Blog
CBAM reshapes electricity demand in South-East Europe by turning power into a measurable export cost
In South-East Europe, electricity is no longer just a volatile line item for industry. Under the EU’s Carbon Border Adjustment Mechanism (CBAM), power consumed during production is being pulled into trade economics through reported embedded emissions—changing how exporters think about sourcing, contracting and financing.
The shift began with CBAM’s move into its definitive regime on 1 January 2026, following a transitional period that ran from 2023 to 2025. The sectors covered remain iron and steel, aluminium, fertilisers, cement, hydrogen and electricity, but the practical impact for many exporters in the region starts far upstream: with how they buy electricity for energy-intensive manufacturing.
Why power procurement becomes an export variable
For years across the Western Balkans, electricity was treated primarily as an input cost—important for margins but rarely decisive in strategic positioning. That logic has been disrupted by Carbon Border Adjustment Mechanism, which makes clear that CBAM-linked embedded emissions are not limited to direct process emissions. In defined cases and using specified methodology, they also include indirect emissions associated with electricity consumed in production.
The commercial consequence is straightforward: exporters selling into the EU must increasingly manage not only wholesale price exposure at the plant gate, but also the carbon profile tied to each megawatt-hour used in making tradable goods. As a result, decisions that once belonged mainly to treasury departments are migrating toward export strategy teams responsible for compliance-ready product documentation.
Where pressure shows up first: steel dominates early declarations
The early months of CBAM’s definitive phase also show where reporting—and therefore competitive pressure—is concentrating. In a January 2026 snapshot of initial CBAM declarations published by the European Commission, iron and steel accounted for 98% of reported volume. By comparison, fertilisers represented 1.2%, while cement made up 0.5%, aluminium 0.3%; electricity and hydrogen were still negligible in early data capture.
This matters for South-East Europe because much of the region’s most exposed tradable industrial base sits in steel and metals value chains rather than in narrower categories tied directly to exporting electricity itself. For Serbia specifically, this implies that CBAM’s first-order commercial effects will be felt through industrial electricity procurement inside steel and metals production—not through power exports as such.
A Serbian test case: long-term contracts aimed at traceability
HBIS Serbia, operator of the Smederevo steel complex, is presented as a key example of how industrial buyers may reposition their power sourcing under CBAM incentives. The company’s latest corporate materials describe annual production capacity of 2.2 million tonnes, more than 5,000 employees, two blast furnaces and an integrated hot-and-cold rolling platform.
The same materials point to an emphasis on energy management and efficiency alongside long-duration power arrangements. HBIS Serbia’s public communications include plans for receiving electricity under a 25-year contractual structure, involving both EPS and renewable sources—framed as economically rational given CBAM-era requirements around reducing exposure to volatile wholesale prices while improving traceability and lowering embedded carbon burdens tied to exported steel.
The money mechanics: premiums can translate into bankability
The article links these procurement shifts to project finance realities by illustrating how sensitive large industrial loads can be to changes in effective electricity pricing. It notes that if an industrial consumer uses 1 TWh annually, then every €1/MWh change equates to roughly €1 million per year on the cost base; at 2 TWh, it becomes about €2 million per €1/MWh.
A central claim is that under CBAM conditions this becomes more than commodity-cost arithmetic: it also reflects economic value from moving toward better-documented lower-carbon supply. The piece describes structured renewable premiums of roughly €5–15/MWh as potentially justified when they reduce carbon-adjusted export burden or strengthen acceptance in EU markets—supporting what it calls “CBAM-safe electricity” as an emerging market concept rather than merely policy language.
PPA pricing ranges widen around compliance-driven demand
The financing discussion extends beyond theory into current regional contracting expectations referenced by the article. It states that industrial renewable PPAs are already being discussed across South-East Europe with broad ranges around €65–95/MWh, depending on country conditions, contract profile, firmness and credit quality.
If industrial buyers are willing to pay a further premium—again described as potentially within €5–15/MWh-type bands—for lower-carbon traceable supply aligned with CBAM-sensitive exports—that premium can improve revenue visibility enough to affect lending metrics such as leverage capacity and debt service coverage ratios (DSCR).
The article provides illustrative calculations: on a
(Illustrations included in the source text) show that on a
A clearer example follows: for a project producing between annual output bands cited by the article—such as a solar asset delivering roughly 140–160 GWh per year from a stated scale—the uplift from higher all-in pricing can amount to approximately €1.4–1.6 million annually per €10/MWh uplift. For wind projects sized at around those described levels (with annual generation cited), similar uplifts are estimated at about €6–7 million per year. The argument is that this magnitude can be sufficient to alter DSCR thresholds, debt sizing decisions and sponsor returns.
Tighter system conditions make structured supply more valuable
The article also connects these contracting dynamics back to national grid realities. It notes Serbia’s official energy statistics indicating end-user consumption remains large while industry stays central within national consumption patterns. At the same time, Serbia’s 2024 energy picture included increased imports and tighter system conditions—used here to support the idea that generic grid supply may not provide enough certainty for large users seeking decarbonisation outcomes aligned with export needs.
This reinforces why CBAM effectively merges two agendas: electrification planning inside industry and renewable procurement inside power markets become parts of one strategic problem rather than separate exercises.
Beyond steel: aluminium and fertilisers face similar documentation pressure
The regulatory scope means exposure does not stop at iron and steel alone. Aluminium is described as especially sensitive because electricity has long been central to its value-chain economics. Fertilisers are characterised as more gas-linked in process economics but still affected because electricity enters plant operations through auxiliary systems or certain pathways affecting configuration.
The broader implication offered is that South-East Europe’s industries are being pushed toward three linked priorities simultaneously: lowering carbon intensity, strengthening documentation/provability of emissions-related claims, and increasing price certainty through contracting structures designed for compliance needs.
An overlooked timing advantage—and why storage fits hybrid deals
The piece argues there is also a timing effect often missed by developers who treat CBAM purely as future demand support. Instead, it says industrial counterparties have begun redesigning contracts ahead of later compliance costs becoming unavoidable elsewhere—creating an advantage for projects reaching commercial structuring while buyers are still building their internal “electricity compliance architecture.” Earlier structuring could mean longer tenors, stronger covenants or better escalation terms compared with projects arriving later into a more crowded market.
Storage enters because many CBAM-sensitive buyers do not want intermittent exposure without shaping or firming capabilities. A steel plant cannot simply shut down when solar output falls; similarly metals processors may not want all renewable value delivered only during lowest-priced periods without additional delivery shaping options.
The article therefore points toward hybrid structures becoming more valuable commercially—for instance wind paired with balancing services or solar combined with BESS—to flatten delivery profiles against industrial contract requirements. It cites potential realised-value additions described as roughly €8–20/MWh in high-volatility markets when such structures help convert weaker merchant solar cases into sturdier contracted industrial outcomes.
A new yardstick for investors—and constraints for industry optimising only on price
The conclusion drawn for investors is that CBAM changes demand composition within SEE power markets by converting part of industrial procurement away from generic commodity buying toward creditworthy contracting driven by compliance needs tied to exported products’ embedded emissions performance.
For industrial companies exporting into EU markets, it argues the optimisation target shifts again: electricity cannot be selected based on price alone but increasingly must be evaluated across price plus carbon content plus provability—because even small differences matter at scale (€1/MWh ) when every tonne of embedded emissions can influence trade economics.
Taken together, CBAM does not function solely like an added border charge according to this analysis—it reorganises how value flows between power procurement choices inside SEE industry systems and export competitiveness outcomes tied directly to documented carbon attributes of traded goods.
