Southeast Europe is integrating physically and commercially at different speeds. The planned GRITA 2 interconnector between Greece and Italy represents the physical ambition: a high-voltage direct-current link of up to 1,000 MW, approximately 300 kilometres long, with around 240 kilometres of subsea cable. Terna and Greece’s IPTO expect to invest about €1.9 billion.
GRITA 2 will complement the existing 500 MW cable operating since 2002. It can increase Greece’s ability to export renewable surpluses, import during tight periods and function as a gateway between the Balkans and Western Europe. For Italy, the link provides access to a more diverse generation portfolio and reinforces the Mediterranean electricity corridor.
The project’s economic value will depend on price differences between the two markets, outage performance and the extent to which internal Greek and Italian networks can deliver electricity to the cable. A cross-border link can become underused if domestic congestion blocks access at either end. The €1.9 billion investment therefore needs coordinated onshore reinforcement and efficient capacity allocation.
The Western Balkans face the opposite problem: extensive physical interconnection but incomplete commercial integration. Industry analysis citing Energy Community estimates suggests that as much as 70% of electricity flowing through the region may be transit between EU countries. Serbia is connected to eight neighbouring systems, yet Western Balkan day-ahead markets are still not fully coupled with the EU Single Day-Ahead Coupling framework.
Market coupling allocates electricity and cross-border capacity in one calculation, sending power toward the higher-priced market until network limits are reached. Without it, traders must obtain transmission rights and electricity separately, increasing risk and reducing liquidity. The result is a region that carries large physical flows without capturing the full welfare benefits of integrated trading.
Regulatory alignment remains uneven. A 2025 assessment put Serbia at 63% alignment with Energy Community requirements, Montenegro and North Macedonia at 53%, Albania at 50%, Kosovo at 46% and Bosnia and Herzegovina at only 26%. Bosnia still needs an effective state-level framework and organised power market, while other countries must complete balancing, unbundling and market-coupling reforms.
Carbon policy adds urgency. From 2026, the EU Carbon Border Adjustment Mechanism applies to electricity imports, making carbon-intensive Western Balkan exports less competitive unless countries align with EU climate and market rules. Up to 60% of electricity imported into the EU from Bosnia and Herzegovina, Montenegro, North Macedonia and Serbia has been estimated to originate from coal. Domestic carbon pricing could retain revenues in the region and support transition investment, but it would also expose ageing lignite plants to their true economic cost.
GRITA 2 shows what fully integrated infrastructure can look like; the Western Balkans show why cables alone are insufficient. The region needs power exchanges, common algorithms, transparent carbon costs and coordinated capacity calculation. Physical connections move electrons. Market integration determines whether those movements lower costs, improve security and reward cleaner generation.
