News
26/10/06
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 number of planned renewable and battery storage projects in the country
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 total capacity of
projects awaiting connection to the transmission grid 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 total capacity of variable
renewable projects awaiting grid connection 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
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