Admir Šahmanović, Minister of Energy and Mining in the Government of Montenegro
Montenegro’s energy sector stands at a pivotal moment between inherited capacities and ambitious plans for a sustainable transition. In an interview for the magazine Diplomacy and Commerce Montenegro, the Minister of Energy and Mining in the Government of Montenegro, Admir Šahmanović, discusses key projects that are shaping the country’s new energy reality, Montenegro’s role as a regional energy hub, cooperation with European institutions, and encouraging steps toward involving citizens in energy production and efficient energy use. Minister Šahmanović also speaks openly about regulatory challenges and the arbitration dispute concerning the Brskovo mine concession.
Mr. Šahmanović, how would you currently assess the state of the energy sector in Montenegro? What are its greatest potentials, and where are the weakest points that require urgent intervention?
Montenegro’s energy sector is in a phase of transition. On the one hand, we still have a stable system that relies on inherited capacities and ensures security of supply for citizens. On the other hand, there is enormous room for development, especially when it comes to renewable energy sources, which still remain underutilized. Montenegro has everything it needs to become a regional leader in the production and export of clean energy. I’m particularly referring to our solar and wind potential, as well as the already existing hydropower infrastructure. The undersea cable with Italy gives us a strategic advantage and positions us as a potential energy hub for the wider region. However, there are challenges, and we must not ignore them. First and foremost is the issue of the Pljevlja Thermal Power Plant, which is undergoing a thorough modernization in order to meet contemporary environmental standards and contribute to improving the quality of life for residents in that area. Additionally, there have been challenges related to administrative barriers and slow procedures, which still represent an obstacle to investments in renewable energy at a time when there is serious interest from both domestic and foreign investors. That is why one of the priorities of this mandate is to adopt a clear and ambitious energy strategy, modernize and digitalize the power grid, and strengthen the legal framework so we can accelerate processes and send a clear signal that Montenegro is ready for investment in clean energy. We have the potential, the knowledge, and international partners now it is our responsibility to turn that into concrete results.
Montenegro has significant potential for renewable energy production. What are the key projects currently in development, and are investors still facing regulatory or infrastructure related barriers?
Montenegro’s potential for generating energy from renewable sources is truly remarkable. Sun, wind, and water form a strong energy mix that must be harnessed in a sustainable and responsible way. Our policies are moving precisely in that direction. Among the most important development projects, I would highlight the construction of solar parks in the municipalities of Nikšić, Cetinje, and Podgorica, as well as wind farms in the areas of Krnovo and Gvozd, where concrete investment activities are already underway. We also believe that, in order to ensure a reliable and balanced energy mix especially as a replacement or supplement for the Pljevlja thermal power plant a new large scale hydropower project is necessary. Naturally, this would require full compliance with environmental standards, active involvement of the local community, and a responsible energy policy with a long term perspective. At the same time, we are working on battery storage and smart grid projects, as these are essential for a stable energy transition. When it comes to challenges yes, regulatory and infrastructure barriers still exist. We’ve identified key issues raised by investors: complex administrative procedures, insufficient inter institutional coordination, and infrastructure limitations in certain parts of the country. Our response is concrete: we are streamlining procedures, digitalizing the permitting system, strengthening the capacity of energy sector stakeholders, and continuously aligning our legal framework with European standards. We have adopted the Law on the Use of Energy from Renewable Sources, passed 15 accompanying by laws, and introduced, for the first time, an auction based model for selecting investors a model that is competitive, transparent, and predictable. The first auction for solar power plants with a capacity of 250 MW has already been launched, marking the largest single investment cycle in Montenegro’s energy sector to date. We have also adopted a new Energy Law, which paves the way for integration into the EU’s single market and introduces new mechanisms: the development of energy communities, active consumers, aggregators, the implementation of dynamic pricing, protection of vulnerable groups through the concept of energy poverty, and a strengthened institutional framework for a just transition. We have also adopted the Law on the Security of Supply of Petroleum Products (also referred to as oil derivatives), as well as the Law on Safety Measures in Offshore Hydrocarbon Exploration and Production. Two additional legislative proposals are now in their final phase: one concerning cross‐border exchange of electricity and natural gas, and another focused on cross‐border infrastructure projects.
