The Electric Power Company of Montenegro (EPCG) conducted a Feasibility Study for the project to build battery facilities for storing electricity (Battery Energy Storage System – BESS), the results of which confirmed both the technical and financial justification of this investment.
The study, completed in June this year, with a subsequent revision in August, showed that the project is feasible in all analyzed scenarios and will bring multiple benefits - from increasing energy stability to reducing greenhouse gas emissions and strengthening Montenegro's position as a regional leader in the field of battery systems.
This was officially announced to "Vijesti" by the state energy company.
Numerous changes to tender documentation
This tender, announced in early September, is worth 58 million euros including VAT, but the energy company still does not have the government's consent to take out a loan for this project.
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The tender was announced on October 2nd and the tender documentation was amended several times, the last amendment being yesterday. According to the latest amendment, if EPCG does not receive approval from the Government for the borrowing by tomorrow, the tender will be cancelled, and the bidders are not entitled to any compensation for damages. The first amendment defined that the conclusion of the Contract is conditional on the prior approval of the competent authority for credit borrowing for financing the public procurement in question.
"If the contracting authority (EPCG) does not receive the aforementioned consent, it reserves the right to cancel the procurement, and of course submit an application for a new procurement after receiving consent, whereby there will be no legal consequences for the contracting authority on this basis," it says in the first amendment to the tender documentation.
In the second amendment, the bidder is no longer required to have commissioned battery plants in the EU in the last five years, but to have a minimum of experience in the quality and successful execution of the same or similar works that are the subject of public procurement, while the third amendment to the tender documentation requires a guarantee once the plants are commissioned of five million euros per year, which is payable in the event of an interruption in the operation of the BSS. The policy will be required for a period of 10 years.
Entered the project willingly and responsibly
EPCG said that since September 2024, the company has been intensively engaged in the development of battery systems in Montenegro, after the Board of Directors declared this project one of the key strategic goals for the period 2025–2026.
As they stated, more than 20 meetings were held with battery manufacturers, distributors and system integrators to analyze the market and assess the technical and financial aspects of the project. The results of these analyses, they added, served as the basis for the development of a feasibility study and cost-effectiveness study, which together constitute the feasibility study completed in June of this year.
"Recognizing the fact that this is a very significant and modern technical solution, the company decided that it was necessary to review the documentation of the battery system study and the feasibility study. Although it is not standard, and with the aim of additional verification and protection of the company's interests, the review was conducted by two instances. We will quote the conclusion of the review: "The obvious need for the construction of battery facilities in EPCG is fully justified by the Study and Study, which were the subject of this review. Therefore, both the technical feasibility and financial feasibility of the project to build a battery storage facility in EPCG have been demonstrated and documented. Therefore, we can conclude that EPCG entered this project very responsibly and completely prepared," the state-owned company emphasized, adding that the Feasibility Study was completed in June of this year, and its correction based on the auditor's findings was completed in August of this year.
EPCG stated that the study concluded that there could be no problems from a technical perspective, and that several financial scenarios were analyzed, namely base, optimistic and pessimistic, whereby each scenario can be concluded that the project is more than profitable.
"After analyzing all financial parameters, as well as the positive impact and other non-financial aspects of this project, we believe that there are no arguments that could dispute the justification of the project. The positive effects are multiple, both from the financial aspects for the economy and EPCG, and from the aspects of the expectations of the international community in order to reduce harmful gas emissions and increase the use of renewable electricity sources. This is very important to mention given the tendencies of increasing prices of fossil fuels, as well as pollution permits at the global level, as well as the global situation with a shortage of electricity. On the other hand, with the implementation of the project, Montenegro would become a leader in the Balkans in the field of battery systems, because it would be the first country to install a 60 MW, or 240 MWh, system," EPCG said.
Turnkey contract
The total estimated budget for two battery storage facilities for electricity is 48 million euros, and when purchasing equipment, the company also pays VAT in the amount of 21%, but in accordance with the Law, this VAT is refunded and, as they say, cannot be considered an additional cost.
It was clarified that this is an EPC contract based on the "turnkey" principle, which includes the procurement and delivery of equipment, development of the main project, construction of the battery plant, commissioning of the plant, training of the investor's technical staff and proving the designed performance of the plant.
“The contract for the performance of works also includes guarantees of the bidder/contractor relating to technical maintenance throughout the entire service life of the plant, payment of penalties to the Investor in hours when a failure occurs at the plant that is not eliminated within 48 hours from the moment of the plant's shutdown. The tender documentation contains very strict conditions that define the quality assurance of the BESS plant and, in addition to the basic equipment, the plant must be equipped with the most modern management and monitoring software. As representatives of the national energy company held over 20 meetings with representatives of renowned companies, starting from the battery system manufacturers themselves, authorized distributors, system integrators, all with the aim of analyzing and testing the market in both the technical and financial segments, we came to the conclusion that prices range from 150.000 euros per MWh to 500.000 euros per MWh. In order to obtain the best price-quality ratio, and therefore the best technical solution, we were also guided by comparative practices from European Union countries, with almost all prices ranging above 200.000 €/MWh”, explained EPCG.
EPCG decided to go with a price of 200.000 euros per MWh in this public tender, according to the company, in order to get the cheapest possible plant.
"It is important to note that we require a mandatory warranty period of one to ten years, as well as 11 to 20 years, which will largely protect us as someone who is the first to install the largest plant of this type in the Balkans. It is of particular importance to note that the public invitation itself required conditions that the bidder is obliged to prove that the equipment offered has been installed at at least three locations in EU countries. In this way, high standards and quality of the equipment are ensured, because the strict criteria that apply in European Union countries are met," they emphasized in EPCG, whose president of the board of directors is Milutin Djukanovic, and the executive director Ivan Bulatović.
Every month of delay costs a million euros
EPCG also explained that the investment is being implemented with complete documentation, where even very pessimistic variants were considered. In addition, very strict criteria for guarantees related to the quality of equipment and complete maintenance were set through the public invitation.
"We note that analyses have shown that each month of delay in the installation of the BESS plant costs EPCG approximately one million euros per month, which weakens the company's liquidity and profitability. This data confirms the necessity of commissioning the BESS plant as soon as possible," EPCG pointed out.
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