The state-owned energy firms Elektroprivreda (EPCG), Montenegrin Electricity Distribution System (CEDIS), and Montenegrin Electricity Transmission System (CGES) invested €105.3 million in production capacities, as well as distribution and transmission networks last year. This information comes from the 2024 Report on the State of the Energy Sector of Montenegro, submitted to the Parliament of Montenegro by the Regulatory Agency for Energy and Regulated Utilities (REGAGEN).

EPCG’s investment reached €52.9 million, which is an increase of €10 million compared to 2023. CEDIS allocated €27.3 million to its network, up by €3 million from the previous year, while CGES invested €25.1 million, marking a €14 million rise from 2023.

The investment strategies of CEDIS and CGES pertaining to their electricity networks have received approval from the Regulatory Agency. They are authorized to generate revenue through lines on consumers’ electricity bills in Montenegro. However, both companies executed their plans with a significantly lower completion rate than approved. Consequently, the Regulatory Agency is assessing if these investments can be carried over into the next regulatory period and how it may affect future consumer prices.

CGES Achieved 45% of Planned Investments

According to the approved 2024 plans, CGES was expected to invest €10.6 million in its transmission energy network. However, actual investments amounted to €4.75 million, or 45% of the target. Last year, CGES reported investments of €20.4 million that were carried over from previous years’ plans.

“The primary reasons for the lower-than-expected implementation of investments in 2024 include a lack of spatial planning documents, lengthy tender procedures, and problems related to property and legal issues, as well as land and infrastructure acquisition,” the Regulatory Agency’s report explains.

The largest individual investments by CGES were made in the Lastva substation (€8.8 million), the Luštica substation (€5.5 million), and constructing the Čevo – Pljevlja transmission line (€3.8 million).

“Developing energy infrastructure and enhancing regional and cross-border interconnections are vital for bolstering energy supply security and ensuring competitive pricing for end users—both households and businesses. Since electricity systems in different countries are interconnected, developments in one nation can directly influence stability in neighboring areas. Disturbances in one system may lead to changes in key parameters across interconnected networks,” the Regulatory Agency highlighted.

Delay in Đurđević Tara is an International Concern

The delay in constructing international transmission lines Lasta (Grbalj) – Pljevlja and Pljevlja 2 – Bajina Bašta is something that raises concerns.

“The 400 kV transmission line ‘Lastva – Čevo – Pljevlja 2’ traverses eight municipalities and two national parks, linking the coast to northern Montenegro. The primary cause for holdups in constructing the section between Čevo and Pljevlja is unresolved property and legal relations at the Đurđevića Tara site. Moreover, the absence of planning documentation for the 400 kV line ‘Pljevlja 2 – Bajina Bašta’ stalls further project development. Addressing these issues is crucial for fully utilizing the submarine interconnection between Montenegro and Italy. The launch of the first core of the submarine cable, with a capacity of 600 MW, connects the transmission systems of both countries and signifies the successful completion of a major investment in Montenegro’s transmission infrastructure, solidifying an energy bridge between the EU and the Western Balkans. Consequently, Montenegro has emerged as an energy hub in this regional context. This interconnection strategically benefits the security of electricity systems and connects wholesale electricity markets between Italy and Montenegro,” the Regulatory Agency stated.

CGES and the state of Montenegro earned €42 million from electricity transit through its territory (allocation of cross-border capacities) last year, compared to €55.8 million in 2023. Hence, expediting the construction of the Lastva – Pljevlja – Bajina Bašta transmission line is vital as it is a prerequisite for laying a second submarine cable to Italy, expected to enhance CGES’s revenue from transit allocations.

The additional revenue generated by CGES from cross-border allocations is utilized to lower bills for domestic consumers.

CEDIS Achieved 41% of Its Planned Investments

CEDIS was projected to invest €36.3 million in the distribution network, but the actual realization was just €14.9 million. Last year, they also reported investments of €7.54 million that were planned for 2023 and earlier years. According to the regulator, CEDIS communicated that some of the unrealized investments faced delays due to property-legal disputes and public procurement procedure issues.

Under strict conditions, investors of residential and commercial properties can build parts of the energy network to connect their facilities at their own expense (from CEDIS’s network to their connection). Upon completion, CEDIS is required to purchase this energy network from the investors, and the value of such purchases is factored into the company’s investment plans submitted to REGAGEN for approval.

According to these plans, CEDIS aimed to acquire a network valued at €17 million from investors in 2024, but only managed a purchase of €4.81 million.

“CEDIS reported that long-standing challenges in obtaining necessary documentation from infrastructure owners and a significant increase in the estimated value of that property relative to initial plans were key factors affecting the level of implementation,” mentioned the Agency’s report.

EPCG Invested €52.9 Million without Raising Prices

Regulatory measures do not encompass EPCG’s investments, as they are funded through electricity sales to local and international customers and specific loans. EPCG has not raised its item on consumer bills for the past 15 years.

The company’s total investment last year was reported at €52.9 million.

A substantial portion of these funds was directed towards projects generating electricity from solar sources through the Directorate for Renewable Energy Sources—€24.5 million. In 2023, €21.9 million were invested in the continuation of the “solari” project, which involves installing mini solar power plants on rooftops of homes and businesses, while another €2.6 million was spent on solar power plants owned by EPCG near Lake Slano and Krupac.

In 2024, EPCG allocated €15.2 million for the environmental reconstruction of the Pljevlja Thermal Power Plant, expected to conclude in November this year (total reconstruction cost is projected at €70 million). Additionally, €7 million was invested in the modernization and maintenance of the Perućica HPP, €3 million for Piva HPP, and €2.5 million for preparing new projects, technical documentation, and tenders.

Among upcoming projects in 2024, preparations have initiated for the Gvozd wind farm, with the expectation of generating initial kilowatts by year-end, while documentation work for the large Kruševo hydroelectric power plant on the Piva River is underway.

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