Montenegro’s electricity exports to Italy face increasing CBAM pressure despite the country’s strong physical connection to the EU through its undersea electricity interconnector with Italy.
Montenegro’s electricity default factor of 0.979 tCO₂/MWh corresponds to an indicative Q3 CBAM carbon cost of approximately €80.59/MWh at the current certificate price.
The resulting burden is particularly significant for a market whose export economics depend on the price differential between Montenegro and Italy.
CBAM has already disrupted the export spread
The Energy Community has identified Montenegro as one of the clearest examples of CBAM affecting established electricity-market behaviour.
During the first quarter, the average Montenegro-Italy day-ahead price spread was approximately €43/MWh, while the applicable default CBAM cost was close to €74/MWh.
The carbon cost therefore exceeded the underlying electricity-price differential, effectively removing the arbitrage opportunity. Commercial exports and physical electricity flows towards Italy declined despite the favourable price spread.
With the CBAM certificate price now higher in Q3, the pressure on the same export route becomes more pronounced.
Renewable projects face a verification premium
The issue is also relevant to Montenegro’s developing wind and solar projects, particularly projects whose investment cases assume access to the Italian market through the interconnector.
For these projects, demonstrating actual emissions could become a direct consideration for bankability. A renewable generator with very low plant-level emissions may have a materially different CBAM position if it can satisfy the applicable actual-emissions requirements than if its electricity is assessed using Montenegro’s national default.
The physical interconnector provides Montenegro with access to the Italian electricity market. The level of the CBAM carbon cost, however, increasingly determines whether that physical access can be converted into commercially viable exports.
