This is a best prospect industry sector for this country. Includes a market overview and trade data.
Last Published: 7/26/2019

Overview

The energy system of Montenegro is small, with only 285,000 customers and a demand of around 3,400 gigawatt hours (GWh) annually.  Electricity production in Montenegro for 2018 was approximately 3,787 GWh.  The majority of electricity in Montenegro is produced at the Pljevlja coal-fired Thermal Power Plant, the Perucica, and the Piva Hydro Plants.

The majority state-owned Electrical Power Company’s (EPCG) core activity is electricity generation, transmission, distribution, and supply.  In July 2017, former strategic partner to the Government of Montenegro, Italian company A2A, initiated the withdrawal procedure by exercising the put option after its contract expired on July 1, 2017.  Under the agreement, the Government would purchase A2A’s 41.7 percent of EPCG shares for 250 million euros over a period of seven years. The government instead decided to purchase A2A shares rapidly, increasing its majority stake in EPCG.  Accordingly, in April 2018, the government made the first payment in the amount of EUR 68.9 million increasing its stake in EPCG to 70.16 percent while the second payment was made in April 2019 in the amount of EUR 39.9 million which increase state’s ownership stake for additional 6.73% to 76.8% of shares in total.    Montenegro signed the Agreement of the Electro-Energetic Community for South Eastern Europe on January 1, 2015, which resulted in opening its energy market to competitors.

Montenegro has the potential to develop hydro and thermal power plants, given the abundance of rivers and streams, as well as the potential for some new types of production such as solar and wind energy.  Montenegro only uses around 20 percent of its hydro potential and consumes more energy than it produces; there are ample opportunities to develop new energy sources.  To fully develop this sector, Montenegro will need a developed/upgraded transmission and distribution network.

The most important development project in the transmission system is the construction of a one-way underwater energy cable to export power to Italy, the laying of which was completed in February 2017.  According to an agreement signed in 2010, the cable, which cost EUR800 million, runs for 433kilometers, 1200 meters below the Adriatic Sea surface and is expected to start exporting renewable energy to Western Europe during 2019.

Opportunities

Hydroelectric power plants on the Moraca River - The Government of Montenegro intends to develop the country’s mostly untapped hydroelectric power potential through Public Private Partnerships. As a priority, the government wants to develop Moraca River’s potential through a series of four hydroelectric power plants for a total installed capacity of 238 MW and an annual production of 694 Giga-Watt hours (GWh). Extensive geotechnical and hydrological investigations have already been performed on the sites.

Komarnica – Investment is needed in two power generators of 168 MW, with a combined annual production of 232 GWh. The investment is worth about 180 million euros. Extensive geotechnical and hydrological investigations have already been performed on the sites.

Small hydropower plants in Montenegro - There are three ways of applying for concession rights over small streams rivers:
a) By responding to the Ministry of Economy initiated tender;
b) By investor-initiated expression of interest (through tender procedure);
c) By issuing of energy permits (Exclusively mini hydro power plants).

For hydropower plants with the installed capacity up to 1 MW is necessary to obtain energy permit. If energy permits are issued for the construction of power plants with installed capacity up to 1 MW, using state resources, a standard Contract of the concession is signed with the holder of energy permit, in accordance with the Decision of the Government. Energy permits are issued on the basis of the Annual Plan adopted by the Government of Montenegro. The Ministry of Economy of Montenegro did not foresee issuing energy permits in its Energy Licensing Plan for 2019. The reason is that Montenegro is already close to reaching the national target of 33 percent of the produced energy from renewable energy sources (RES) in final energy consumption. Law on Concessions stipulates possibility of awarding concessions based on an annual plan adopted by the Government and published on the web site of the Government. The tender can be launched upon the initiative of a competent authority or upon initiative of an interested investor.            
So far, 34 concession contracts have been signed for the construction of 53 small hydro power plants to date. For 2018, EUR 47 million worth investment it is planned for the construction of small hydropower plants, and EUR 22.7 million in 2019.                

