The submarine electricity connection between Montenegro and Italy has become one of the clearest tests of how CBAM interacts with wholesale price spreads, transmission availability and renewable-export economics.
Italy averaged €120.9/MWh in the second quarter of 2026, compared with €93.6/MWh in Montenegro. The resulting differential of approximately €27.2/MWh was the widest among the principal Western Balkan–EU borders, although it narrowed sharply from roughly €44/MWh in the first quarter.
Montenegro’s national CBAM default factor is 0.979 tCO₂/MWh, producing an implied Q2 cost of approximately €73.70/MWh. On quarterly averages, the carbon charge was therefore almost three times the visible Italian premium.
Yet scheduled exports from Montenegro to Italy increased around 19% year on year, to approximately 708 GWh. Export-direction capacity was offered in about 84% of quarter hours and was almost fully allocated whenever available. The average daily auction value of the route rose to around €8.59/MWh, confirming strong interest in the interconnector.
The recovery shows that quarterly average spreads and default-factor costs do not fully describe trading behaviour. Electricity may be exported during selected high-price hours when the Italian premium is much wider. Some market participants may have contractual positions established before delivery, while others may anticipate that regulatory amendments will improve access to actual values or reduce default factors.
The route also carries system value beyond simple day-ahead arbitrage. The Italy–Montenegro interconnector links the Balkan system with one of Europe’s higher-priced markets and creates optionality for hydro, wind and future solar production. Its value rises during Italian scarcity periods, outages and high cooling demand.
For renewable generators, however, the national default factor remains a serious distortion. Montenegro’s system is represented by a factor heavily influenced by the Pljevlja lignite power plant, even though the country also has substantial hydro and growing wind production. A Montenegrin wind project exporting to Italy may therefore be assigned a carbon cost that bears little relationship to the actual installation.
The issue directly affects PPA design and project finance. A lender assessing a wind or solar project cannot assume that the Italian price premium will be available unless the project has a verifiable physical PPA, hourly metering, traceable cross-border delivery and access to an accredited verifier. Without those elements, revenues may be limited to the domestic Montenegrin market.
The interconnector remains a major strategic asset, but CBAM has changed what is required to monetise it. Physical access alone is no longer enough. The commercial value increasingly depends on proving the origin of each exported megawatt-hour and maintaining a documentary chain that survives importer and verifier review.
