Carbon Border Adjustment Mechanism rules are changing the commercial conditions for selling electricity generated outside the European Union, creating new revenue and financing risks for renewable projects in Serbia, Montenegro and the wider Western Balkans. The Energy Community Secretariat’s second-quarter 2026 assessment points to difficulties related to verification, power-purchase-agreement eligibility and access to favourable EU market prices. The assessment also links these issues to how electricity is treated under the applicable EU methodology.
Verification, eligibility and EU market price access
Wind, solar and hydropower projects have historically relied partly on cross-border sales to support merchant revenues and long-term power purchase agreements. Higher wholesale prices in neighbouring European markets can provide income beyond domestic sales, but grid connection and operational ability to deliver electricity do not by themselves 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 actual-emissions treatment requirements cannot be met, default emissions treatment may materially change the economics of importing electricity into the EU. This shift affects whether export-related costs apply under default treatment and how those costs interact with the price available to generators. The assessment frames these verification and eligibility constraints as key factors influencing export outcomes.
Export treatment scenarios for revenue and financing
Financing assessments may need to compare three revenue cases: domestic electricity sales, cross-border sales under default emissions treatment, and exports that meet requirements for actual-emissions treatment. Domestic electricity sales do not give rise to export-related CBAM obligations, while default treatment for cross-border sales carries cost exposure that may affect the export price a generator can achieve. Differences among the three cases can materially affect electricity-price assumptions, operating cash flow, debt-service capacity and project valuation.
The exposure described in the assessment concerns both operating projects and projects under development. Even where a long-term export power purchase agreement provides a relatively predictable electricity price, allocating CBAM costs among the generator, trader and EU importer can substantially alter the revenue available to the project company. Uncertainty about projected export revenue and responsibility for carbon-related obligations therefore matters to lenders assessing a project’s financing.
Power purchase contract provisions and evidence requirements
Export-oriented power purchase agreements increasingly need clear provisions on emissions evidence, verification responsibilities and changes in CBAM legislation. They also need to address transmission capacity, balancing electricity and liability if required evidence cannot be provided. The assessment warns that inadequate allocation of these responsibilities could lead to disputes among generators, electricity traders and EU importers after commercial delivery.
Banks and investment funds are expected to assess whether an assumed export route is commercially realistic. They also need to evaluate whether nominated electricity can be linked to eligible generating assets and whether counterparties can provide required regulatory evidence. The availability of accredited verification services, together with technical capability of project metering and scheduling systems, is described as relevant to financing due diligence.
Regional interconnections relevant to EU wholesale access
Montenegro’s connection with Italy is identified as particularly relevant for projects seeking access to European wholesale electricity prices. Serbia’s interconnections with Hungary, Romania and Croatia are also highlighted in relation to export-oriented renewable projects. The assessment indicates that developers addressing CBAM requirements during project preparation may be better positioned to negotiate export agreements and demonstrate revenue resilience to lenders.
Projects built on unverified assumptions of unrestricted EU market access may face higher financing risk or more conservative lender revenue forecasts. The emerging investment standard described in the assessment is a project with an electricity-sales structure that includes documentary controls and contractual risk allocation supporting intended market revenues, rather than only a project capable of producing electricity at a competitive cost. It also states that CBAM readiness is becoming part of renewable-project bankability rather than a compliance matter postponed until exports begin.