Montenegro is preparing a revised market-premium auction for 250 MW of solar capacity after cancelling its first tender because none of the submitted bids met all legal and technical requirements.
The Ministry of Energy is working with the European Bank for Reconstruction and Development on new documentation. No replacement launch date has been fixed, with officials prioritising changes to the legal, spatial-planning and grid-connection framework.
The first auction was launched in July 2025 and was designed around 12-year two-way contracts for difference. Developers competed by offering the lowest strike price. The state would compensate successful projects when the market price fell below that level, while generators would repay excess revenue when prices moved above it.
The auction failed not because of insufficient interest in Montenegrin solar development, but because the submitted projects could not satisfy the complete compliance package. Deficiencies included documentation, spatial-planning status and network-connection criteria. These are fundamental bankability conditions rather than administrative formalities.
At an indicative development and construction cost of €0.6-0.8 million per MW, a fully awarded 250 MW programme would represent an estimated capital envelope of €150-200 million, excluding major transmission reinforcement. Equity requirements could reach €35-60 million, depending on leverage, construction contingencies and lender requirements.
The two-way contract model can support project-finance debt by stabilising revenue, but only when land, permits, grid access and curtailment rules are sufficiently clear. A nominal 12-year support period loses value when grid energisation is delayed or when compensation does not cover curtailment.
A 12-18 month connection delay could reduce equity returns by several percentage points through additional development expenditure, interest during construction and the loss of early operating cash flow. The impact would be particularly severe for projects that begin procurement before obtaining enforceable connection milestones.
Montenegro’s 2026-2028 incentive programme covers 450 MW, comprising 250 MW of solar and 200 MW of wind. The wind auction was planned separately because wind has a higher capacity factor, a different production profile and greater potential system value during non-solar hours. It should not be priced or assessed as an extension of the solar round.
The revised auction will test whether Montenegro can convert its renewable potential into projects that are legally executable and financeable. Strong irradiation and high regional electricity prices attract developers, but lenders will focus on grid capacity, dispatch rights, curtailment compensation, completion deadlines and the enforceability of the market-premium agreement.
