Montenegro’s transmission network is becoming increasingly important to the financing and commercial performance of new renewable energy projects, as expanding wind and solar capacity requires reliable grid connections, balancing services and access to cross-border electricity markets.
The country’s renewable pipeline includes the operational first phase of the 54.6 MW Gvozd wind farm, a further 21 MW second phase and the planned expansion of solar capacity to approximately 215 MW under the 2026 Energy Balance, provided the proposed projects are delivered. The 400 MW Montechevo solar project represents a further increase in potential grid connection requirements.
Financing supports substation and transmission upgrades
AFD and CGES signed a EUR 25 million sovereign-guaranteed loan to modernise the Perućica and Pljevlja 2 substations. The financing plan also includes a planned EUR 8.5 million EU grant through the Western Balkans Investment Framework.
The Energy Ministry has also highlighted progress on the Trans-Balkan corridor section towards Pljevlja.
Network improvements affect renewable project economics by reducing connection bottlenecks, improving reliability and increasing the number of hours in which electricity can reach buyers. They also support the availability and quality of operational records used for contracts, settlement and emissions verification.
Grid records become part of export compliance
Under the EU’s Carbon Border Adjustment Mechanism (CBAM), transmission capacity reservations and interconnector bookings do not independently establish that a particular generating installation produced the imported electricity or that all requirements for actual-emissions treatment have been satisfied.
Traders need accepted nominations, route identifiers and evidence relevant to the applicable network condition. Generators must provide settlement-meter output for corresponding periods, while the EU declarant needs an electricity allocation reconciled with the customs import.
Consequently, data access and retention requirements need to be addressed alongside physical connection arrangements. Long-term power purchase agreements and lender direct agreements must establish who can access source records, how corrections are managed, how long information is retained and what happens when a trader or service provider exits the transaction. A renewable project may have a physical grid connection but still lack the documentation required for a financeable compliance structure.
Battery storage adds flexibility to the network
Montenegro has initiated a process to select a strategic partner for battery energy storage systems (BESS).
Greater wind and solar generation increases the potential value of balancing, congestion management, electricity arbitrage and reserve capacity. Batteries can also shift electricity delivery towards higher-priced hours, making export profiles more commercially attractive. The financial benefits of storage must be distinguished from any assumed CBAM qualification for time-shifted renewable electricity. Under the current electricity rules, production and nominations must correspond within the same period. Metering can help establish the physical origin of stored electricity, but does not by itself determine the legal treatment of a later discharge.
The financing assessment therefore needs to value balancing and arbitrage separately from any unproven carbon premium.
Italy interconnector links domestic capacity to export markets
The 600 MW Montenegro-Italy high-voltage direct-current interconnector makes the domestic transmission network part of a wider electricity export route into the EU.
New generation in northern and central Montenegro must reach the relevant grid nodes, navigate internal network constraints and be scheduled for cross-border transmission. Export performance consequently depends partly on the capacity of the network connecting generating facilities to Lastva, rather than solely on the availability of the submarine cable.
Lower curtailment, improved network availability, reliable emissions records and more predictable export access can increase the proportion of electricity earning contracted prices or premiums. These factors can also strengthen debt-service coverage without relying exclusively on optimistic assumptions about wholesale electricity prices.
The expansion of renewable generation will therefore require coordinated investment in transmission capacity, substations, operational control and auditable data systems to ensure that new electricity production can reach buyers under commercially and financially viable arrangements.
By Virtu.Energy
