Bosnia and Herzegovina (BiH) is experiencing significant challenges in its electricity export market, primarily driven by the tightening trade balance and the implications of the European Union’s Carbon Border Adjustment Mechanism (CBAM). Historically recognized for its robust electricity exports, BiH is now increasingly dependent on imports to meet domestic energy needs.
Recent data indicates that electricity exports for the first two months of 2026 totaled €63.1 million, a decrease from €75.1 million during the same timeframe in 2025. This decline of approximately €11.8 million continues a troubling trend, with export revenues already dipping to €65.6 million in early 2024, underscoring the gradual weakening of BiH’s position in the regional electricity market.
While imports have also seen a reduction compared to previous years, they remain at historically elevated levels. In the initial months of 2026, BiH imported €51.6 million worth of electricity, down from €78.3 million in early 2025. Despite this decrease, import volumes are significantly higher than early 2024, when purchases were only €13.8 million.
The hydrological conditions at the beginning of the year may have contributed to a slight reduction in import demand, as improved water inflows likely enhanced hydropower generation capabilities. However, the overall situation reveals an energy system under mounting pressure, with local production failing to generate the surplus necessary for exports.
The introduction of CBAM by the EU poses additional complications for BiH’s electricity sector. This mechanism imposes carbon-related costs on electricity imports from countries lacking equivalent carbon pricing measures, creating a competitive disadvantage for BiH’s exports and necessitating urgent regulatory reforms within the country.
Officials in Sarajevo have emphasized the need for comprehensive legislation to regulate the electricity market, transmission systems, and regulatory frameworks. Without these reforms, revenues associated with carbon-related charges risk being redirected to EU institutions instead of benefiting BiH’s energy sector. Estimates suggest that under adverse conditions, losses in the electricity sector could reach up to €644 million, highlighting the significant risks facing BiH without proactive domestic measures.
Energy analyst Nihad Harbas pointed out that electricity markets are influenced by factors beyond mere pricing; supply security and meeting end-user demand are critical priorities. He noted that BiH could maintain competitiveness during specific periods depending on market dynamics, Europe’s generation mix, and fluctuations in renewable energy output.
However, Harbas cautioned against relying solely on market improvements as a strategy for recovery. He advocates for establishing a domestic carbon pricing framework, accelerating decarbonization efforts, and increasing investments in renewable energy as essential steps to safeguard BiH’s electricity exports from CBAM and similar regulatory challenges that threaten regional trade viability.
