Serbian renewable power producers seeking access to lower carbon costs in the European Union will have to connect each electricity export to a named EU importer through a traceable physical supply chain, under new European Commission guidance that limits the value of anonymous exchange trading for CBAM compliance.
The guidance gives accredited verifiers their first detailed methodology for auditing electricity imported under the EU’s Carbon Border Adjustment Mechanism, or CBAM, and could accelerate the development of specialised cross-border power purchase agreements between Serbian generators and EU traders, suppliers and industrial consumers.
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It also points towards a two-tier market for Serbian renewable electricity: plant-specific power supported by physical contracts, hourly nominations and verified emissions, and conventional exchange-traded electricity assessed using the EU’s default emission values.
The distinction matters because electricity is itself a CBAM good, classified under customs code CN 2716 00 00. It is not merely an input used to reduce the emissions of steel, aluminium or other carbon-intensive products.
CBAM entered its definitive phase on January 1, 2026, requiring importers to account for emissions embedded in electricity and other covered goods entering the EU. Electricity is excluded from the general 50-tonne small-importer exemption, meaning even relatively small commercial power flows can fall within the system.
Under the EU regulation, electricity imports are normally assigned a default emission value. An importer can instead use the actual emissions of an identified Serbian wind, solar or hydroelectric plant only when several cumulative conditions are satisfied.
The current rules require a power purchase agreement between the Serbian generator and the authorised CBAM declarant, proof of an eligible physical transmission path, a generating installation with emissions no higher than 550 grams of fossil carbon dioxide per kilowatt-hour, firm cross-border capacity nominations and verification by an appropriately accredited organisation.
Generation and the nominated electricity import must correspond within the same measurement period, which cannot exceed one hour. The verifier must also receive interim evidence at least monthly.
For wind and solar farms, the plant-emissions test should normally be straightforward. The larger challenge is proving that the electricity imported by a particular EU company during a particular hour can be connected to the output of that Serbian installation.
The Commission’s new methodology effectively shifts the centre of CBAM electricity compliance away from the renewable certificate and towards the transaction.
A Serbian guarantee of origin can demonstrate the renewable attributes associated with electricity, but it does not replace the required PPA, transmission capacity, hourly nomination and verification evidence. Ownership of certificates alone will not normally allow an importer to apply the near-zero actual emission factor of a named Serbian plant.
The strongest commercial structure is therefore a physical PPA under which a Serbian generator sells electricity to an EU trader or supplier that is also the importer and authorised CBAM declarant.
That company can secure cross-border capacity, nominate the electricity, complete the import and then resell the power on an EU exchange or deliver it to an industrial customer.
In a potential Serbia-Hungary structure, for example, a Serbian wind farm could contract with an EU trader, match plant output with accepted cross-border nominations and import the electricity before selling the position on HUPX. The exchange would be the venue for resale after import, rather than the mechanism used to establish the Serbian electricity’s origin.
CBAM liability attaches when the electricity enters the EU customs territory. A subsequent exchange sale does not retrospectively change the emissions attributed to the import, provided the importer has already established and verified the required plant-to-border chain.
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The reverse structure is much weaker.
If electricity from a Serbian renewable plant is placed into an anonymous wholesale market and an EU participant later buys an equivalent volume, the buyer will generally lack the bilateral producer relationship and plant-specific evidence required to use actual emissions.
The safe regulatory assumption in such a case is that the electricity import will be assessed using the applicable default value, even if the buyer separately obtains renewable certificates.
This creates a material difference between selling verified Serbian power on an EU exchange after import and relying on an exchange purchase to prove that imported power came from a particular Serbian generator.
Direct sales to EU industrial consumers may also qualify, but only if the industrial buyer is itself the importer and authorised CBAM declarant, or uses an eligible indirect customs representative.
A European factory that signs a financial or virtual PPA with a Serbian solar project while continuing to buy its physical electricity from an ordinary EU supplier would not automatically qualify as an importer of that Serbian electricity. The financial contract may hedge prices or support renewable development, but it does not establish the physical CBAM chain.
A more practical model may involve an EU energy supplier importing the Serbian electricity and reselling it to the industrial customer. In that structure, the supplier carries the CBAM obligation, uses the verified Serbian emission value and passes the electricity, renewable attributes and agreed carbon costs to the customer through a downstream supply contract.
The customer would not become the authorised declarant simply because it ultimately consumes the power.
