The Renewable Energy Law is in the final stage of drafting and includes proposed indicative targets of 2.62% by 2010 and 7.56 % by 2020 of electricity produced from renewable energy sources in new generation capacities in the final electricity consumption but excluding existing large hydro. The overall share of renewable energy is envisaged to be set at 20% by 2020.

The Regulatory Authority will be assigned as the issuing body for the guarantees of origin.

The administrative procedure for authorizing new RES capacities has to be simplified as currently it is complicated and time consuming also due to various authorities involved in the overall approval process (at national and municipality level).
In relation to grid system issues, there is a guaranteed access to distribution grid and the producers are exempted from transmission access charges. The cost of connection to the grid has to be paid by the producer, however, shallow costs of connection are considered to be implemented in the future.

In 2007, the electricity produced from renewables, mainly in two large hydro power plants, counted for about 28% in the total electricity consumption in Montenegro. The Strategy for Development of Small Hydropower Plants estimated the technical potential at about 640 GWh/y, in 230 MW installed capacity. The Ministry finalized the tender awarding 8 concessions to build 8 SHPP (up to 10 MW installed capacity) based on DBOT schemes. The contracts will be signed for a maximum period of 30 years and the purchase price for the electricity injected in the grid is set at 7,1 ¢€/kWh. A support schemes for promoting electricity produced from various RES and to ensure investor confidence is considered in the future.

Biomass has the second large potential in Montenegro and according to the Energy Development Strategy are planned to be build 5MW capacity in co-generation plants using biomass and 10 MW plants using municipal waste.

Unlike to the activities regarding the realization of the Plan for promotion of electricity produced from renewable energy sources, the implementation of the Directive 2003/30/EC on the promotion of the use of biofuels or other renewable fuels for transport has not been followed up so far. The ongoing revision of the Energy Law can be regarded as a good opportunity to deal also with the missing provisions regarding the biofuels and to define the indicative targets, as well as to transpose the other needed provisions of the Directive 2003/30/EC.