SARAJEVO, March 29 (Reuters) - A capacity of an undersea power link between Montenegro and Italy will be halved to 500 megawatts (MW) due to a slower than expected pace of construction of renewable energy projects in the Balkans, a Montenegro government official said on Thursday.
The interconnector, whose cost was estimated at around 1 billion euros ($1.23 billion), was designed to enable renewable energy exports from the Balkans to Italy, as well as to boost regional energy security and attract investments into the largely untapped hydroelectric sector.
“The decision (to slash the capacity) was made with the mutual consent of Montenegro and Italy,” Srdjan Kusovac, adviser to Montenegro’s prime minister, told Reuters. The project’s completion, previously expected in 2018, has been pushed back into 2019, he added.
In 2010, Italian power grid company Terna and Montenegro’s grid operator CGES signed a deal to build the 415 km interconnector, the first such link between the Balkans and the European Union.
It was part of a larger inter-governmental agreement between Italy and Montenegro initiated in December 2007. Terna did not immediately reply to a request for comment.
Italy’s biggest regional utility A2A in 2009 became a minority stake holder of Montenegro’s power utility EPCG , setting its sights on green energy imports from the Balkans once Terna had built the interconnector.
However, A2A said last year it would exercise a put option to sell its entire 41.7 percent stake in EPCG to the Montenegrin government, which owns the remaining stake in EPCG.
The two have for years been at odds because A2A opposed Montenegro’s plans to add a new coal-fired power plant there, while Montenegro’s government complained about low level of investment by A2A.
Kusovac said Montenegro would have the right to use 200 MW of the interconnector’s total capacity as initially agreed. He said the decision was not linked to A2A’s exit from EPCG.
“It is however made as a direct consequence of a failure to implement EPCG’s planed investments while it was jointly managed with A2A,” he said. ($1 = 0.8113 euros) (Reporting by Maja Zuvela Editing by Alison Williams)