The energy framework devised by the Montenegrin government is impressive but remains incomplete. Its original road map amounted to a state-directed and rigid policy which largely failed to spark enthusiasm from investors, domestic or foreign, and so it was revised, with the government formulating a more flexible approach and opening the door to private enterprise.
Ratification of the Kyoto protocol in 2007 was just one step in the process of opening up the Montenegrin market and providing an acceptable degree of regulatory authority and transparency. The country's 'Energy Development Strategy by 2025' was a major policy document which outlined road maps and required measures for meeting strategic targets.
Its baseline goals were fairly broad and included, among others, secure power supply, infrastructure improvements, creation of regulatory frameworks, higher utilisation of renewables, and the privatisation of the Montenegrin state utility. Its implementation was left to the 'Action Plan 2008—12'.
As a follow-on measure, the Montenegrin parliament passed a new energy law in April that introduced more flexible guidelines, especially for private sector participation. Other changes were made to the responsibilities of the regulatory bodies and planning procedures.
For renewable energy it meant new financial incentives which, it is hoped, will lead to a new renewables programme. Although the specific benefits of it have yet to be seen, one concrete measure is the use of a new licence, the energy permit, which succeeds the various licences of the previous energy law.
It will have a term of 15 years which is extendable. Another provision is the concept of the 'qualified energy producer', which will be given to renewable energy generators and guarantee them a fixed tariff as well as preferential grid access for 12 years.
Energy production in the country totals some 25 PJ (hydro 33.5%, lignite 56.5%, and wood 10%) but total consumption lies at some 46 PJ, with the shortfall being made up from imports (oil 32%, coal 30%, hydro 20% and wood 5%).
The state-owned utility, Elektroprivreda Crne Gore (EPCG), is responsible for generation, transmission and distribution. Montenegro's total installed capacity is 868 MW, of which 649 MW is from two large hydro plants and 210 MW from a coal-fired plant. Electricity demand has grown significantly from 505 GWh in 1994 to 2077 GWh in 2005.
A recent wind atlas for the country showed average wind speeds of between 5.5-6.5 metres/second at 50 metres.
The biggest hurdle for investors considering developing renewable energy projects in Montenegro is the difficulty in attaining any economies of scale.
There is certainly potential. However, on its own, the country may struggle to attract investments from abroad unless they are combined with projects in neighbouring countries.
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