Montenegro is witnessing a significant shift in its energy landscape as the focus moves from traditional power sources like hydropower and coal to solar energy initiatives. This transition is being led by the state-owned utility, EPCG, which is exploring innovative models for integrating renewable energy into the national grid. The emergence of a virtual power plant (VPP) model is expected to enhance the management of renewable output, demand flexibility, and overall energy distribution.
A key project in this transition is EPCG’s solar initiative at the former steel complex in Nikšić. The Environmental Protection Agency has approved the expansion of the Zeljezara solar project without necessitating a full environmental impact assessment, streamlining the regulatory process. This project will feature a total installed capacity of 34.58 MW, comprising 21.21 MW from factory rooftops, 11.45 MW on land within the complex, and 1.92 MW from existing installations, with an anticipated annual generation of approximately 46.6 GWh.
This development signifies a strategic repurposing of industrial land for renewable energy production, allowing Montenegro to utilize its former heavy-industrial sites for cleaner energy solutions. Such brownfield solar projects can mitigate permitting challenges and land-use conflicts while fostering a positive narrative around the country’s energy transition.
The Krupac solar project further amplifies EPCG’s ambitions in renewable energy. A tender has been issued for preparatory construction and engineering works valued at around €1.72 million, with total preparation costs estimated at €6.7 million. Located near Lake Krupac in the Nikšić region, this solar park is expected to have a capacity of 41.8 MW, spread over approximately 118 hectares, and generate about 62 GWh annually. The total investment for this project is projected at around €28 million.
While these projects alone will not overhaul Montenegro’s entire electricity system, they are crucial in establishing a more robust domestic solar foundation. Montenegro’s geographical position enhances its potential as an energy hub, with connections to Italy and neighboring countries like Serbia, Bosnia and Herzegovina, Albania, and Kosovo. The market value of Montenegrin solar will be influenced not only by generation costs but also by how effectively EPCG and CGES manage transmission access and timing.
The proposed VPP model is particularly significant as it aims to coordinate distributed production alongside flexible demand management, batteries, and prosumers into a cohesive portfolio. In an environment with increasing solar energy penetration, this approach can shift focus from mere generation volume to enhancing dispatchability. For instance, midday solar output without adequate flexibility may lead to price drops; however, aggregated flexibility can elevate the value of that same energy during peak demand periods or export opportunities.
Modernizing the grid infrastructure is essential to support these advancements. CEDIS has initiated collaboration with AFD and EDF International Networks to evaluate the distribution network and develop recommendations for digitalization, automation, smart-grid implementation, renewable integration, and long-term investment strategies. This initiative includes plans for reconstructing six 35 kV substations and upgrading various 10/0.4 kV facilities.
The future success of Montenegro’s energy transition will hinge on more than just increasing megawatt capacity; it will depend on the simultaneous progression of solar projects, grid modernization efforts, VPP aggregation capabilities, export access, and regulatory stability. Ongoing legal disputes regarding canceled small hydro concessions highlight how policy reversals can undermine investor confidence when not managed within a stable legal framework. By prioritizing bankable permits and transparent grid regulations, Montenegro’s solar initiatives have the potential to avoid past pitfalls.
EPCG is positioning itself not merely as a traditional utility adding solar capacity but as a portfolio operator within a strategically significant electricity system where each megawatt can be optimized for coordination, forecasting accuracy, and market tradability.
