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Overview of Montenegro’s Energy Sector

Overview of Montenegro’s Energy Sector

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Montenegro is continuing to develop its energy sector by creating appropriate legislative, regulatory, institutional, and financial frameworks to encourage greater investment from the private sector. As part of this process, Montenegro is moving towards harmonizing its energy legislation with that of the European Union, the Energy Community, the World Energy Council, and the International Energy Agency, recognizing energy as a pillar of the country’s overall, sustainable, and long-term stable development, with evident positive macro-economic effects.

Also, the Law on Amendments to the Law on Energy (the “Law”) is expected to be adopted in 2020. The Law will simplify and shorten the procedure for connecting users’ facilities to the electricity system, and to specify the legal framework for the stock-exchange-form of electricity trading. The Law will also clarify the provisions governing the pursuit of gas and thermal energy sources and set out more favorable conditions for the production of electricity from renewable sources.

To achieve the goal of developing the energy sector it is also necessary to maintain, rehabilitate, and moderate the existing infrastructure and create new infrastructure for the production, transmission, and distribution of energy, based on the principles of the fulfilling international technical standards, improving energy efficiency, reducing losses, making better use of renewable energy, and decreasing the negative impact on the environment.

According to official data, Montenegro has significant coal reserves and potential renewable energy sources including hydro-power, wind, biomass, thermal energy, and solar radiation, while possible oil and gas reserves are still in the exploration phase.

Montenegro produced more than 60% of its electricity from renewable energy sources in the last two years. The main sources of renewable power generation in recent years have been the Piva and Perucica hydropower plants.

The Electric Power Industry of Montenegro is planning to invest a total of EUR 700 million in the construction of new renewable energy capacities, as well as in the reconstruction of other power plants in accordance with environmental standards.

The plan for the period from 2020 to 2024 is divided into three development directions. The first refers to the diversification of existing electricity production, with a continuous increase in the share of renewable energy sources, through the construction of the Gvozd wind farm and Briska Gora solar power plant. The second consists of the construction of new hydroelectric power plants, which primarily refers to the Komarnica hydroelectric power plant and the reconstruction of five existing hydroelectric power plants owned by the EPCG. The third direction includes the improvement of the operation of the Pljevlja thermal power plant (“TPP Pljevlja») and the environmental standards in that city.

TPP Pljevlja is the first Montenegrin condensing thermal power plant designed with two units, although only one unit has been built. In September 2019, the Government of Montenegro halted the construction of the second unit of the TPP Pljevlja for environmental reasons, after which the EPCG decided to reconstruct the first unit of TPP Pljevlja, which should be completed by 2022. This improvement should ensure that all emissions and products of combustion of coal and chemical processes in the production of electricity will be below the permitted limits, in accordance with the regulations of Montenegro and strict EU directives.

It is also important to emphasize that new energy supply capacities have progressed with the launch of the 50 MW Mozura wind farm, Montenegro’s second largest, and with the issuance of several licenses to build and operate solar power plants, including a large 250 MW solar plant at Briska Gora, which will be one of the largest in Europe. Also, closing the deal for the construction of a 100.8 MW commercial wind farm in Brajici is expected to occur soon.

In 2019, Montenegro managed to produce electricity for ten consecutive days exclusively from renewable energy sources, joining a small group of countries in the world to have done so.

Montenegro will be able to produce 100% of its electricity from renewable energy sources in the near future if it continues to develop in this manner, and this development of the energy sector will be a good influence on other countries in the region.

By Igor Zivkovski, Partner, Zivkovic Samardzic Law Office

This Article was originally published in Issue 7.6 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

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