Southeast Europe is increasing both physical and commercial integration, but the two tracks are progressing at different speeds. A planned GRITA 2 interconnector between Greece and Italy is designed as a high-voltage direct-current link with up to 1,000 MW capacity and a length of around 300 kilometres. The project includes approximately 240 kilometres of subsea cable. Greece’s IPTO and Italy’s Terna expect investment of around €1.9 billion.
GRITA 2 is intended to complement an existing 500 MW interconnector that has been in operation since 2002. The planned link would increase Greece’s ability to export renewable electricity during surplus periods and import power during supply shortages. It would also support Greece’s role as a gateway between the Balkans and Western European electricity markets. For Italy, the project would provide access to a more diversified generation portfolio while reinforcing the wider Mediterranean electricity corridor.
GRITA 2 utilisation depends on cross-border pricing and grid capability
The economic value of the new connection depends on more than its headline capacity. Price differences between the Greek and Italian markets, availability during critical periods, and the ability of domestic networks to move electricity to and from the interconnector are expected to influence utilisation. Cross-border capacity can be constrained in practice if internal congestion prevents flows reaching the border. The expected €1.9 billion investment is therefore linked to coordinated onshore grid reinforcement and efficient capacity allocation.
The Western Balkans present a separate challenge focused on commercial integration rather than physical links. The region has extensive physical interconnection, but industry analysis using Energy Community estimates suggests that up to 70% of electricity flows may represent transit between EU countries. Serbia is connected to eight neighbouring electricity systems, while Western Balkan day-ahead markets are not yet fully integrated into the EU Single Day-Ahead Coupling framework.
Day-ahead coupling gap affects transmission allocation across the region
Market coupling allocates electricity and cross-border transmission capacity through a single calculation. Under this approach, electricity is directed toward higher-priced markets until network constraints are reached. Where such mechanisms are absent, traders must secure transmission rights and electricity separately, which increases transaction risks and limits market liquidity. This leaves the region with substantial physical flows but incomplete economic benefits from integrated trading.
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Regulatory alignment levels vary across Western Balkan markets
Regulatory alignment across the Western Balkans remains uneven, according to a 2025 assessment referencing Energy Community requirements. Serbia is assessed at 63%, followed by Montenegro and North Macedonia at 53%. Albania is at 50%, Kosovo at 46%, and Bosnia and Herzegovina at just 26%. Bosnia and Herzegovina still requires an effective state-level framework and an organised electricity market.
The assessment also indicates that other countries continue work on balancing arrangements, unbundling, and market-coupling reforms. These steps are relevant for how cross-border capacity is translated into market outcomes. Differences in progress across jurisdictions shape how quickly trading arrangements can converge with EU frameworks.
CBAM from 2026 raises pressure to align power markets with EU rules
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