The Carbon Border Adjustment Mechanism (CBAM) is creating new revenue and financing risks for renewable electricity projects in Serbia, Montenegro and the wider Western Balkans, where access to EU markets depends on emissions evidence, verification and contractual arrangements. The Energy Community Secretariat’s assessment for the second quarter of 2026 identified difficulties involving verification, power-purchase-agreement eligibility and access to favourable EU market prices.
Wind, solar and hydropower projects in the region have historically relied partly on cross-border electricity sales to support merchant revenues and long-term power purchase agreements. Higher wholesale prices in neighbouring European markets can add to income from domestic sales, but a project’s ability to generate and deliver electricity does not by itself establish eligibility for actual-emissions treatment under the EU methodology.
The European Commission is cited in connection with the electricity CBAM methodology and certificate pricing. If a project cannot meet the conditions for actual-emissions treatment, default emissions treatment may materially change the economics of importing its electricity into the EU. The resulting compliance issue can affect project bankability even where the generating technology has very low direct emissions.
Export treatment shapes project revenues
Financing assessments may need to distinguish among three revenue cases: domestic electricity sales, cross-border sales under default emissions treatment, and exports that satisfy the requirements for actual-emissions treatment. Domestic sales do not give rise to export-related CBAM obligations. Cross-border sales treated using default emissions carry cost exposure and may affect the price a generator can secure.
An export structure meeting the requirements for actual-emissions treatment may preserve a stronger commercial relationship with EU buyers. Differences among the cases can materially affect electricity-price assumptions, operating cash flow, debt-service capacity and project valuation. The exposure applies to both operating renewable projects and projects still under development.
Even a long-term export power purchase agreement that offers a relatively predictable electricity price does not settle how CBAM costs are shared. Their allocation among the generator, electricity trader and EU importer can substantially alter the revenue available to the project company. For lenders, uncertainty over projected export revenue and responsibility for carbon-related obligations affects the assessment of the financing.
Contracts and evidence enter lender due diligence
Export-oriented power purchase agreements increasingly need clear provisions covering emissions evidence and verification, responsibility for changes in CBAM legislation, transmission capacity and balancing electricity. Contracts also need to set out liability if required evidence cannot be provided. Inadequate allocation of these responsibilities could lead to disputes among generators, traders and EU importers after commercial delivery has taken place.
Banks and investment funds need to assess whether a proposed export route is commercially realistic, whether nominated electricity can be linked to eligible generating assets, and whether counterparties can provide the required regulatory evidence. The availability of accredited verification services and the technical capability of project metering and scheduling systems are also relevant to financing due diligence.
Access routes matter for projects seeking European wholesale electricity prices. Montenegro’s connection with Italy and Serbia’s interconnections with Hungary, Romania and Croatia are particularly relevant. Developers that address CBAM requirements during project preparation may be better positioned to negotiate export agreements and demonstrate revenue resilience to lenders.
Projects based on unverified assumptions of unrestricted EU market access may face higher financing risk or more conservative lender revenue forecasts. CBAM readiness is therefore becoming part of renewable-project bankability, rather than a compliance matter to be addressed only once exports begin. The emerging investment standard is a project with a sales structure, documentary controls and contractual risk allocation able to support its intended market revenues, not merely one capable of producing electricity at a competitive cost.