Carbon border adjustment rules are affecting how electricity generated outside the European Union can be sold into the EU market, with new revenue and financing risks for renewable projects in Serbia, Montenegro and the wider Western Balkans. The Energy Community Secretariat reported in a second-quarter 2026 assessment that verification, power-purchase-agreement eligibility and access to favourable EU market prices present difficulties. The assessment links these issues to the commercial conditions for cross-border electricity trade.
Wind, solar and hydropower projects have historically relied partly on cross-border sales to support merchant revenues and long-term power purchase agreements. Higher wholesale prices in neighbouring European markets can provide income beyond domestic sales. However, the source notes that being connected to the grid, operational status and the ability to deliver electricity do not by themselves establish eligibility for actual-emissions treatment under the applicable EU methodology.
Actual-emissions versus default treatment for imported electricity
If requirements for actual-emissions treatment cannot be met, default emissions treatment may materially change the economics of importing electricity into the EU. The European Commission is cited in connection with the electricity CBAM methodology and certificate pricing. The rules therefore affect not only eligibility but also how costs are reflected in import arrangements.
Export treatment changes revenue assumptions used in project evaluations. Financing assessments may need to compare three revenue cases: domestic electricity sales, cross-border sales under default emissions treatment, and exports that meet requirements for actual-emissions treatment. Domestic sales do not create export-related CBAM obligations, while default treatment for cross-border sales carries cost exposure and may affect the export price a generator can achieve.
An export structure that satisfies actual-emissions requirements may support a stronger commercial relationship with EU buyers. Differences among the three revenue cases can materially affect electricity-price assumptions, operating cash flow, debt-service capacity and project valuation. The exposure is described as applying to both operating projects and projects under development.
Allocation of CBAM costs in export power purchase agreements
The source indicates that even when a long-term export power purchase agreement provides a relatively predictable electricity price, allocating CBAM costs among the generator, trader and EU importer can substantially alter revenue available to the project company. Uncertainty about projected export revenue and responsibility for carbon-related obligations is therefore relevant to lenders assessing financing. This includes how contractual arrangements distribute risk tied to CBAM implementation.
Export-oriented power purchase agreements increasingly require clear provisions on emissions evidence, verification responsibilities and changes in CBAM legislation. The agreements also need to address transmission capacity, balancing electricity and liability if required evidence cannot be provided. Inadequate allocation of these responsibilities could lead to disputes among generators, electricity traders and EU importers after commercial delivery.
Verification evidence, due diligence and regional interconnections
Banks and investment funds need to assess whether an assumed export route is commercially realistic, whether nominated electricity can be linked to eligible generating assets, and whether counterparties can provide required regulatory evidence. The availability of accredited verification services is described as relevant to financing due diligence. Technical capability of project metering and scheduling systems is also identified as part of this assessment.
The source highlights that Montenegro’s connection with Italy and Serbia’s interconnections with Hungary, Romania and Croatia are particularly relevant for projects seeking access to European wholesale electricity prices. Developers that address CBAM requirements during project preparation may be better positioned to negotiate export agreements and demonstrate revenue resilience to lenders. Projects built on unverified assumptions of unrestricted EU market access may face higher financing risk or more conservative lender revenue forecasts.
The emerging investment standard described in the source focuses on an electricity-sales structure supported by documentary controls and contractual risk allocation, rather than only on being able to produce electricity at competitive cost. It also states that CBAM readiness is becoming part of renewable-project bankability instead of being treated as a compliance matter that can be left until exports begin.