Montenegro is preparing a revised market-premium auction for 250 MW of solar capacity after cancelling its first tender. The cancellation followed a situation in which 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. Officials have not fixed a replacement launch date, prioritising changes to the legal, spatial-planning and grid-connection framework.
July 2025 auction design and contract structure
The first auction was launched in July 2025. It was structured around 12-year two-way contracts for difference, with developers competing by offering the lowest strike price. Under the model, the state would compensate successful projects when the market price fell below the strike level. Generators would repay excess revenue when prices moved above it.
Compliance package gaps behind tender cancellation
The auction did not fail due to a lack of interest in Montenegrin solar development. Instead, the submitted projects could not satisfy the complete compliance package required for participation. Deficiencies included documentation, spatial-planning status and network-connection criteria. These elements were described as 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 imply 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.
Bankability requirements for two-way CfD projects
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 can lose value if grid energisation is delayed or if compensation does not cover curtailment. A connection delay of 12-18 months could reduce equity returns by several percentage points through additional development expenditure, interest during construction and lost early operating cash flow.
The impact could be more pronounced for projects that begin procurement before obtaining enforceable connection milestones. Lenders are expected to assess whether projects meet requirements that affect execution risk and enforceability under the support arrangement. These include grid capacity constraints, dispatch rights, curtailment compensation terms, completion deadlines and whether the market-premium agreement is enforceable.
Montenegro’s 2026-2028 renewables incentive programme context
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. Officials said it should not be priced or assessed as an extension of the solar round.
The revised auction is intended to determine whether Montenegro can convert renewable potential into projects that are legally executable and financeable. Strong irradiation and high regional electricity prices are expected to attract developers, while lenders will focus on grid capacity, dispatch rights, curtailment compensation, completion deadlines and enforceability of the market-premium agreement .
