Electricity trading between the Western Balkans and neighbouring European Union markets remained significantly below last year’s levels during the first half of 2026, pointing to a shift in regional trading patterns as CBAM begins to influence the economics of cross-border power flows.
Gross commercial electricity exchange across the Western Balkan-EU border was approximately 19% lower year on year in the first half of 2026, according to Energy Community analysis. The decline was particularly pronounced in the first quarter, when cross-border trade fell by around 23% compared with the same period of 2025.
Strong hydropower generation during the first quarter pushed Western Balkan electricity prices below EU benchmarks, reducing the need for imports and limiting the attractiveness of exports into the EU. In the second quarter, the decline moderated to around 15% year on year, even as the regional hydro surplus weakened and the Western Balkans returned towards its traditional net-import position.
The figures do not allow the impact of CBAM to be separated entirely from other market factors, including hydrological conditions, fuel prices, power-plant availability and changes in demand. Nevertheless, the persistence of weaker cross-border activity beyond the unusually strong first quarter suggests that structural changes are also affecting regional electricity trading.
At the same time, liquidity on domestic power exchanges moved in the opposite direction. Combined day-ahead trading on the monitored Western Balkan exchanges increased by approximately 19% to 2.70 TWh in the second quarter, supported in part by a recovery in activity on Serbia’s SEEPEX.
The contrasting trends point to an increasingly fragmented regional market structure. More electricity is being traded within Western Balkan markets, while a smaller volume is being exchanged across their borders with the EU.
A major factor is the different CBAM exposure created by national default emissions factors. Based on the second-quarter CBAM certificate price, the indicative cost of importing electricity into the EU was around €86.42/MWh for Bosnia and Herzegovina, €78.37/MWh for Serbia and €73.70/MWh for Montenegro. Albania, by contrast, had a default cost of zero under the relevant calculation.
These differences can influence commercial scheduling decisions even though the physical movement of electricity continues to be determined by the interconnected regional grid. Where the EU price premium is insufficient to cover the applicable carbon cost, traders may have greater incentives to keep electricity within Western Balkan markets or structure commercial transactions through lower-carbon jurisdictions where the rules permit.
This creates a potential distortion in regional electricity markets. Cross-border capacity may remain underused despite price differences, while commercial trading patterns become increasingly disconnected from the physical optimisation of supply and demand.
Price correlations between the Western Balkans and EU markets strengthened again during the second quarter as the region moved back towards net-import status and prices once again followed European benchmarks. However, the recovery in price convergence was not accompanied by a return to the cross-border trading pattern recorded in 2025.
If this divergence continues, CBAM will have implications far beyond the carbon cost attached to individual electricity imports. It could increasingly influence cross-border capacity values, trading-hub liquidity and commercial power flows across Southeast Europe, reshaping how electricity is bought, sold and routed between the Western Balkans and the EU.
