The submarine electricity interconnector between Montenegro and Italy has become one of the clearest examples of how CBAM is reshaping the relationship between wholesale price spreads, transmission availability and the economics of renewable power exports.
Italy averaged €120.9/MWh in the second quarter of 2026, compared with €93.6/MWh in Montenegro. The resulting price differential of approximately €27.2/MWh was the widest among the main Western Balkan–EU borders, although it narrowed sharply from around €44/MWh in Q1.
Montenegro’s national CBAM default emission factor stands at 0.979 tCO₂/MWh, translating into an implied Q2 carbon cost of approximately €73.70/MWh. On a quarterly-average basis, the potential CBAM charge was therefore almost three times the visible Italian wholesale price premium.
Yet scheduled Montenegro–Italy exports increased by around 19% year on year, reaching approximately 708 GWh. Export-direction transmission capacity was offered during about 84% of quarter-hours and was almost fully allocated whenever available. The average daily auction value of the interconnector rose to approximately €8.59/MWh, indicating sustained demand for access to the route.
The continued exports show that quarterly average price spreads and default-factor costs do not fully explain trading behaviour. Electricity can be exported during selected high-price hours when the Italian premium is significantly wider than the quarterly average. Some market participants may also hold contractual positions established before delivery, while others may be factoring in potential regulatory changes that could improve access to actual emission values or reduce the impact of default factors.
The interconnector also provides system value beyond day-ahead arbitrage. The Italy–Montenegro link connects the Western Balkan power system with one of Europe’s higher-priced electricity markets, creating additional commercial optionality for hydropower, wind and future solar generation. Its value becomes particularly pronounced during periods of scarcity in Italy, generation outages and high cooling demand.
For renewable energy generators, however, the national default factor remains a significant distortion. Montenegro’s electricity system is represented by a factor heavily influenced by the Pljevlja lignite-fired power plant, despite the country’s substantial hydropower resources and growing wind generation. A Montenegrin wind project exporting electricity to Italy could therefore face a carbon cost that bears little relationship to the actual emissions profile of the plant.
The issue has direct implications for PPA structures and project finance. Lenders assessing wind or solar projects cannot simply assume that the Italian wholesale premium will be fully accessible. Projects may need a verifiable physical PPA, hourly metering, traceable cross-border delivery and access to an accredited verifier to demonstrate eligibility for more favourable emissions treatment. Without these elements, export revenues could effectively be constrained to the domestic Montenegrin market.
The interconnector remains a major strategic asset, but CBAM has changed what is required to monetise its capacity. Physical access to the Italian market is no longer sufficient. The commercial value of the link increasingly depends on the ability to prove the origin and emissions profile of each exported megawatt-hour and maintain a complete documentary and verification chain that can withstand scrutiny by both importers and accredited verifiers.