Bosnia and Herzegovina (BiH) is experiencing significant challenges in its electricity export sector, as evidenced by a marked decline in export revenues and an increased reliance on imports. The country’s electricity trade balance is narrowing, raising concerns about its future as a regional exporter amid the implications of the EU Carbon Border Adjustment Mechanism (CBAM).
Recent data indicates that BiH’s electricity exports generated €63.1 million in the first two months of 2026, a decrease from €75.1 million during the same period in 2025. This decline of approximately €11.8 million underscores a persistent downward trend that has been apparent over recent years, with January-February 2024 exports already at a reduced level of €65.6 million.
While imports have also seen a reduction, they remain historically elevated. In early 2026, BiH imported €51.6 million worth of electricity, compared to €78.3 million in the corresponding timeframe last year. Despite this decrease, import levels are significantly higher than those recorded in early 2024, when only €13.8 million was spent on foreign electricity.
The hydrological conditions at the beginning of the year provided some relief, likely bolstering hydropower generation due to improved water inflows and potentially lessening the need for imports. However, the overall situation indicates increasing pressure on the domestic energy system, which can no longer sustain the surplus exports that previously defined its market position.
The introduction of CBAM has exacerbated these challenges for BiH’s electricity sector by imposing carbon-related costs on electricity imports into the EU from countries lacking equivalent carbon pricing mechanisms. This regulatory change presents a competitive disadvantage for BiH’s exports and necessitates urgent reforms within its domestic regulatory framework.
Officials from Sarajevo have emphasized the immediate need for legislative action to establish clear governance over the electricity regulator, transmission systems, and market operations. Without these reforms, revenues associated with carbon-related charges may be diverted to EU institutions rather than benefiting BiH’s energy sector directly. Estimates suggest that under adverse scenarios, BiH could incur losses up to €644 million within its electricity segment alone—an alarming figure that highlights the risks facing this sector without decisive local measures.
Energy analyst Nihad Harbas points out that factors influencing electricity markets extend beyond mere pricing; supply security and fulfilling end-user demand remain paramount concerns. He suggests that while BiH might retain some competitiveness during specific seasonal periods due to market fluctuations and variations in Europe’s generation mix, relying solely on favorable conditions is insufficient.
Harbas advocates for proactive strategies including the establishment of a domestic carbon pricing framework, accelerating decarbonization efforts, and enhancing investments in renewable energy sources as essential steps to safeguard BiH’s position in international electricity trade against CBAM and other potential regulatory hurdles.
