Montenegro’s renewable energy investment pipeline is expanding, with electricity generation forecast at 3,798 GWh and a projected system surplus of approximately 398 GWh under the government’s 2026 Energy Balance. Installed solar capacity was expected to reach around 215 MW by year-end, provided planned public and private projects were delivered.
The changing generation outlook is increasing the importance of revenue structures, grid access and export conditions in assessing renewable energy investments. Wind, solar, hydropower and battery storage projects must account for transmission costs, balancing risks, Carbon Border Adjustment Mechanism (CBAM) exposure, verification requirements and counterparty risks when establishing their financing models.
Gvozd wind farm advances into operation
The first phase of the 54.6 MW Gvozd wind farm entered trial operation in May 2026 following an investment of approximately EUR 82 million. The facility is expected to generate around 150 GWh of electricity annually.
European Bank for Reconstruction and Development (EBRD) project records identify a combined financing package of approximately EUR 108 million for the two-phase development. The second phase is planned to add 21 MW of capacity, with EPCG expecting an additional 63 GWh of annual generation.
The Energy Ministry had described the first phase as completed and work on the second phase as ongoing. The project’s commercial performance will depend partly on electricity sales arrangements and the contractual and verification documentation accompanying exports. Domestic sales, regional trading and physical exports to EU importers can involve different electricity price bases, balancing costs, collateral requirements, transmission rights and carbon-related risks.
Grid modernisation and storage investments
AFD and CGES signed a EUR 25 million sovereign-guaranteed loan to modernise the Perućica and Pljevlja 2 substations. The investment is accompanied by a planned EUR 8.5 million EU grant through the Western Balkans Investment Framework. The government has also initiated a process to select a strategic partner for battery energy storage systems.
Grid capacity and flexibility affect renewable project economics through curtailment exposure, balancing expenses, output management and access to export corridors. The quality of operational data is also relevant to substantiating commercial and regulatory claims.
Battery storage can support electricity trading and balancing, although stored renewable electricity should not automatically receive the same actual-emissions treatment under the current CBAM electricity methodology as directly generated renewable electricity shifted from an earlier hour.
Montechevo adds 400 MW to the development pipeline
CWP Europe is developing the 400 MW Montechevo solar project near Cetinje. Project materials indicate expected annual production of approximately 650 GWh, with commercial operation targeted around the end of 2028.
The development is linked to battery storage and a broader regional investment package. Its scale would have implications for grid reinforcement, market access, electricity offtake arrangements, storage dispatch and export planning.
Financing models face stricter revenue requirements
Renewable project financing increasingly requires separate assessments of three revenue sources: electricity sales under domestic power purchase agreements (PPAs), merchant arrangements or regional contracts; environmental attributes such as Guarantees of Origin, where recognition and contractual transfer are valid; and potential premiums associated with verified lower embedded emissions for electricity imported into the EU.
Any premium dependent on emissions evidence requires a separate assessment rather than being automatically incorporated into a project’s valuation. Lenders must evaluate how much output can meet applicable contractual, routing, hourly matching and verification requirements, who bears the costs of non-compliance, how long settlement may be delayed and whether producer liabilities could exceed the premium received.
Equity investors face similar considerations when valuing potential exits based on expected export premiums. Projects combining reliable generation, credible offtakers, secure grid access, controlled operational data and clearly allocated downside risks may be better positioned to secure lower financing costs. Their commercial viability will also depend on the ability to sell electricity without relying on regulatory benefits that have not been established.
By Virtu.Energy
