Electricity trading between the Western Balkans and neighbouring European Union markets stayed sharply below last year’s level during the first half of 2026. Energy Community analysis links the weaker activity to the introduction of CBAM and its impact on regional arbitrage and transit routes. The gross commercial exchange across the Western Balkan-EU border was about 19% lower in the first half than in the corresponding period of 2025.
Cross-border volumes down through first half 2026
Trade fell by approximately 23% year on year in the first quarter. Strong hydropower production pushed Western Balkan prices below EU benchmarks during that period. It then remained about 15% lower in the second quarter, even after the hydro surplus faded and the region returned to its usual net-import position.
The data do not separate CBAM effects from hydrology, fuel costs, plant availability and demand. The continued weakness in cross-border activity indicates that the change cannot be attributed solely to an unusually wet first quarter. Cross-border commercial exchange therefore stayed below 2025 levels across both quarters.
Regional trading liquidity rises as border flows weaken
Domestic power-exchange liquidity moved in the opposite direction over the same period. Combined day-ahead trading on observed Western Balkan exchanges rose around 19% to 2.70 TWh in the second quarter. The increase included a recovery at Serbia’s SEEPEX.
This shift corresponds to a more segmented market structure, with more electricity traded within the region and less crossing into EU markets. Even as physical flows continue to follow the interconnected network, commercial routing decisions can diverge from earlier patterns.
CBAM default factors shape indicative import costs
National CBAM default factors were described as a major element of the calculation for indicative import costs. At the second-quarter certificate price, Bosnia and Herzegovina faced an indicative cost of €86.42/MWh, while Serbia was set at €78.37/MWh. Montenegro’s indicative import cost was €73.70/MWh, and Albania’s default cost was zero.
The differences affect where traders schedule electricity commercially, even when physical delivery remains tied to network interconnections. Electricity may be routed through lower-carbon jurisdictions or kept within the Western Balkans when an EU price premium cannot offset the CBAM charge. The outcome is described as a less efficient market, with cross-border capacity potentially underused despite price differences.
Price signals diverge from earlier 2025 configuration
Cross-border capacity can remain underutilised while supply and demand no longer converge as they did before 2026. Price correlations recovered in the second quarter as the Western Balkans became a net importer and again followed EU benchmarks. However, gross cross-border trade did not return to its 2025 configuration.
If that pattern continues, CBAM is expected to influence more than adding a carbon price to electricity imports. It would also affect capacity values, trading hubs and the direction of commercially moved power across Southeast Europe.
