Western Balkan electricity trade with the European Union recovered from the second quarter but remained below a year earlier, as price convergence weakened. The report found spreads above €20/MWh in more than half of all hours on borders with EU markets. Such spreads occurred more often than in Q2 2026 and more than twice as often as in Q3 2025.
An economic incentive for electricity trade often remained, but physical capacity, carbon costs and market arrangements prevented full price convergence. The Carbon Border Adjustment Mechanism (CBAM) has become part of dispatch and trading calculations. On every assessed border with a non-zero default emission value, the indicative CBAM cost per MWh was higher than the average price advantage of the Western Balkan market over its EU neighbour. Albania was the exception because its default emission value was zero. For exporters other than Albania, carbon costs can erase part or all of the apparent wholesale price advantage.
Montenegro’s exports to Italy were around 80% higher year on year in Q3. The submarine cable gives Montenegro access to Italy’s higher-value market and a route where verified low-carbon generation can remain commercially attractive after carbon-border adjustments.
Generators in the Western Balkans increasingly need more than competitive production costs. They need verifiable emissions data, clear contractual allocation, reliable metering, scheduling evidence and documentation supporting the use of actual emissions where permitted. Electricity trade is increasingly a combined energy, transmission and compliance product.
Exchange liquidity may deepen through winter, while export margins will continue to depend on transmission capacity and the applicable carbon cost. Contracts and evidence supporting actual emissions where permitted can become decisive to the economics of individual trades.