The submarine electricity link between Montenegro and Italy is being used to assess how CBAM affects the relationship between wholesale price spreads, transmission availability and the economics of cross-border renewable power sales. Italy’s average day-ahead price in the second quarter of 2026 was €120.9/MWh, while Montenegro averaged €93.6/MWh. The resulting differential of about €27.2/MWh was the widest among major Western Balkan–EU borders, though it fell from roughly €44/MWh in Q1.
Montenegro’s national CBAM default emission factor is set at 0.979 tCO₂/MWh, implying a Q2 carbon cost of approximately €73.70/MWh. Using quarterly averages, the potential CBAM charge was therefore almost three times the visible Italian wholesale price premium. This compares the default-factor cost level with the observed market spread between the two bidding zones.
Exports, transmission allocation and auction values
Scheduled exports from Montenegro to Italy rose by around 19% year on year to approximately 708 GWh. Export-direction transmission capacity was made available during about 84% of quarter-hours and was almost fully allocated whenever it was offered. The average daily auction value for the interconnector increased to roughly €8.59/MWh, reflecting continued demand for capacity access.
The export pattern indicates that quarterly average price spreads and default-factor costs do not fully account for trading decisions. Electricity can be scheduled during selected high-price hours when the Italian premium is wider than the quarterly average. Some market participants may also hold contractual positions established before delivery, while others may be considering potential regulatory changes that could improve access to actual emission values or reduce reliance on default factors.
System value beyond day-ahead price spreads
The link also provides value outside day-ahead arbitrage based on spreads alone. The Italy–Montenegro interconnector connects the Western Balkan power system with one of Europe’s higher-priced electricity markets. It creates additional commercial optionality for generation types including hydropower, wind and future solar.
The value of cross-border flows is described as becoming more pronounced during periods of scarcity in Italy, generation outages and high cooling demand. In those conditions, the interconnector can support deliveries into a higher-priced market rather than relying only on average spreads across the quarter.
Default-factor representation and implications for project finance
For renewable generators, CBAM default-factor treatment remains a key constraint in monetising exports. Montenegro’s electricity system is represented by a factor heavily influenced by the Pljevlja lignite-fired power plant, even though Montenegro has substantial hydropower resources and growing wind generation. A Montenegrin wind project exporting electricity to Italy could therefore face a carbon cost that does not closely match its actual emissions profile.
This affects how power purchase agreements are structured and how projects are assessed by lenders. Lenders cannot assume that the Italian wholesale premium will be fully accessible under CBAM-related requirements. Projects may need a verifiable physical PPA, hourly metering, traceable cross-border delivery and access to an accredited verifier to demonstrate eligibility for more favourable emissions treatment.
If those elements are not available, export revenues could be limited to the domestic Montenegrin market. The interconnector remains a strategic asset, but CBAM changes what is required to monetise capacity beyond physical access to Italy. The commercial value increasingly depends on proving the origin and emissions profile of each exported megawatt-hour and maintaining a complete documentary and verification chain that can withstand scrutiny by importers and accredited verifiers.
