Italian renewable-energy developer Renexia and Montenegrin company Sistem-MNE have signed a memorandum of understanding covering a proposed €1.2 billion investment programme involving more than 1 GW of wind and solar capacity in Montenegro. The portfolio could generate approximately 2.3 TWh of electricity annually once fully operational.
The companies envisage a development and construction period of around four years, with the programme potentially supporting up to 1,000 construction-related jobs. The memorandum expands the scale of Renexia’s prospective involvement in Montenegro, building on the company’s previous cooperation in the country.
The programme remains at the development stage. The proposed €1.2 billion represents planned capital expenditure, not committed financing. No final investment decision, project-finance package or construction start has been disclosed.
The projected annual output would be substantial relative to Montenegro’s domestic electricity market, making it unlikely that local consumption alone could absorb the portfolio’s generation. Cross-border electricity sales and exports could therefore become central to the projects’ commercial viability.
Italy Interconnection Could Support Electricity Exports
Montenegro’s existing high-voltage subsea electricity connection with Italy provides direct physical access to one of Europe’s largest electricity markets. A renewable portfolio of the proposed scale could increase the strategic importance of this interconnection, particularly when Italian and broader European electricity prices are higher than those in Southeast Europe.
However, physical connectivity does not guarantee unrestricted access to export markets. Project developers will need to assess transmission rights, network congestion, potential grid reinforcements, balancing requirements and competition from other regional generators seeking to sell electricity into the same markets.
Transmission and Storage Requirements
The proposed addition of more than 1 GW of variable renewable generation would require substantial planning for Montenegro’s domestic electricity network. Potential requirements include new substations, transmission lines and investments to increase system flexibility.
Battery storage could become increasingly important as wind and solar capacity expands. Without adequate storage or flexible generation, periods of high renewable output could result in lower electricity prices or curtailment. The pace of renewable development would therefore need to be accompanied by investment in transmission infrastructure, storage capacity and electricity-market integration.
Financing and Electricity Sales Arrangements
Financing will be a critical step in advancing the proposed portfolio. A programme of this size is unlikely to rely exclusively on corporate balance sheets. Commercial banks, infrastructure funds and development institutions could participate, although lenders would require clarity on project ownership, permits, grid connections, revenue structures and long-term electricity sales.
Potential commercial arrangements include corporate power purchase agreements (PPAs), utility contracts, merchant-market exposure or combinations of these structures. The choice of revenue model would form part of the financing process, alongside the development and permitting of individual projects and confirmation of their grid connections.
Implications for Montenegro’s Electricity Sector
The proposed investment would support Montenegro’s transition towards an electricity-generation structure increasingly based on renewable energy rather than coal. Achieving that shift at the envisaged scale would also require coordinated investment in the infrastructure and market arrangements needed to integrate additional generation and support exports.
If the memorandum progresses into financed and constructed assets, the programme could strengthen Montenegro’s position as a renewable electricity exporter with a direct connection to Italy.
The next milestones include identifying individual project sites, completing grid studies, obtaining permits, securing financing and reaching final investment decisions. Until those steps are completed, the €1.2 billion programme remains a prospective investment pipeline rather than secured construction expenditure.
