The Energy Development Strategy of Montenegro sets out objectives and defines mechanisms for the transition from the current energy system to a safe, competitive and environmentally acceptable energy paradigm by 2025. It also provides guidelines for.
The Article (in Montenegrin and English) prepared by Dajana Drljević and Aleksa Janković, Associates from the JPM Montenegro office, outlines key aspects of the law including detailed regulations on planning renewable energy shares, administrative procedures, and incentive systems for electricity generation.
The energy sector of Montenegro is small, with only 396,000 customers and overall demand of approximately 3,000 gigawatt hours (GWh) annually. Electricity production in Montenegro for 2022 totaled 2,731 GWh, which is 13.6 percent less than in 2021. Most of the electricity in Montenegro is produced at the Pljevlja coal-fired Thermal Power Plant
This independent regulatory authority is competent in the area of electricity, oil and natural gas, as well as in the area of water supply and wastewater utility regulation. The main responsibilities of REGAGEN are: Licensing of energy utilities in the areas of electricity, oil and gas.
This legislation aligns with the European Union’s Directive 2018/2001/EU, promoting renewable energy sources such as wind, solar, geothermal, and biomass.
The Article (in Montenegrin and English) prepared by Dajana Drljević and Aleksa Janković, Associates from the JPM Montenegro office, outlines key aspects of the law including detailed regulations on planning renewable energy shares, administrative procedures, and incentive systems for electricity generation. It introduces market premium systems and feed-in tariffs specifically for small plants and demonstration projects. A notable addition is the recognition of Energy communities, which allows groups of individuals and organizations to collaborate in utilizing renewable energy.
The law also addresses the use of renewable energy in transportation, mandating obligations for fuel suppliers to incorporate renewable sources and establish necessary infrastructure. It outlines a market premium incentive structure, where producers may owe payments if market prices exceed their realized prices, and includes provisions for compensation related to electricity delivery restrictions.
Overall, the law aims to enhance investment conditions for renewable energy generation and improve the regulatory framework across various sectors, ultimately benefiting both buyers and investors in the renewable energy market.
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Electricity can be generated in two main ways: by harnessing the heat from burning fuels or nuclear reactions in the form of steam (thermal power) or by capturing the energy of natural forces such as the sun, wind or moving water.
Unlike other energy commodities such as coal, oil and natural gas, electricity trade between countries is relatively limited as it is more technically complex and requires a direct cross-border interconnection. Such connections can help to balance out supply and demand across regions, which will be increasingly important as variable renewables like solar and wind make up a larger share of electricity generation.
Power generation, which includes electricity and heat, is one of the largest sources of CO2 emissions globally, primarily from the burning of fossil fuels like coal and natural gas in thermal power plants.
Growth in electricity demand has slowed down or even reversed in many advanced economies due to energy efficiency efforts and the shift towards less energy-intensive forms of economic activity, such as services. But it is still growing rapidly in many emerging market and developing countries, especially those where a significant fraction of the population still lacks access to electricity.
Electricity is primarily used for heating, cooling, lighting, cooking and to power devices, appliances and industrial equipment. Further electrification of end-uses, especially transportation, in conjunction with the decarbonisation of electricity generation, is an important pillar of clean energy transitions.
„Energy and Water Regulatory Agency of Montenegro" (REGAGEN) was established by the Parliament of Montenegro on 22 nd January 2004 as „Energy Regulatory Agency of Montenegro". Competences and responsibilities of this institution, initially prescribed by the Law on Energy, have been evolving meanwhile, following the Law on communal utilities enacted in 2016 and the Law on monitoring of wholesale electricity and natural gas markets enacted in 2022.
Nowadays, REGAGEN is an independent, non-profit organization, legally and functionally independent form state authorities and energy utilities. This independent regulatory authority is competent in the area of electricity, oil and natural gas, as well as in the area of water supply and wastewater utility regulation.
Following the ratified international treaty, REGAGEN conducts decisions of Energy Community bodies. With an aim to foster cooperation between the regulators in Energy Community, REGAGEN could enter into bilateral cooperation arrangements. REGAGEN cooperates with national regulatory authorities, other competent authorities of Energy Community Contracting Parties and states in the region in the area of cross-border issues, contributes to the market integration, as well as harmonisation and exchange of data and information at the regional level.
At the international level, REGAGEN is full member of Energy Community Regulatory Board (ECRB), Association of European Regulators in the drinking water and wastewater sector (WAREG) and Association of Mediterranean Energy Regulators (MEDREG), while it holds an observer status at Council of European Energy Regulators (CEER). At the end of 2017, REGAGEN became the first national regulatory authority from Energy Community that has been granted participation at electricity and gas working groups of The European Union Agency for the Cooperation of Energy Regulators (ACER).
The financing sources of REGAGEN are: fees for licence issuing, annual fees for the license use, fees for determination of status of Closed Distribution System Operator, annual fees for the use of status of Closed Distribution System Operator, fees for arbitration and other fees in line the Law on Energy, as well as fees paid by the water supply and wastewater utilities.
On 31 August 2024, the Law on renewable energy usage came into force in Montenegro. For the first time, it comprehensively regulates the use of renewable energy sources.
About Montenegro electricity regulations
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