The Energy Community Secretariat has published its first quarterly assessment of the EU Carbon Border Adjustment Mechanism (CBAM) for electricity imports, covering Q1 2026. The report argues that CBAM is already changing electricity trading dynamics across Southeast Europe by creating measurable divergence between EU and non-EU markets. It examines how these shifts relate to power flows, market spreads, interconnector usage, system operation and regional price formation after the definitive CBAM phase for electricity began on 1 January 2026.
The assessment covers the six Western Balkan Energy Community Contracting Parties: Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia and Serbia. It also looks at neighbouring EU markets including Hungary, Croatia, Bulgaria, Romania, Greece and Italy. The Secretariat presents the document as operational evidence rather than regulatory theory.
Q1 2026 price spreads widen between Western Balkans and EU zones
A central finding is a breakdown in the long-standing price convergence mechanism between Western Balkans markets and nearby EU electricity zones. The report says Southeast European markets previously moved in relatively synchronized patterns, particularly around the Hungarian benchmark. During Q1 2026, that convergence weakened sharply.
According to the report, day-ahead price spreads between WB6 markets and neighbouring EU zones widened to more than €30/MWh. It describes this level as roughly two to three times higher than in the same period of 2025. The divergence is presented alongside changes in arbitrage economics and market coupling.
The Secretariat links the widening gaps to CBAM-related costs affecting import economics from non-EU systems. It states that electricity imports became economically less attractive once CBAM certificate costs were included, even when physical electricity remained significantly cheaper than inside the EU. The report highlights that this reduced arbitrage opportunities during Q1 2026.
Default emission factors estimate CBAM costs for Serbia, Montenegro and Bosnia
The assessment provides default CBAM emission factor calculations for several Western Balkan countries. Serbia’s average default factor is reported at 1.041 tCO2eq/MWh, corresponding to an estimated CBAM cost of €78.45/MWh for electricity imported into the EU during Q1 2026. Montenegro’s default factor is given as 0.979 tCO2eq/MWh, equivalent to approximately €73.78/MWh.
Bosnia and Herzegovina is reported with the highest burden at €86.51/MWh. Albania is described as retaining a zero default emission factor, effectively exempting Albanian hydro exports from CBAM charges under the default approach used in the report. The Secretariat presents these differences as relevant to regional competitiveness.
Montenegro–Italy cable shows reduced scheduled exports after CBAM costs
The report identifies Albania as structurally advantaged under CBAM because its hydro-dominated generation mix allows exports into EU markets without additional carbon charges. It says Montenegro remained commercially disadvantaged during Q1 despite strong hydro output because its country-level default emission factor still reflected coal-fired generation within the national system.
The Montenegro–Italy submarine cable is cited as a clear example of this distortion in trading outcomes. The Italy South bidding zone recorded average Q1 2026 prices above €130/MWh, while Montenegro averaged €85.8/MWh. The resulting spread is reported at approximately €43/MWh.
The Secretariat reports that scheduled flows from Montenegro to Italy declined by more than 2,100 MWh/day, with physical flows also dropping materially. It concludes that CBAM charges absorbed most or all of the available arbitrage margin as a plausible explanation for the reduced export response.
The report adds that auction-clearing prices for cross-border capacity on the Montenegro–Italy interconnector remained almost unchanged compared with 2025 despite the increase in market spread. It interprets this as indicating traders did not view the price differential as commercially usable after CBAM costs were included.
SEEPEX volume falls and transit routes become less viable
The assessment also describes similar dynamics affecting Serbia’s trading activity. SEEPEX, described as the region’s largest power exchange, recorded an 11% decline in traded volumes during Q1 2026 even as several neighbouring exchanges expanded.
The report links part of this decline to Serbia’s previous role as a transit trading corridor between EU markets. It cites routes such as Hungary–Serbia–Bulgaria as having been commercially attractive before CBAM implementation due to their fit with regional trading strategies.
After CBAM introduction, those transit strategies are described as becoming less economically viable due to regulatory uncertainty and financial implications tied to electricity crossing non-EU territory. The Secretariat characterizes this as contributing to a partial rerouting of Southeast European electricity trading away from Western Balkan transit corridors toward “CBAM-free” pathways.
New trading patterns shift exports and redistribution roles
The report references increased intra-WB6 trading alongside changes in which corridors gain strategic importance. It states that some EU-EU corridors and Albania-linked routes became more significant in this context. Exports from Albania into Greece are described as surging during Q1 2026.
It also says Greece increasingly acted as a redistribution hub toward Bulgaria and Italy. The Secretariat presents these shifts as part of emerging trading structures that bypass Serbia and other WB6 markets referenced in the assessment.
Operational scheduling mismatch raises concerns for TSOs
The assessment raises concerns about operational system stability linked to differences between commercial schedules and physical flows during Q1 2026. It states that traders reduced commercial usage of certain WB6 transit corridors while physical electricity continued flowing according to network physics rather than commercial schedules.
The Secretariat notes that transmission system operators depend on commercially scheduled flows for balancing and congestion management. It warns that a widening mismatch between commercial and physical flows could create additional operational stress for regional TSOs and potentially increase system costs and network tariffs.
South–North corridor highlighted amid past outage risk
The Secretariat highlights the South–North corridor running from Greece through Albania and Montenegro toward Bosnia and Croatia as strategically sensitive. It references a June 2024 regional blackout triggered by simultaneous outages of 400 kV lines in Montenegro and Albania as an example of vulnerability under stressed conditions.
The report frames this example within broader concerns about how heavily loaded systems can become vulnerable when coordination is insufficient during outages affecting major transmission elements.
Hydrology drives generation changes alongside coal decline
The assessment describes hydrology as a major factor during Q1 2026 while cautioning against attributing all observed market changes solely to CBAM. It reports that regional hydro generation increased by 33% year-on-year, rising from 16.70 TWh to 22.18 TWh. Albania’s hydro output expanded by roughly 70%, while Greece recorded a 275% increase compared with the low base in 2025.
Coal generation is reported to have fallen by approximately 16%