Montenegro’s energy transition is beginning to move beyond the old debate between hydropower, coal and small hydro concessions. The new story is taking shape around utility-led solar, distribution-grid modernisation and the prospect of a virtual power plant model that could allow EPCG to manage renewable output, flexibility and demand in a more integrated way. The shift remains early, but the direction is becoming more visible.
The most symbolic project is EPCG’s solar development at the former steel complex in Nikšić. Montenegro’s Environmental Protection Agency has cleared the planned Zeljezara solar expansion without requiring a full environmental impact assessment, removing a key regulatory step. The project will have total installed capacity of 34.58 MW, with 21.21 MW on factory rooftops, 11.45 MW on land within the complex and 1.92 MW from previously installed modules. Expected annual generation is around 46.6 GWh.
That project matters because it shows a practical route for reusing industrial land and infrastructure. Instead of treating the former steel site only as a legacy industrial asset, EPCG is turning it into a renewable-energy platform. For a small system such as Montenegro, this type of brownfield solar can reduce permitting friction, avoid some land-use conflicts and create a cleaner narrative around the transition of former heavy-industrial locations.
The Krupac project adds scale. EPCG has launched a tender for preparatory construction and engineering works worth about €1.72 million, with a wider preparation phase estimated at €6.7 million. The future solar park near Lake Krupac in the Nikšić region is planned at 41.8 MW, across roughly 118 hectares, with expected annual production of about 62 GWh. Earlier estimates put total investment at around €28 million.
Together, Zeljezara and Krupac would not transform Montenegro’s entire electricity system by themselves, but they would create a more credible domestic solar base. That base is important because Montenegro has a strategic position that exceeds the size of its market. Its connection to Italy gives it access to a higher-priced market, while its links with Serbia, Bosnia and Herzegovina, Albania and Kosovo place it in the middle of several regional flow patterns. The market value of Montenegrin solar will therefore depend not only on generation costs, but on how EPCG and CGES manage timing, transmission access and balancing.
This is why EPCG’s interest in a virtual power plant model is strategically important. A VPP would allow distributed production, flexible demand, batteries and possibly prosumers to be coordinated as a single portfolio. In a system with rising solar penetration, this can help shift value away from pure generation volume and toward dispatchability. Midday solar output without flexibility may depress prices; aggregated flexibility can turn the same energy into a higher-value product during evening peaks or export windows.
Grid modernisation is the necessary counterpart. CEDIS has launched cooperation with AFD and EDF International Networks, supported by up to €290,000 through technical assistance, to assess the distribution network and prepare recommendations for digitalisation, automation, smart-grid deployment, renewable integration and long-term investment planning. The same programme includes planning for reconstruction of six 35 kV substations and modernisation of numerous 10/0.4 kV facilities.
The investment case for Montenegro’s energy transition will not be decided only by MW additions. It will be decided by whether solar, grid digitalisation, VPP aggregation, export access and regulatory stability move together. The unresolved legal claims over cancelled small hydro concessions show that investor confidence can be damaged when policy reversals are handled without a durable legal framework. Montenegro’s solar cycle has the opportunity to avoid that mistake by building projects around bankable permits, transparent grid rules and portfolio-level system planning.
EPCG is now positioned to become more than a traditional utility adding solar capacity to an old generation fleet. It can become a portfolio operator in a small but strategically connected electricity system, where every MW has higher value when it is coordinated, forecastable and tradable.
Elevated by Virtu.Energy
