Western Balkan electricity trade with the European Union recovered from the second quarter but remained below a year earlier, as price spreads widened and Carbon Border Adjustment Mechanism (CBAM) costs complicated cross-border sales. A market assessment found that price convergence between the region and EU markets weakened.
Spreads above €20/MWh occurred in more than half of all hours on borders with EU markets. They were more frequent than in Q2 2026 and more than twice as frequent as in Q3 2025, the assessment found. Economic incentives for trade often remained, but physical capacity, carbon costs and market arrangements prevented full price convergence.
CBAM has become part of electricity dispatch and trading calculations. On every assessed border with a non-zero default emission value, the indicative CBAM cost per MWh exceeded the average price advantage of the Western Balkan market over its EU neighbour. Albania was the exception because its default emission value was zero; for other exporters, carbon costs can erase some or all of the apparent wholesale price advantage.
Montenegro’s electricity exports to Italy were around 80% higher year on year in Q3. The submarine cable gives Montenegro access to Italy’s higher-value market and offers a route where verified low-carbon generation can remain commercially attractive after carbon-border adjustments.
Generators across the Western Balkans increasingly need more than competitive production costs to sell across borders. The assessment highlighted verifiable emissions data, clear contractual allocation, reliable metering, scheduling evidence and documentation supporting the use of actual emissions where allowed. Electricity trade is increasingly a combined energy, transmission and compliance product.
Exchange liquidity may deepen through winter, while export margins will continue to depend on transmission capacity and the applicable carbon cost. Contracts and evidence supporting actual emissions, where permitted, can become decisive to the economics of individual trades.