster returns through operational improvements, including smart meters, room occupancy controls, variable-speed drives, temperature regulation systems and building-management software.
Additional measures include:
- high-efficiency chillers
- heat pumps
- heat recovery systems
- improved hot-water production
- LED lighting
- upgraded pumps and ventilation systems
More capital-intensive projects include façade insulation, roof improvements, glazing upgrades and complete heating, ventilation and air-conditioning system replacements. Water management is also part of the efficiency strategy. Hotels consume energy for pumping, heating and treating water, while seasonal tourism increases pressure on water networks. Measures such as low-flow fixtures, leak detection systems, pool covers, heat recovery and grey-water applications can reduce both water and energy consumption.
Retrofit planning requires measurement before investment
Energy upgrades are more effective when based on detailed consumption analysis. A bankable retrofit programme should begin with a baseline audit, hourly or sub-hourly metering and defined energy-performance targets. Low-cost efficiency improvements should be completed before final photovoltaic capacity decisions are made.
For example, a hotel with an annual energy bill of €250,000 could save approximately €62,500 per year through a 25 per cent reduction in energy consumption. A €500,000 project receiving a 30 per cent grant would require the owner to finance €350,000. The simple payback period on the owner-funded portion would be approximately 5.6 years, compared with around eight years without grant support.
Energy savings can affect hotel valuations
Energy-efficiency improvements can also influence property values when savings are sustained and independently verified. A recurring reduction of €100,000 in operating costs, capitalised at a yield of 9 to 11 per cent, could support approximately €910,000 to €1.11 million in additional asset value. Buyers and lenders require evidence supporting projected savings, including baseline consumption data, equipment specifications, installation certificates, testing results, warranties and post-installation performance records.
Financing models could expand hotel retrofits
The programme could influence financing approaches for Montenegro’s hotel sector, where many operators are small or family-owned businesses with seasonal revenues and limited collateral beyond their properties. Commercial banks often treat energy-efficiency loans as standard corporate financing unless projected savings are sufficiently documented to support debt-service assessments.
A financing model linking grants with technical audits and loans based on verified energy savings could improve access to capital.
Possible measures include:
- repayment schedules aligned with seasonal tourism revenues
- interest-rate subsidies
- partial credit guarantees
- risk-sharing mechanisms
Montenegro already has experience with blended green finance involving the European Bank for Reconstruction and Development (EBRD), the EU and domestic banks. The regional Green Economy Financing Facility has provided cashback grants of up to 20 per cent for eligible household investments, while the SME Go Green framework combined commercial lending with incentives generally equivalent to 10 per cent, increasing to 15 per cent for certain renewable-energy and agricultural investments.
A hotel-specific financing structure could use existing mechanisms, with banks providing loans, the Eco Fund administering incentives, EPCG and distribution-system operators managing technical procedures, and qualified engineers certifying project implementation.
Location affects investment priorities
Energy investment priorities differ depending on hotel location Coastal properties in Budva, Bar, Ulcinj, Tivat, Kotor and Herceg Novi are expected to focus on cooling systems, hot water, solar generation, pool operations and peak electricity management. Hotels in Kolašin, Žabljak, Plav and other northern areas require stronger building insulation, efficient heating systems and solutions adapted to colder temperatures and variable occupancy.
Smaller rural accommodation facilities face different challenges because their total energy costs may not justify complex audits or conventional financing structures. The September call is expected to become more accessible if it includes simplified technology options, standardised costs and proportional documentation requirements for smaller businesses.
Monitoring and grid capacity remain important
The €500,000 programme should prioritise projects achieving measurable reductions rather than only smaller cosmetic improvements. Evaluation criteria could include estimated energy savings per euro of public support, applicant contribution, technical readiness, completion timelines, emissions reductions, use of local contractors and year-round operation. Energy savings should be monitored for at least 24 to 36 months after project completion, with adjustments for guest numbers, heated or cooled floor area and weather conditions.
Procurement standards are also important because choosing equipment solely on purchase price can result in inefficient systems, limited spare parts availability and weak after-sales support.
Contracts should include seasonal commissioning, performance guarantees and clear responsibility for integrating control systems. The EPCG partnership can support standardisation of solar projects, but hotels also require transparent equipment pricing, competition among suppliers and clear grid-connection procedures. As installations increase, grid capacity will become more significant, particularly in densely developed coastal areas where new solar generation may exceed demand during periods of lower occupancy.
Programme supports EU climate objectives
Montenegro’s energy-efficiency investments are also linked to its obligations under EU negotiating Chapter 27 on environment and climate change. Hotel retrofits provide measurable reductions in energy use and emissions within relatively short implementation periods.
The Eco Fund has already supported more than 8,000 beneficiaries through various programmes. Future reporting is expected to focus increasingly on energy savings achieved, renewable generation installed, emissions reductions and private capital mobilised. For Montenegro’s tourism industry, energy performance is becoming increasingly relevant as international hotel brands, tour operators, lenders and corporate clients request information on energy use and sustainability standards.
The €2.2 million already allocated represents the first stage of a broader investment approach combining grants, bank financing, EPCG-supported solar deployment, technical audits, performance-based procurement and digital monitoring.
