CBAM is already reshaping Montenegro’s electricity export economics

The European Union’s Carbon Border Adjustment Mechanism (CBAM) is no longer a distant regulatory topic for Montenegro’s power sector. A new analysis by NGO Eko-tim concludes that CBAM-related carbon costs are already altering commercial electricity trading behavior between Montenegro and the EU, with flows particularly affected toward Italy, a market where Montenegro has historically relied on export opportunities through a submarine interconnection link.

Price spreads are being outweighed by carbon costs

While wholesale electricity prices in southern Italy during the first quarter of 2026 stayed significantly above Montenegrin market prices, planned commercial flows from Montenegro to Italy fell by more than 2,100 MWh per day compared with the same period a year earlier. Under normal trading conditions, such a differential would typically encourage exports. Eko-tim estimates that the average spread between Italian and Montenegrin electricity prices in the quarter was about €43/MWh.

CBAM changes that calculation. The analysis estimates CBAM-related carbon costs at roughly €74/MWh for Montenegrin electricity exports, effectively wiping out the competitive advantage created by regional price differences.

Coal-linked generation faces tighter export economics

The implications extend beyond short-term trading volumes. Eko-tim argues that CBAM is not simply adding another cost layer; it is fundamentally changing how export profitability is assessed for coal-linked electricity systems. Electricity generated in high-carbon-intensity systems becomes increasingly difficult to place inside the EU market even when regional €/MWh spreads appear commercially attractive.

This matters for Montenegro because its export economics remain tightly linked to the Thermal Power Plant Pljevlja, the country’s dominant coal-fired asset. As CBAM progressively tightens economic pressure on carbon-intensive electricity, exporting lignite-based generation becomes more fragile from a profitability standpoint.

Risk exposure in 2026 and potential revenue impact

Eko-tim estimates that around 500 GWh of planned electricity sales in 2026 could qualify as EU-relevant exports exposed to CBAM-related risks. Based on reduced export volumes and market adjustments, the organization projects that Montenegro could face lower export revenues or lost export premiums ranging from roughly €4 million to over €9 million, depending on pricing and emissions scenarios.

A wider Western Balkans pattern after CBAM implementation

The report also points to a broader regional shift consistent with CBAM’s early effects across the Western Balkans. Energy Community data for the first quarter of 2026 showed commercial electricity exchanges between the region and the EU declining materially after CBAM implementation: total commercially traded volumes reportedly fell by about 25% year-on-year, while flows from the Western Balkans toward the EU declined by more than 8%.

Montenegro’s challenge is not isolated. Serbia’s EPS has acknowledged that exports toward the EU became commercially uncompetitive after CBAM implementation because carbon-related charges significantly increased delivered electricity costs. Serbian market participants estimate CBAM-related charges on exported electricity at around €78/MWh—levels described as substantial enough to alter cross-border trading economics.

A strategic policy dilemma: domestic carbon pricing vs externalized value

For Montenegro, CBAM’s impact goes beyond near-term revenue. The country faces a strategic energy policy dilemma: if it does not establish a domestic carbon pricing framework aligned with EU systems, an increasing share of carbon-related value associated with electricity exports will be collected externally through EU CBAM mechanisms rather than retained within Montenegro’s economy.

The stakes are fiscal and investment-related. Revenues from carbon pricing mechanisms inside EU member states are often recycled into renewable energy investment, grid modernization, industrial decarbonization, and consumer transition support programs. By contrast, externalized CBAM payments risk reducing Montenegro’s access to that kind of transition finance capacity.

Investment logic shifts toward preserving market access

CBAM also changes how investors evaluate future generation assets. Renewable energy projects, battery storage systems, and lower-carbon generation are increasingly framed not only by ESG narratives or long-term climate targets, but as necessary tools for preserving export competitiveness and maintaining access to European electricity markets.

Eko-tim suggests this dynamic is likely to intensify investment pressure around wind, solar, and battery storage across Montenegro and parts of the wider Western Balkans. Developers, utilities, and traders are being pushed to treat electricity not just as a commodity priced in €/MWh, but as a carbon-adjusted product in which embedded emissions directly affect tradability and market access.

For Montenegro’s policymakers, CBAM is rapidly evolving from a compliance discussion into a macroeconomic issue touching export revenues, energy sector profitability, industrial competitiveness, and long-term investment positioning—turning what was once theoretical transition pressure into an immediate economic constraint.