Total electricity generation across the Western Balkan Contracting Parties and neighbouring EU markets reached 107.97 TWh in Q2 2026, broadly unchanged from the same period a year earlier. Coal and lignite output declined 8% to 10.34 TWh, while gas-fired generation increased 6% to 27.12 TWh. Renewable generation rose 2% to 56.58 TWh.
Hydrological conditions shaped the quarter’s balance. Exceptional water availability earlier in 2026 had reduced the need for both coal and gas, according to the figures. As hydro conditions returned closer to normal levels in Q2, part of the decline in hydro output was replaced by gas-fired generation, particularly in larger EU electricity systems.
Generation by market: Italy, Greece and Bulgaria
Italy remained the region’s largest electricity market, producing 53.17 TWh in Q2 2026. Gas, solar, hydropower and wind were listed as the main sources of generation. Greece recorded the strongest relative increase among neighbouring EU markets, with output up 17% to 12.77 TWh, supported primarily by solar and wind.
Bulgaria’s generation rose 9% to 9.04 TWh. Romania and Hungary continued to benefit from significant nuclear generation during the quarter.
Western Balkans: coal-heavy systems and hydropower concentration
Within the Western Balkans, Serbia remained the largest coal producer, though its total generation fell 12% to 6.54 TWh. The decline was linked to lower lignite output. Bosnia and Herzegovina, Kosovo and North Macedonia also retained coal-heavy generation structures.
Albania continued to rely overwhelmingly on hydropower, with its generation profile described as predominantly hydropower-based. Montenegro recorded a sharp increase in generation to 0.52 TWh, reflecting operation of the Pljevlja lignite-fired power plant after it had been offline during the corresponding quarter of 2025.
First-half 2026 trend and implications for CBAM exposure
The shift was clearer across the first half of 2026. Regional coal generation declined 13% to 26.13 TWh, while renewable generation increased 11% to 109.10 TWh. Gas-fired generation rose 3% to 72.23 TWh, with total regional electricity production up 3% to 237.57 TWh.
The renewable totals may still understate actual output in several Western Balkan markets because rooftop solar, small hydropower plants and other distribution-connected assets are not fully captured in available statistics. North Macedonia’s solar generation was cited as one area where reported output is particularly incomplete.
The changing mix also has commercial implications for CBAM, with coal-intensive systems exposed to high national default emission factors. Albania’s predominantly hydropower-based system benefits from a zero factor under CBAM rules as described in the figures . The pace at which Serbia, Montenegro, Bosnia and Herzegovina, Kosovo and North Macedonia reduce lignite generation is therefore linked to domestic electricity economics and their access to higher-value EU electricity markets .
Thermal flexibility when hydropower weakens
The quarter showed progress on reducing coal generation alongside continued reliance on gas and other thermal flexibility when hydropower output declines. For coal reductions to become structural rather than dependent on favourable weather conditions, renewable expansion would need support from greater storage capacity, stronger balancing resources and additional grid investment.
The broader trend is described as positive but uneven, with Southeast Europe moving toward a lower-carbon generation mix while future performance depends on managing variability from renewables and seasonal hydro conditions alongside cross-border balancing needs without reverting to coal when renewable output falls.
