Photovoltaic project development in Montenegro : a case study

Abstract

Due to climate change and unreliable natural gas supplies, renewable energy has become increasingly important. The current share of electricity generated by solar power in Montenegro is negligible. However, the country has a high solar potential which is suitable for developing PV projects. Consequently, this thesis will elaborate on the following research questions: (1) ”What are the main steps involved in developing a feasible PV project in Montenegro, and what external factors need to be considered during the process?”, (2) ”What is the outcome of a cost-benefit analysis for developing a PV project in Montenegro?” and (3) ”What are the challenges and opportunities for the PV sector in Montenegro?” The first part of the thesis gives a fundamental background about PV technology and the project development framework. After basic knowledge has been given, a case study was conducted on how a PV project can be developed in Montenegro. An analysis of the most important political, economic, social, technical, environmental, and legal settings has been made. In addition to this, a stakeholder analysis and cost-benefit analysis were carried out. In order to get local insights, insightful interviews with specialists from Montenegro were done. The result is a guideline for a project developer coming to Montenegro with the aim of developing a PV project. Further interpretation shows that the project is financially feasible but the external factors have a crucial impact on the outcome of the project. Political instabilities, missing legislative and supporting incentives, a lack of best-practices, corruption, and informal market structures outweigh the favorable environmental and financial conditions. A first-mover advantage can be seized by experienced developers but should be closely managed with good insurance and risk management. Nevertheless, if the country manages to get back on track with a clear political direction and takes action regarding the promotion of renewable energy systems, it could turn Montenegro into a favorable environment for project developers and transform the country into an innovative renewable energy hub on its path to become an EU member state.