An assessment of Western Balkan electricity markets found that trade with the European Union recovered from the second quarter but remained below the level of a year earlier. The rebound came as price convergence weakened and carbon-border costs complicated cross-border sales.
Price spreads above €20/MWh occurred in more than half of all hours on borders with EU markets. They occurred more often than in Q2 2026 and more than twice as often as in Q3 2025. Physical capacity, carbon costs and market arrangements prevented full price convergence even when price differences offered an economic incentive to trade.
The Carbon Border Adjustment Mechanism (CBAM) has become part of electricity 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 to that comparison 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, affecting the economics of individual cross-border sales.
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 provides a route where verified low-carbon generation can remain commercially attractive after carbon-border adjustments.
Generators increasingly need verifiable emissions data alongside competitive production costs. Other requirements include clear contractual allocation, reliable metering, scheduling evidence and documentation supporting the use of actual emissions where allowed. 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.