Montenegro is laying the foundations for a two-tier electricity flexibility market that could allow aggregators, industrial consumers and distributed energy assets to earn revenue from both national balancing and local distribution-grid services.
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Transmission system operator CGES is developing new balancing rules that would allow portfolios combining generation, consumption and storage to qualify as balancing service providers, giving smaller assets a route into markets traditionally dominated by larger power plants.
At distribution level, CEDIS has separately established rules for non-frequency ancillary services, while Montenegro’s regulatory framework allows the distribution operator to procure flexibility as an alternative to conventional network reinforcement.
Together, the measures create the beginnings of two distinct markets.
CGES would procure flexibility needed to balance the national electricity system.
CEDIS could procure flexibility where a specific distribution-grid constraint requires action.
The distinction is important because those services have different economics.
A factory capable of reducing consumption by 5 MW could have value to CGES when Montenegro’s overall system is short of electricity. The same facility could have additional value to CEDIS if its reduction relieves congestion or supports voltage at a particular network location.
That means flexibility can acquire both a national and a locational value.
Aggregators gain route into balancing
Under the emerging CGES framework, balancing portfolios could include multiple production units, consumers and storage installations operating as one resource.
This lowers the participation barrier for individual assets that are too small to qualify alone.
Hotels, industrial plants, water systems, refrigeration facilities and eventually commercial EV fleets could be combined into larger portfolios able to meet minimum technical and operational requirements.
The aggregator would manage forecasting, telemetry, dispatch and settlement.
That changes the role of flexible demand.
An industrial consumer would no longer simply reduce consumption to lower its own electricity bill. It could sell the ability to change consumption as a market product.
The resulting revenue could come from two sources: payment for keeping capacity available and payment for balancing energy actually activated.
That structure begins to make existing electricity consumption investable as a flexibility asset.
Distribution flexibility adds second revenue layer
The more unusual development is taking place at distribution level.
CEDIS rules cover non-frequency ancillary services that can include voltage support, reactive power, system restoration capabilities and other technical services required to operate the grid securely.
Montenegrin regulation also requires distribution planning to consider flexibility, demand response and storage as potential alternatives to conventional grid investment.
This creates the possibility of a local flexibility market.
Instead of immediately replacing a transformer or reinforcing a feeder that becomes overloaded for only a limited number of hours each year, CEDIS could potentially pay customers to modify consumption or production during those periods.
The comparison becomes economic.
A network upgrade may require substantial capital expenditure.
A flexibility contract may cost less if the constraint occurs relatively rarely.
That makes flexibility a potential non-wire alternative to traditional network development.
For market participants, the attraction is that the service could have value even when national electricity prices and balancing conditions are unremarkable.
The problem being solved is local.
Location becomes part of the price
Distribution flexibility differs fundamentally from national balancing because location matters.
A flexible megawatt in one part of Montenegro cannot necessarily solve congestion or voltage problems elsewhere.
That could eventually create highly localised prices.
The value of an industrial load, battery, renewable generator or controllable commercial site would depend not only on how quickly it can respond but also on where it is connected.
This adds another layer to project valuation.
Developers traditionally examine grid-connection cost, available MW and curtailment risk.
If local flexibility procurement becomes commercial, a project’s network location could also create an additional revenue stream.
A resource positioned close to a constrained substation may become more valuable than an otherwise identical asset connected in an unconstrained area.
Same MW cannot be sold twice
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The two-tier model also creates a coordination problem.
A flexible asset cannot simultaneously promise the same capacity to CGES and CEDIS if both operators may need it at the same time.
That makes dispatch priority, metering and contractual control critical.
An aggregator operating across both markets would need to know in real time which assets remain available, what obligations have already been sold and which activation creates the greatest value without breaching another commitment.
This is where flexibility markets become increasingly digital.
The key infrastructure is not only electrical equipment but also telemetry, communications, baselining and optimisation software.
The aggregator’s competitive advantage therefore comes from controlling a portfolio accurately enough to sell several services without double-counting the underlying MW.
Montenegro could become a Western Balkan test case
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Montenegro remains a small electricity market, and that will limit liquidity.
A limited number of eligible providers could make some services difficult to procure competitively.
But the same market size could also favour aggregation.
Combining commercial buildings, industry, distributed generation and flexible infrastructure may be the only practical way to create sufficient competition outside the traditional utility sector.
The regulatory framework is increasingly compatible with that model.
The next step will be commercial implementation.
For CEDIS, the important signal would be publication of specific flexibility requirements showing where capacity is needed, how many MW are required, for how long and at what price.
For CGES, the test will be whether final balancing rules produce regular procurement that aggregators and industrial customers can rely on when assessing investment in telemetry and control equipment.
If both markets develop, Montenegro could create something still unusual in the Western Balkans: flexible assets earning from both system-wide balancing and local grid services.
The country’s next meaningful power-market asset may therefore not be another generating plant.
It may be an existing factory, hotel, pump or commercial load whose ability to change electricity consumption becomes valuable in two different markets.
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