Montenegro’s plans for a second high-voltage direct-current (HVDC) connection with Italy could increase its role in regional electricity trading and renewable energy exports, although the investment case for new generation projects must remain grounded in transmission infrastructure that is operational or sufficiently secured.
The existing Italy-Montenegro interconnector provides 600 MW of transfer capacity. Italian transmission operator Terna continues to include a second pole in its development planning, which would establish an additional connection and potentially strengthen the corridor’s strategic importance.
Implementation remains conditional on regulatory decisions and the development of the Trans-Balkan corridor.
For renewable energy developers planning solar and wind projects for commissioning in the late 2020s, the distinction between existing and prospective transmission capacity directly affects financing assumptions. Projects financed today must meet debt-service obligations according to their construction and financing schedules.
If a project’s base-case revenues depend on additional transmission capacity that remains subject to permitting, procurement, regulatory approvals or construction, its financial viability becomes dependent on infrastructure outside the developer’s control.
Lenders can distinguish between the two scenarios by using the existing 600-MW interconnector and reasonably foreseeable cross-border conditions as the basis for the base case. Additional capacity from a second pole can be incorporated into an upside scenario once its implementation schedule and delivery prospects are sufficiently credible to support financial modelling. This approach allows lenders to recognise potential additional merchant-market revenues without making debt repayment dependent on infrastructure that has yet to be delivered.
Domestic transmission requirements
A second interconnector would not remove all network constraints. Greater transfer capacity with Italy would increase the importance of domestic transmission reinforcement, since electricity would still need to reach Lastva and the HVDC interface.
The expansion could also increase the importance of the Trans-Balkan corridor, regional electricity flows and balancing resources. If domestic generation capacity expands rapidly, constraints could shift from the international connection to inland substations and transmission corridors. The commercial effects of additional interconnection would also depend on electricity market dynamics. Greater connectivity can create more export opportunities, but it can also narrow price differences between markets.
Renewable developers relying on a sustained Italian price premium would therefore need to assess whether stronger interconnection could reduce that spread over time. Increased access to another market does not guarantee the future direction or magnitude of electricity prices.
At the national level, a second HVDC pole could strengthen Montenegro’s position between Western Balkan electricity generation and the European Union market. It could support larger renewable generation volumes and increase the country’s strategic importance in regional power trading. Realising those benefits would require coordinated development of generation capacity, transmission infrastructure and electricity market arrangements.
For lenders, financing decisions should be based on infrastructure that is already operational or can be delivered under sufficiently established contractual arrangements. Proposed network expansion should remain an additional revenue opportunity until it has progressed through the engineering and regulatory milestones required for inclusion in the base-case financial model.
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