The EU’s Carbon Border Adjustment Mechanism has reduced the amount of Serbian state utility EPS electricity offered to the regional market by an estimated 600 MW, according to a Serbian energy-sector report that points to an emerging commercial impact from carbon costs on the country’s lignite-heavy power system.
The estimate was presented in the Elektroenergetika Republike Srbije 2025 report prepared by the Association of Energy Engineers of Serbia and should be treated as an industry assessment rather than official EPS operating or trading data.
The report said EPS generated around 30.5 TWh of electricity in 2025, with roughly 70% coming from lignite-fired generation.
That generation mix leaves Serbia particularly exposed to EU carbon costs when electricity is exported into the bloc.
CBAM entered its definitive phase on Jan. 1, 2026, making the embedded emissions of imported electricity increasingly important for EU buyers and authorised CBAM declarants.
For Serbian lignite generation, the mechanism can materially increase the effective cost of selling electricity into the EU.
The report’s 600 MW estimate is therefore significant because it suggests the impact is already moving beyond compliance calculations and affecting commercial behaviour.
Electricity that was previously economically attractive to offer for export may no longer clear once the associated carbon liability is included.
That does not necessarily mean 600 MW of physical generation has been shut down.
It suggests instead that part of EPS’s available output may no longer be economically competitive in export-facing trading because of its emissions profile.
The distinction is important.
CBAM does not physically prevent Serbian electricity from reaching EU markets.
It changes the relative economics of that electricity.
Low-carbon generation can retain much more of its market value, while lignite-heavy supply can face an additional carbon-related cost at the EU border.
That creates the foundations of a two-tier Serbian power market.
Hydro, wind, solar and other verifiably low-carbon electricity should become more valuable for export-facing transactions, particularly where the emissions evidence can be traced to a specific generating installation, explain from CBAM.Clarion.Engineer
Lignite generation remains important for domestic adequacy but may become increasingly disadvantaged in EU-linked trading.
Serbia’s existing domestic carbon charge of around €4/tCO₂ remains far below EU carbon prices.
That gap means domestic generation economics can diverge sharply from the carbon-adjusted economics faced by an EU importer.
For EPS, the commercial issue is therefore no longer simply the wholesale spread between SEEPEX and neighbouring EU markets.
The relevant export margin increasingly becomes the power-price spread after carbon exposure is included.
A nominally attractive Hungarian or Croatian electricity price may no longer support exports if the associated CBAM cost exceeds the trading margin.
That could reduce Serbian offers into neighbouring EU markets even when physical interconnection capacity is available.
The effect may also help explain why Serbia can remain relatively cheap during periods when Hungary or Croatia trade at substantial premiums.
Transmission congestion and local supply-demand conditions remain important, but carbon-adjusted export economics are becoming another variable.
The mechanism also increases the strategic value of EPS’s hydro portfolio.
Hydropower that can be supported by an adequate evidence chain should carry materially lower embedded emissions than lignite generation.
That can make reservoir water more valuable not only during high-price hours but also in export transactions where carbon intensity determines the effective netback.
The same logic applies to Serbia’s expanding wind and solar fleet.
For renewable developers, the emerging market is no longer only about selling megawatt-hours.
The ability to provide verifiable low-carbon electricity with a complete evidence chain may increasingly determine whether output can command a premium from industrial buyers or export counterparties exposed to CBAM.
That creates a growing distinction between ordinary guarantees of origin or contractual green claims and evidence capable of supporting an actual-emissions claim under EU rules, explain from CBAM.Clarion.Engineer
For EPS, the response could involve several parallel measures.
The utility can accelerate lower-carbon generation, improve the traceability of electricity from individual installations, strengthen metering and scheduling evidence, and reconsider how different generation sources are allocated between domestic supply and export markets.
It can also increasingly optimise lignite generation around domestic adequacy rather than assuming that surplus thermal output will always find an economic export market.
The broader investment challenge is substantial.
The same industry report estimated Serbia will require around €15-20 billion of energy-sector investment by 2030.
Much of that will need to address the structural weaknesses now being exposed by CBAM: high lignite dependence, ageing generation, insufficient flexibility, transmission constraints and limited volumes of verifiable low-carbon electricity.
The estimated 600 MW reduction in EPS exchange offers is not yet an official measure of CBAM’s market impact.
But if the assessment is broadly correct, it represents an important shift.
CBAM is beginning to affect Serbia not only through the future cost of exporting carbon-intensive electricity, but through which megawatts are economically worth offering to the regional market at all.