Western Balkan electricity trade with the European Union recovered from the second quarter but remained below the year-earlier level. An assessment found price spreads above €20/MWh in more than half of all hours on borders with EU markets, as price convergence weakened.
Such spreads occurred more often than in Q2 2026 and more than twice as often as in Q3 2025. Although trading incentives often existed, physical capacity, carbon costs and market arrangements prevented prices from converging fully.
The Carbon Border Adjustment Mechanism (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 was higher than 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 exporters elsewhere in the region, carbon costs can erase some or all of the apparent wholesale price advantage.
Montenegro’s 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 provides a route where verified low-carbon generation can remain commercially attractive after carbon-border adjustments.
Generators increasingly need more than competitive production costs to sell across borders. Requirements include 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 for actual emissions, where permitted, can become decisive to the economics of individual trades.
