The European Union’s Carbon Border Adjustment Mechanism (CBAM) is already influencing electricity trade across the Western Balkans, even though many countries in the region have not yet completed their transition away from coal. The result is a complex energy shift in which renewable investment is expanding rapidly, while exported electricity can still carry the carbon footprint of the wider national power system.
North Macedonia represents one of the clearest examples of this challenge. Domestic and international developers are advancing projects that could add around 2.8 GW of low-carbon capacity, almost matching the country’s current installed power generation capacity of approximately 3 GW. The pipeline includes projects such as Alcazar Energy’s 396 MW Štip wind farm, a planned 400 MW solar project by Akuo Energy and a 414 MW wind development linked to WDP.
The strategic goal is to transform North Macedonia from a long-term electricity importer into a regional power exporter. This ambition has broader economic importance, as around 77% of the country’s merchandise exports were directed towards the EU in 2024. Access to affordable and verifiably low-carbon electricity could support industrial growth, attract foreign investment and strengthen the competitiveness of companies operating in European markets.
However, CBAM introduces a new challenge for electricity exporters. Cross-border electricity flows from the Western Balkans reportedly declined by 19% during the first six months of 2026. North Macedonia generated €36.8 million from electricity exports in the first five months of the year. If annualised, this would equal roughly €88.3 million, around 44.6% lower than the €159.3 million recorded in 2025.
The main issue lies in how exported electricity is assessed under emissions accounting rules. Renewable power generated from a specific wind or solar facility may still be associated with the average emissions intensity of the national grid if the wider electricity system remains dependent on coal. Renewable projects reduce overall emissions, but they may continue to face commercial disadvantages while lignite generation remains part of the energy mix.
This creates a significant bankability challenge for renewable developers. Projects targeting EU electricity markets can no longer depend only on traditional power purchase agreements. They increasingly require reliable systems that connect generation data, metering, scheduling, grid delivery and contractual relationships with the final buyer. The value of electricity is becoming increasingly linked to the credibility of its emissions profile.
The necessary framework goes beyond simple guarantees of origin. Exporters and industrial consumers will need installation-level measurement, time-based matching between production and consumption, transparent accounting of network losses, verified delivery routes and safeguards against double counting of renewable attributes. Without these mechanisms, low-carbon electricity claims may face difficulties during buyer assessments or third-party verification processes.
The impact extends across the wider Western Balkan region. Serbia, Bosnia and Herzegovina, and Kosovo continue to rely heavily on coal-fired generation, creating challenges for electricity exports under stricter EU climate rules. Montenegro has a cleaner energy mix but still depends on thermal generation and imports during certain periods. Albania benefits from significant hydropower resources but remains exposed to changes in water availability and external electricity markets.
As a result, electricity markets are increasingly moving towards a distinction between two categories of power. Conventional wholesale electricity will continue to depend on market prices, transmission capacity and hourly supply-demand conditions. At the same time, verified low-carbon electricity will gain additional value because of its importance for companies seeking to reduce CBAM-related costs and meet EU sustainability requirements.
The most competitive renewable developers will be those that build the verification system alongside the physical energy asset. Metering, data management and contractual transparency are becoming essential parts of energy infrastructure. In the future Western Balkan electricity market, a megawatt-hour will not be defined only by where and when it was produced, but also by the evidence proving its environmental characteristics.