To what extent is regional cooperation crucial for the stability of energy flows in the Western Balkans, and which projects do you consider most important for cross border integration in the coming years?
Regional cooperation is essential. No country including Montenegro can ensure full energy security on its own, especially in the context of an increasingly dynamic energy transition and growing consumption. In the coming years, our priorities will include better utilization of the existing undersea cable with Italy, improving interconnections with Bosnia and Herzegovina and Serbia, and constructing a new electricity link with Albania. At the same time, we are working to align with EU market rules and regional energy trading platforms. Montenegro’s goal is to be a reliable partner and an energy bridge between the region and the European Union through concrete infrastructure projects, and also aligned policies, and open cooperation.
How has Montenegro adapted to the turbulence caused by the global energy crisis? Has the crisis accelerated strategic decision making or further delayed the energy transition?
The global energy crisis was a serious test for all countries but also an important lesson. Thanks to its own production capacities and timely institutional measures, Montenegro managed to avoid major disruptions in supply. Moreover, the crisis did not slow us down it further motivated us to accelerate strategic decision making. It became clear that energy independence, investment in renewables, diversification of production, and modernization of the grid are no longer options, but necessities. In that spirit, we have adopted a series of important laws and launched institutional reforms that are guiding us toward a sustainable, modern, and resilient energy system. The crisis reminded us that energy security is inseparably linked to sovereignty as well as to economic stability. And that is the path we intend to continue following.
To what extent is your ministry focused on introducing measures that enable citizens and small businesses to actively participate in the energy transition for example, through incentives for solar panels or energy efficiency?
Energy efficiency incentives are being implemented through multiple models. In cooperation with international partners such as the World Bank, the EBRD, and KfW, we are investing in public buildings, primarily in the health and education sectors. We are raising standards in design and construction, which is crucial for long term sustainability. On the other hand, through subsidy programs, the state has enabled a wide range of activities for citizens from the purchase of high quality air conditioning units to improving the energy performance of residential buildings. The focus has often been on the northern part of the country, such as Pljevlja and Bijelo Polje, due to the high levels of air pollution during the winter months. The third mechanism involves commercial projects by EPCG and its subsidiary Solar, which enable citizens to install solar panels and produce their own energy. We are encouraged by the fact that more and more citizens are recognizing energy efficiency as both a personal and societal benefit in their homes, workplaces, schools, and hospitals.
Additionally, the new Energy Law introduces mechanisms for the development of energy communities, active consumers, and aggregators that is, all forms of organization and market participation that allow citizens and businesses to actively engage in the production of energy from renewable sources. In cooperation with the World Bank, energy efficiency improvements have been successfully completed in seven healthcare facilities over the past few years, with an investment of €4.5 million. Through the KfW program, energy efficiency upgrades were carried out in four educational institutions in Bar and Cetinje, and a contract is being prepared for three more facilities in northern Montenegro. Currently, construction is underway on a retirement home in Risan, valued at €6.56 million, serving as an example of a modern and energy efficient public institution. In this important process of energy transition, the Government of Montenegro and the ministry I lead remain reliable partners both to our citizens and the international community. We are ready to work alongside European institutions, regional stakeholders, and investors to meet the challenges of our time and ensure a secure, sustainable, and fair energy future for all.
An arbitration dispute has been initiated against Montenegro regarding the concession for the Brskovo mine. What are your expectations?
The arbitration process is still in its early stages. At this moment, the selection of a law firm to represent the state in the proceedings is upcoming. This process will be conducted through a public tender, in accordance with regulations. I wouldn’t want to speculate on the outcome of the arbitration. What I can say is that the government’s decisions regarding the concession were made to protect the public interest. Our current task is to ensure strong legal representation and to present ourselves as a serious and reliable legal entity in the international arena.