Solar power plants - Due to a good geographical position Montenegro is “rich” with solar radiation. Areas with highest solar radiation are located in south of Montenegro (aria around cities Bar and Ulcinj) and area around capital city Podgorica. There is also a growing interest for renting of state-owned ground for construction of on ground installed solar power plants. In these cases, when investor is interested in the construction of PV power plant in certain area a public tender for 30 years rent of state-owned ground may be organized. The Ministry of Economy has so far issued 19 energy permits for installation of rooftop PV plants with installed power of up to 1 MW. Their total installed power is around 10,5 MW, while the planned annual production is around 13,8 GWh.

In 2016 the local authority of the capital city of Podgorica issued planning documents for construction of a ground mounted solar power plant at Velje Brdo, with installed power of at least 50 MW.

In October 2018, a consortium between Fortum, Montenegrin energy company EPCG and Sterling & Wilson International Solar FZCO has won the public call to build a solar power plant in the Ulcinj solar site in Montenegro. The consortium has proposed to build 250 MW of solar power in Ulcinj. The next step in the process is to negotiate the final contract with the State of Montenegro, expected to be concluded during 2019.
Apart from the construction of small hydropower plants and solar plants the government hopes to further develop renewable energy sources such as wind and biomass. Two wind farms in Montenegro, in Krnovo with a capacity of 72MWh and in Mozura, with a capacity of 46MWh are in operations.

Investment in Oil and Gas – In late 2013, Montenegro invited international oil and gas companies to bid on licenses to explore its offshore coast, based on the seismic data which showed favorable conditions for hydrocarbon deposits off Montenegro’s deep-water coast.  The GoM has signed concession agreements with two consortia: the Italian-Russian consortium Eni/Novatek for four blocks and the Greek-British consortium Energean oil/Mediterranean oil & gas for one block.  It is expected that the exploration will start in 2019, and several more licensing rounds are foreseen by 2020 for additional exploration blocks.

The 2014 Montenegrin Energy Development Strategy estimates that by 2030 up to 7 billion barrels of oil and 425 billion cubic meters of natural gas could be discovered along the coast. Further research regarding these resources is necessary to confirm the capacity levels. The search for oil and gas, along with the production cycle, consists of several phases: exploration, appraisal, development, production, and abandonment. Montenegro does not possess the necessary technology, nor does it have the experience, to produce oil or gas. Furthermore, successful energy exploration must also factor in the environmental impact of operations, as coastal tourism comprises a significant percentage of national revenues.
Montenegro does not currently possess the gas distribution network or the necessary technology to produce oil or gas, which may represent opportunity for FDI.

Ioninan-Adriatic Pipeline (IAP) - The Energy Development Strategy of Montenegro (2014 until 2030) recognizes IAP as the leading option for gasification of Montenegro and as a possibility to market its own gas as a result of the construction of the gas infrastructure and being closer to significant gas market. The 530 kilometers long IAP, which has been planned to connect Fier (Albania) to Split (Croatia), is expected to pass through the territory of Montenegro – 94 kilometers along the coast – transporting gas from the Caspian Sea.  The Energy Development Strategy however, also estimates that by 2030 up to 7 billion barrels of oil and 425 billion cubic meters of natural gas could be discovered along the coast. Currently, Montenegro does not yet have any system or necessary technology for distribution of natural gas.

Web Resources

Ministry of Economy
Mrs. Dragica Sekulic, Minister
81000 Podgorica, Rimski trg 46
Phone: +382 20 482 163, 234 676; Fax: +382 20 234 027
Web site: www.mek.gov.me

Ministry of Sustainable Development and Tourism
Mr. Pavle Radulovic, Minister
81000 Podgorica, IV Proleterske brigade 19
Phone: +382 20 446 200; Fax: +382 20 446 215
Web site: www.mrt.gov.me

Energy Regulatory Agency
Mr. Novak Medenica, Director
81000 Podgorica, Bulevar Svetog Petra Cetinjskog 96
Phone: +382 81 201 360; Fax: +382 81 201 365
Web site: www.regagen.co.me



 

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