The Carbon Border Adjustment Mechanism (CBAM) is introducing revenue and financing risk for renewable-electricity projects in Serbia, Montenegro and the wider Western Balkans, where access to European Union (EU) export markets and the prices available may depend on proving actual emissions. The Energy Community Secretariat’s Q2 2026 assessment identified difficulties with verification, power purchase agreement eligibility and access to favourable EU market prices. The exposure affects operational projects as well as assets under development.
Cross-border electricity sales have historically helped make merchant revenues and long-term power purchase agreements attractive to renewable projects in the region. Higher wholesale prices in neighbouring European markets can offer generators revenue beyond domestic sales. But a project may be connected to the grid, operational and able to deliver electricity while still having difficulty demonstrating that its output qualifies for actual-emissions treatment under the applicable EU methodology.
If the conditions for actual-emissions treatment cannot be met, default emissions treatment may materially change the economics of importing the electricity into the EU. The difference between the two approaches can affect the export price achievable by a project. Domestic electricity sales do not give rise to export-related CBAM obligations, while cross-border sales subject to default treatment carry associated cost exposure.
Export assumptions feed into financing
Financing assessments may need to distinguish among three revenue cases: domestic electricity sales, cross-border sales under default emissions treatment, and exports that meet the requirements for actual-emissions treatment. An export structure that meets those requirements may preserve a stronger commercial relationship with EU buyers. The different cases can materially affect electricity-price assumptions, operating cash flow, debt-service capacity and project valuation.
The Secretariat’s monitoring findings indicate that carbon compliance can affect project bankability even when the generating technology has very low direct emissions. A long-term export power purchase agreement may provide a relatively predictable electricity price, but how CBAM costs are allocated among the generator, trader and EU importer can substantially affect the revenue ultimately available to the project company. This makes the allocation of those costs relevant to the project’s expected returns.
Banks and investment funds need to assess whether an assumed 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 assessments. Projects relying on unverified access assumptions may face higher financing risk or more conservative lender revenue forecasts.
Contracts and evidence shape export plans
Export-oriented renewable power purchase agreements increasingly need clear provisions for emissions evidence, verification responsibilities, changes in CBAM legislation, transmission capacity, balancing electricity and liability if required evidence cannot be provided. Inadequate allocation of responsibilities could lead to disputes among generators, electricity traders and EU importers after commercial delivery has taken place.
Interconnections are relevant to renewable projects seeking access to European wholesale electricity prices. Montenegro’s connection with Italy and Serbia’s interconnections with Hungary, Romania and Croatia are among the routes relevant to those projects. The existence of a connection does not, by itself, resolve whether an export structure can meet the requirements for actual-emissions treatment.
Developers that address CBAM-related requirements during project preparation may be better positioned to negotiate export agreements and demonstrate revenue resilience to lenders. The emerging investment standard is a renewable project with a sales structure, documentary controls and contractual risk allocation capable of supporting its intended market revenues, rather than simply the ability to generate electricity at a competitive cost. CBAM readiness is becoming part of renewable-project bankability, not a compliance matter that can be postponed until exports begin.
The European Commission’s electricity CBAM methodology and certificate pricing, as well as implementing rules for actual-emissions evidence, are cited as research references for the issue. These requirements bear on whether an export case can rely on actual-emissions treatment or must account for default emissions treatment in its revenue assumptions.