Intermediaries create a further complication. Under the rules currently in force, electricity purchased through an intermediary must generally be covered by a tightly integrated three-party contractual arrangement involving the generator, intermediary and authorised CBAM declarant.
A series of separate contracts — from the Serbian producer to a local trader, then to an EU trader and finally to an industrial consumer — does not automatically constitute a qualifying PPA.
The Commission proposed changes in December that would make such arrangements easier by allowing a verifiable contractual chain through one or more intermediaries. Its impact assessment cited several Serbian PPAs under development with combined capacity of about 0.3 GW, while noting that formal cross-border PPAs remained uncommon.
The proposed legislation would also remove the current requirement to demonstrate an absence of physical network congestion between the Serbian plant and the EU transmission system.
That could simplify exports through Serbia’s interconnections with Hungary, Romania, Bulgaria and Croatia, particularly where several transmission system operators are involved.
However, the proposal would introduce a potentially significant restriction by making clear that the firm-nomination criterion is not satisfied when cross-border capacity is allocated implicitly through market coupling.
Implicit allocation combines electricity and transmission capacity in a single exchange auction. It improves market efficiency but makes it harder to reserve and trace capacity for electricity from an individual power plant.
The proposed treatment therefore exposes a tension between deeper European power-market integration and CBAM’s demand for producer-specific physical traceability.
The EU Council adopted its negotiating position in June 2026, while the European Parliament’s first-reading vote is expected in September. Until the amendment is adopted and enters into force, exporters and importers must comply with the existing requirements, including the congestion test and the narrower PPA structure.
The new verifier methodology does not change those legal conditions. It defines how they must be examined.
A verifier handling electricity imports must be accredited for activity group LI, covering electricity entering the EU customs territory. Verification of electricity used to calculate indirect emissions in another CBAM product falls under the separate LII scope.
The LI verifier must conduct a pre-contract review, strategic and risk analysis, develop a verification programme, test the operator’s controls and data, perform site activities where required and submit the final opinion to independent internal review.
For Serbian renewable plants, the principal risks are likely to arise not from emissions calculations but from inconsistencies between settlement meters, SCADA data, PPAs, trading records, capacity rights, TSO nominations and importer allocations.
The producer’s monitoring plan must define the installation boundary, authoritative meters, auxiliary consumption, net generation, hourly time synchronisation, data-gap procedures, calibration controls and the allocation of electricity to each importer.
The relevant activity level is net electricity leaving the installation boundary after internal consumption. For each claimed hour, the eligible CBAM volume should be limited to the defensible overlap between net production, contracted PPA volume, accepted nomination, cross-border import and declarant allocation.
The Serbian operator must deliver monthly evidence allowing the verifier to reconcile those quantities. At year-end, it must prepare a separate addendum for each authorised declarant, identifying the importer by its EORI number and confirming the quantity imported from the installation for which the actual-emissions conditions were met.
The verifier is therefore not merely certifying that a wind or solar plant has negligible operating emissions. It is confirming that a defined quantity imported by a named declarant from that installation satisfies the full legal chain.
The process will increasingly run through the EU’s CBAM Registry. Serbian operators can use the third-country installation portal, known as O3CI, to register their installations, maintain emissions information, establish collaboration with an accredited verifier and share verified data with authorised declarants.
Verifier registration in the system opens from September 1, 2026, and the first verification reports can be issued through the Registry from January 2027.
The Commission’s approach turns electricity verification into a year-round assurance process rather than an annual document exercise. Producers that begin exporting before establishing their monitoring plans, meter hierarchy, contractual structure and nomination controls risk discovering after the reporting year that part or all of their electricity cannot use actual values.
Contracts will also need to allocate the commercial consequences of failed verification. Those provisions are likely to cover CBAM certificate costs, default-value fallback, carbon-price changes, verification expenses, data rights, renewable attributes and liability for double counting or unsupported volumes.
For Serbian generators, the emerging premium product is consequently not simply “green electricity”. It is electricity whose production, contract, transmission and import can all be demonstrated for the same hour and the same authorised declarant.
For now, the most defensible route remains a physical PPA with the EU importer, traceable cross-border capacity, hourly production and nomination reconciliation, monthly reporting and verification by an LI-accredited body.
Once that electricity has crossed the border under a verified import structure, it can be sold on an EU exchange or delivered to a final customer. What cannot safely be done is to buy anonymous power first and reconstruct a Serbian renewable origin afterwards.
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