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.
