The European Union’s Carbon Border Adjustment Mechanism (CBAM) is reshaping electricity prices and trading economics across Southeast Europe, creating a growing divide between wholesale power values and the carbon-adjusted cost of electricity imported from the Western Balkans.
The impact is potentially more immediate than in steel and aluminium. While those industries benefit from transitional adjustments linked to the gradual withdrawal of free EU carbon allowances, electricity imports receive no equivalent free-allocation relief, exposing carbon-intensive power exports to substantial additional costs from the beginning of 2026.
The latest published CBAM certificate price reached €82.32 per tonne of CO₂ for the third quarter, compared with €75.28 in the preceding quarter, increasing the indicative carbon cost of exports from countries with high default emissions factors.
Applied to the existing national default factors, the latest price implies a gross CBAM exposure of approximately €85.70/MWh for Serbian electricity, €80.59/MWh for Montenegro and €94.50/MWh for Bosnia and Herzegovina. North Macedonia faces an indicative €73.01/MWh, while Albania’s zero default factor produces no carbon charge under the default calculation.
These are illustrative amounts based on the third-quarter certificate price, not final charges for October deliveries. The fourth-quarter certificate price will only be established in January 2027, and actual liabilities can also reflect eligible deductions for carbon prices paid in the country of origin.
Nevertheless, the figures demonstrate how CBAM can overwhelm conventional wholesale trading margins.
On October 9, Serbia’s SEEPEX day-ahead electricity price increased to €239.96/MWh, up almost 34% from the preceding session, while Hungary’s HUPX reached €269.43/MWh. The difference of €29.47/MWh remained substantially below Serbia’s indicative default-based carbon exposure.
A trader importing Serbian electricity into Hungary would therefore struggle to cover the carbon cost using that daily average wholesale spread, even before accounting for cross-border transmission capacity, losses, balancing and other trading expenses.
Montenegro’s BELEN price reached €223.39/MWh on the same day, while Italian wholesale prices in several bidding zones stood around €230–235/MWh. This provides a similarly narrow indicative price differential for electricity delivered through the Montenegro–Italy interconnection.
Daily average spreads are not executable trading margins, and hourly price variations can create individual opportunities. Nevertheless, the structural effect is clear: a low wholesale price outside the EU no longer guarantees competitive electricity inside the EU.
The Energy Community Secretariat has already identified changes in regional electricity flows. Gross commercial exchange between Western Balkan and neighbouring EU markets declined by approximately 19% year on year in the first half of 2026, although hydrological conditions, generation availability and changing import requirements also contributed.
The region’s electricity market is increasingly separating into two commercial segments: domestic and regional trading, where EU CBAM import charges do not directly apply, and exports into EU markets, where carbon-adjusted costs influence whether scheduled transactions remain profitable.
For Serbian utility EPS, Montenegrin EPCG and power producers across Bosnia and Herzegovina, the new environment places greater emphasis on generation technology, electricity origin and the ability to demonstrate actual emissions.
This distinction is especially important for renewable energy projects.
A Serbian wind farm producing low-carbon electricity does not automatically qualify for favourable CBAM treatment when its output is exported into Hungary. Unless the EU declarant meets the conditions for using actual embedded emissions, the electricity can remain subject to Serbia’s national default value.
The existing rules require a qualifying physical power purchase agreement, evidence of the generating installation, compliant cross-border capacity nominations, hourly matching between generation and nominated deliveries, and evidence regarding grid connection or the absence of congestion. An accredited verifier must assess the supporting information.
Guarantees of Origin alone cannot substitute for this physical and contractual evidence.
For project developers and lenders, the consequence is significant. A wind or solar project may generate electricity competitively but still face uncertainty over the additional value obtainable from selling power directly into the EU.
This affects projected revenues, long-term power purchase agreements, financing assumptions and the investment case for new renewable capacity.
The impact also extends to industrial manufacturers, although the regulatory distinction is important.
Under the current CBAM regime, indirect emissions from purchased electricity are included in the CBAM liability for cement and fertilisers, but not generally for iron, steel and aluminium, whose liabilities currently focus on direct embedded emissions.
Consequently, sourcing renewable electricity does not automatically reduce the current CBAM certificate obligation of a Serbian steel or aluminium exporter. It can, however, lower operating costs, improve corporate emissions performance and strengthen supply relationships with European manufacturers demanding lower-carbon materials.
For cement and fertiliser producers, qualifying lower-emission electricity can directly influence the carbon intensity used in CBAM calculations, subject to the applicable methodology and verification requirements.
The European Commission has proposed changes to electricity CBAM methodology that could reduce the disadvantage faced by renewable generators in countries whose default emission factors reflect carbon-intensive thermal production. Such reforms could improve the economics of hydropower, wind and solar exports from Serbia, Montenegro and Bosnia and Herzegovina, but have not yet been fully adopted.
For banks financing renewable energy projects, electricity-intensive manufacturers or cross-border trading businesses, CBAM therefore represents an additional source of revenue, margin and regulatory risk.
New project assessments increasingly need to distinguish conventional wholesale electricity revenues from revenues supported by verified, CBAM-compliant physical export arrangements. Existing loans may also require reassessment where earlier financial models assumed uninterrupted access to EU wholesale price premiums.
The first CBAM certificates covering 2026 electricity imports will be purchased from February 2027, with annual declarations and certificate surrender due by September 30, 2027.
For Southeast Europe, the emerging challenge is that electricity markets remain physically interconnected while their commercial economics are becoming increasingly differentiated by carbon treatment.
A megawatt-hour produced in Serbia or Montenegro can still reach a European buyer through the interconnected transmission network. Whether that electricity can be sold profitably will increasingly depend on its carbon classification and the evidence supporting the transaction, not simply on the difference between wholesale prices on either side of the border.