The Montenegrin Ministry of Energy plans to ask preferential producers of renewable energy, primarily private wind farms and small hydropower plants, to transfer their entire production to the state-owned power utility EPCG at domestic prices in 2025. This move is aimed at compensating for part of the electricity deficit in the system, as the coal-fired thermal power plant Pljevlja will be offline for eight months for reconstruction.

In exchange, these producers would receive a one-year extension to their subsidy period for renewable energy, as well as a guaranteed purchase of their electricity from EPCG at contracted prices. While negotiations have not yet begun, the Ministry hopes to start talks by the end of November or early December.

Preferential electricity producers have a special status, which obliges the state to purchase their entire output at prices specified in individual contracts. In 2023, mandatory electricity purchases from these producers cost nearly 48 million euros for just over 400 GWh of electricity. Of this amount, EPCG covered 42 million euros, with the rest financed by consumers through a fee included in their electricity bills.

The Ministry’s plan is to negotiate with preferential producers to “freeze” their status during 2025. This would mean these producers would no longer have guaranteed purchase rights and would instead sell their electricity on the open market. This change could help reduce EPCG’s costs by about 42 million euros.

Preferential producers include companies that were granted this status in recent years to encourage renewable energy production. These producers are entitled to subsidies funded by electricity consumers and are guaranteed to sell their electricity to EPCG at fixed contract prices, regardless of market rates. Among the preferential producers are two large private wind farms—Mozura and Krnovo—along with 32 small hydropower plants and five solar power plants.

The preferential producer status lasts for 12 years, with some contracts expiring as early as 2027 and others extending until 2033, depending on when they were granted the status. The two large wind farms generate around 320 GWh of electricity annually, while the small hydropower plants collectively produce around 180 GWh.

Until recently, the prices paid by EPCG to preferential producers, in addition to the subsidies they received from consumers, were significantly higher than market prices. However, in the past two years, there have been instances when market prices have exceeded the rates received by preferential producers under their contracts. This has led some producers to exit the preferential purchase and subsidy agreements in favor of selling directly on the open market.

The shutdown of TPP Pljevlja next year will result in a power shortfall of around 600 GWh. Preferential producers generate about 450 GWh annually, leaving EPCG to cover the remaining 150 to 200 GWh from international markets, some of which has already been secured. As a result, the proposed agreement with preferential producers could influence electricity prices for consumers in 2025.

In addition to being Montenegro’s largest electricity producer, TPP Pljevlja is a key stabilizing force in the national energy system, providing consistent output, balancing production and consumption, and maintaining stable voltage. Temporarily transferring production from preferential producers to EPCG would not only help fill the electricity deficit but also support the overall balance of the power system, which is crucial for reliable operation.