Three changes are beginning to reshape Southeast Europe’s electricity market: carbon costs at the EU border, possible recognition of Western Balkan renewable certificates and the redirection of cross-border trade towards new northern and southern routes.
The EU’s definitive Carbon Border Adjustment Mechanism began on January 1, placing a carbon liability on electricity imported from non-EU markets.
For countries using national defaults, the commercial effect is severe. At the second-quarter certificate price of €75.28/tCO₂, indicative costs reached €86.42/MWh for Bosnia and Herzegovina, €78.37/MWh for Serbia and €73.70/MWh for Montenegro.
Albania, whose default factor is zero, faced no corresponding charge. That created a two-tier market in which electricity with similar physical characteristics could carry a radically different CBAM cost depending on its declared origin.
The first-half trading data suggest that market participants have responded. Gross commercial exchange between Western Balkan and neighbouring EU markets fell approximately 19% year on year, even as trading on regional power exchanges increased.
In the first quarter, strong hydro production widened price gaps between the Western Balkans and the EU, but the cheaper power was not fully exported. CBAM default costs often exceeded the available arbitrage margin.
In the second quarter, EU prices declined and the Western Balkans returned to net imports. Price correlations recovered, but trade did not fully return to the earlier pattern.
Instead, new routes strengthened. Scheduled Serbia-Hungary exports rose 111%, while Romania-Hungary trade increased 156%, partly reflecting Ukrainian import demand. Greece retained its role as a southern supply centre, sending more electricity towards Bulgaria, North Macedonia and Albania.
Commercial schedules increasingly diverged from physical flows. The difference was particularly visible on the south-to-north axis through Albania, Montenegro, Bosnia, Serbia and the EU border.
That creates a structural challenge for CBAM. Commercial contracts assign electricity to a declared origin and importer, while the interconnected transmission network moves power according to physics.
The Commission’s August electricity guidance attempts to bridge that divide through an evidence chain. Renewable actual-emissions claims require a physical PPA, hourly production, firmly nominated interconnection capacity, documentation across transit countries and an accredited verification conclusion.
A GoO cannot replace those elements. But a new Commission proposal for mutual EU-Energy Community recognition could make renewable certificates issued in Serbia, Montenegro and other qualifying markets commercially usable inside the EU.
The certificate reform could improve corporate-PPA economics and create additional renewable-project revenue. Separately, proposed CBAM amendments could reduce national default factors by reflecting the entire electricity mix and remove the difficult requirement to demonstrate an absence of network congestion.
Together, the reforms could give Southeast European renewable producers a workable route into the EU market. But the commercial structure will have to combine three distinct products: the electricity itself, its renewable certificate and verified evidence supporting its CBAM emissions claim.
Utilities and independent traders will have different starting positions. Large state utilities such as EPS, EPCG, ERS and EPBiH control broad generation portfolios and established trading routes but must prevent renewable electricity from being mixed, double allocated or attributed inconsistently across customers.
Independent suppliers may be more agile in building installation-specific packages for EU declarants or Serbian industrial exporters. Their challenge will be securing long-term access to named plants, interconnector capacity and the operational data required by verifiers.
Renewable producers will also face a strategic choice. They can export electricity directly into the EU, with the full scheduling and CBAM evidence burden, or supply Serbian and Montenegrin factories seeking credible low-carbon electricity for goods exported to Europe.
The second route may prove easier in some cases, but it serves a different emissions claim. Electricity used in a Serbian factory becomes part of the manufacturer’s CBAM or corporate emissions evidence; it is not treated as electricity imported into the EU as a good.
The emerging market will reward parties that keep those claims separate and controlled.
Southeast Europe still has the renewable resources, interconnections and price differentials needed to support electricity trade with the EU. What has changed is the burden of proof. From 2026, the most valuable megawatt-hour will not necessarily be the cheapest or even the greenest, but the one whose commercial and carbon identity can be independently demonstrated from the generating installation to the final declarant.