The Ministry of Energy plans to ask privileged producers of electricity from renewable sources, mostly private wind power plants and small hydropower plants, to transfer their entire production to Elektroprivreda in the coming year at the prices valid in Montenegro in order to be compensated for part of the loss of electricity in the system, because Thermal Power Plant Pljevlja will not work for eight months next year due to the completion of the reconstruction, it was announced to "Vijesta" from this department, which is headed by the minister Saša Mujović.
In return, the period for these producers would be extended by one year, when they would be entitled to subsidies for energy from renewable sources and guaranteed purchase from EPCG at agreed prices.
"Negotiations haven't started yet, and we plan to start them at the end of November or the beginning of December. As you know, privileged producers of electricity have a special status and the state is obliged to purchase their entire production at the prices defined in the contracts with each of the privileged producers. On an annual basis, specifically for the year 2023, the mandatory purchase of electricity by privileged producers cost Montenegro, i.e. EPCG and the citizens almost 48 million euros, for the production of slightly more than 400 GWh of electricity", the Ministry stated in "News".
Of these 48 million, EPCG paid 42 million, and the rest was paid by the citizens, which, as the Ministry explained, would mean that the mentioned action would result in lower costs for EPCG in the amount of 42 million euros.
"The intention of the Ministry is to reach an agreement with privileged producers on freezing their status during 2025. This would mean that privileged producers do not have a guaranteed purchase, but sell electricity on the market, which would ultimately reduce EPCG costs by around 42 million euros", the Ministry stated.
Now a higher price on the stock exchange than the preferential one
Privileged producers are companies that received this status in the past years in order to encourage the production of electricity from renewable sources, by which they are entitled to incentives from the electricity bill and guaranteed purchase of electricity from EPCG according to the agreed prices, regardless of the market price. Among them are two private large wind farms in Možura and Krnovo, 32 small hydroelectric plants and five solar plants.
The status of a privileged producer lasts for 12 years, and for some, that term expires in 2027, while for others, depending on when they received it, it lasts until 2033.
Two large wind power plants annually produce about 320 GWh, and a group of privileged small hydropower plants about 180 GWh. It is important for EPCG to get answers as soon as possible, in order to plan their further decisions.
Until two years ago, the price of electricity paid to privileged producers by EPCG, in addition to the amount they received additionally through subsidies from the consumer's account, was significantly higher than the prices on international exchanges. However, since then, there have been periods when the electricity prices on the international exchanges were already higher than those received by privileged producers under the contracts, as is the case now, which is why some of them canceled purchase and incentive contracts and entered the market.
Prices for consumers can also depend on the agreement
Due to the break in the operation of the Pljevlja Thermal Power Plant, next year, Montenegro will lack about 600 gigawatt-hours (GWh) of electricity, while privileged producers annually produce about 450 GWh, so EPCG would buy the remaining 150 to 200 GWh on foreign markets, part of which already purchased in advance. So that future electricity prices for consumers in 2025 can depend on this agreement with privileged producers.
TE Pljevlja, in addition to being the largest producer of electricity, is also the most stable part of the system because it produces equal amounts of electricity regardless and serves as a support for balancing the system between production and consumption, i.e. maintaining a constant voltage in the system. By having EPCG temporarily take over production from privileged producers, apart from compensating for the amount of missing electricity, it would also help maintain the balance of the energy system, which is equally important.
Some of the privileged producers have already left that status because in the previous period the electricity prices on the stock exchange were higher than the amount they received from the purchase price of EPCG and the incentive amount. Now they are out of the privileged status of "Hidroenergija Montenegro" Ranko Radović i Oleg Obradović, which has eight small hydroelectric power plants, as well as "BB Hidro" of which he is a co-owner Blazo Djukanovic with one small hydroelectric power plant and the company "Viridi Progressum", the majority owner of which is the businessman "Perla" from Herceg Novi Ivana i Igor Popović.
Eight owners of small hydropower plants are suing the state because their contracts for some other small hydropower plants were terminated or because they could not build them due to protests by citizens and environmental activists.
In the case of the "Možura" affair in 2021, the Special State Prosecutor's Office formed three cases, on which evidence and notifications are still being collected in that case, and expert examinations are ongoing.
EPCG now buys a kilowatt for 10 cents, and sells it to citizens for five cents
In recent days, EPCG has bought 50 GWh abroad at a price of 100 euros per MWh, with delivery during the period when the Pljevlja Thermal Power Plant will not operate next year in order to provide part of the missing amount of energy for its consumers.
That's a total of about five million euros, or ten cents per kilowatt. Depending on the consumption package, EPCG charges citizens about five cents per kilowatt, at current prices, that is, EPCG will lose about five cents for each kilowatt sold to citizens.
Yesterday, the price of electricity on international exchanges was already 120 to 130 euros per MWh.
EPCG previously announced that they have not yet decided whether they will increase their share of the item on the bill for consumers, so-called active energy, in the coming year, and that it will depend on the market situation and total costs. it was also announced that they will not increase bills from January, while they did not guarantee for the rest of the year.
This company has the right to independently increase this price in the event that the costs of production and procurement of electricity have increased. Their item on the invoice is worth about 40 percent of the total amount of the invoice.
The other two power companies CEDIS and CGES also have their own items on the account, for which the regulatory allowed income will be determined by the Regulatory Agency most likely at the session of November 18.
A few days ago, at the Assembly session, Minister Mujović said that Montenegro, in the process of joining the European Union, has an obligation to switch to the calculation of electricity prices at market prices by 2027, while protecting socially vulnerable categories.
EPCG previously had a plan to increase its portion of the item on the account annually by six percent until reaching the market price.
The reform agenda, which the Government sent to the European Commission and which agreed to it, envisages a 10 percent increase in electricity prices per year.
The price of electricity in Montenegro has not increased significantly for 15 years.
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