06/10/26
Q&A: CGES expands Montengrin grid, eyes high RES growth
London, 6 October (Argus) — Montenegrin transmission system operator (TSO) CGES
is accelerating the development of key domestic and cross-border grid projects
as the country's pipeline of renewable and battery storage projects rises
significantly and new operational challenges emerge, the TSO's chairman of the
supervisory board Aleksandar Mijuskovic told Argus ahead of the Energy Week
Western Balkans conference in Montenegro. Edited highlights follow: How is CGES
progressing with key interconnectivity projects? After the recent completion of
the key 400kV Lastva–Pljevlja line, CGES is advancing several major projects
aimed at strengthening Montenegro's role as a regional transit hub. Regarding
the 400kV Pljevlja–Bajina Basta interconnection, part of the Trans-Balkan
Corridor, on the Montenegrin side the project consists of approximately 15km
from Pljevlja 2 to the Serbian border, together with two new 400kV bays at
Pljevlja 2. Following adoption of the spatial plan, CGES has moved to
implementation, and is expecting to open the site soon. Construction of the
overhead line is expected to start by the end of 2027. However, completion of
the whole Pljevlja–Bajina Basta connection will mostly depend on Serbia, for
which it is a much larger project. Serbian TSO EMS currently plans to complete
section 3 of the Trans-Balkan Corridor in 2028, while section 4, which connects
Bajina Basta to Visegrad and Pljevlja, is still to be tendered. EMS expects this
tender to be completed by 2029, according to the latest information. On the
second Italy–Montenegro interconnection, Italian TSO Terna has obtained
regulatory approvals and we hope the project will enter its construction phase
soon. The current estimate is that it could be completed in 2030-32. The 220kV
corridor from Bosnia and Herzegovina through Montenegro towards Albania is much
more advanced. In March 2026, CGES signed a €15mn EBRD financing agreement for
reconstruction of the existing Trebinje–Perucica–Podgorica–Vau i Dejes corridor,
which will double its capacity to 600MW. The planned implementation deadline is
end-2028. CGES is preparing a tender for the main contractor that will be
published in the next few weeks. How is Montenegro's renewable buildout
progressing in 2026 and what is the state of its connection queue? Are there
connection requests for battery energy storage system (Bess) projects too?
Renewable development has accelerated significantly, and the transmission
connection pipeline is now considerably larger than Montenegro's existing power
system, making our queue very difficult to manage. CGES has signed 15 connection
agreements for approximately 3GW, mainly for solar projects in the west. The
ministry has issued technical conditions for projects of nearly 7GW capacity.
But not all of these projects are expected to be commissioned soon, as many
solar projects are in a difficult situation financially. Wind projects are in a
much better situation. The 54MW Gvozd 1 wind farm was commissioned several
months ago and the 21MW Gvozd 2 is expected to be completed in the coming
months. Several wind projects are also under construction , while solar projects
are looking for alternatives including hybrid solutions with Bess. So the
connection queue is not a forecast of actual capacity expected to be built. In
fact, the size of the queue is becoming one of CGES' main planning challenges.
The large number of applications is making subsequent connections increasingly
demanding. Therefore, we have discussed a transition from a "first-come,
first-served" approach to "first-ready, first-served," which will streamline
connection conditions for well-prepared projects. CGES also proposes temporary
connection agreements, which allow investors to connect their projects even if
the complete infrastructure has not been finished. This helped Gvozd 1 connect
to the grid at least six months earlier than if all connection infrastructure
had been fully completed. Bess are also becoming key. Several connection
requests have been filed by solar project investors and stand-alone project
investors, and a few connection studies have been prepared. CGES now considers
Bess connection projects as a separate and increasingly relevant category,
especially as the volume of variable renewables in the connection pipeline
grows. Considering Montenegro's high installed hydropower capacity, can Bess
still play an important role? Our large hydropower plants are technically very
flexible and capable of changing their output quickly. However, due to the
characteristics of their water inflows and reservoirs, their availability for
balancing also depends on hydrological conditions, reservoir management and the
market. Keeping hydropower units on line to provide spinning reserve during
low-price periods can have a significant opportunity cost, as it may require
using valuable, stored water instead of preserving it for higher-price periods.
This is where Bess can play a complementary role in the balancing market. During
periods when it is not economically attractive for these plants to remain on
line or to reserve part of their generation capacity for balancing, batteries be
a balancing alternative. This can broaden the pool of balancing service
providers and increase competition in the balancing market. This will become
increasingly important as Montenegro integrates more solar and wind generation.
How is the grid coping with hotter summers and greater volumes of cross-border
flows due to the increasing variability from renewables? Summer 2026 showed that
we can cope with hotter conditions and greater volumes of variable renewables.
There were no disruptions in power supply, no local or regional level incidents.
However, it does not mean that there were no operational challenges. Contrary to
that, this was probably one of the busiest summers so far. And the challenges
will not be smaller in the coming years. Some are addressed by completed
investments; others we are tackling through fully operational regional
co-operation solutions in line with Acer decisions on capacity calculation
regions, and by installing several new transformers. These projects have
significantly enhanced the security and reliability of the power system, both in
terms of interconnected system operation and the security of supply to
consumers. This resulted in no electricity supply interruptions in the coastal
region in the past two summer seasons, a significant improvement from previous
years. How has the carbon border adjustment mechanism (CBAM) affected you and
your relationship with traders and their cross-border transactions? The CBAM has
clearly influenced market behaviour. At the beginning of 2026, we observed lower
demand and significantly lower prices for capacity from Montenegro to Italy.
This indicated that traders were taking into account the additional CBAM-related
cost when assessing cross-border transactions. During the second and third
quarters, the situation improved and monthly auction prices recovered towards
historical levels. Still, the CBAM remains an important source of uncertainty
for traders, especially regarding the use of default emissions values and the
recognition of carbon prices paid in third countries. When it comes to
cross-border trading, for CGES the main impacts are primarily related to
congestion income and the future market coupling process. This is why we are
closely following the ongoing amendments to the CBAM regulation, particularly
changes to the methodology for determining default emissions factors, and the
possibility of enabling future market coupling through a phased approach to
fulfilling the conditions for a CBAM exemption. The Energy Community argued that
the CBAM has caused physical flows to diverge from commercial flows on EU
borders. Is this an issue for Montenegro? Has it resulted in an increase in
network costs? Preliminary comparison of the commercial and physical flows in
2026 with previous years do confirm this observation. It is particularly evident
in high-transit regimes. Potentially higher network costs are not the main
concern, as these can directly affect network security, which is a much more
challenging consequence. Ongoing activities at a broader regional level will
hopefully result in a technical solution soon. Otherwise, we are entering an era
of completely new and different operational challenges. This is not only a
consequence of the CBAM, but also of insufficient co-ordination in the region.
Entso-E has recognised this issue, which is currently being addressed by its
System Operations Committee. The committee is expected to develop near-term
measures to mitigate this problem. By Apostolos Tsarikas & Jessamy Guest Send
comments and request more information at feedback@argusmedia.com Copyright ©
2026. Argus Media group . All rights reserved.
