Electricity generated EUR 73.6 million in export revenue for Montenegro during the first eight months of 2026, accounting for approximately 19.7% of total merchandise exports, as the European Union’s Carbon Border Adjustment Mechanism (CBAM) changes the economics of cross-border electricity sales.
According to MONSTAT, Montenegro exported EUR 372.9 million in goods between January and August, while total imports approached EUR 3.0 billion. Export coverage of imports stood at just 12.5%, highlighting the importance of export earnings from electricity within the country’s merchandise trade balance.
Electricity exports reached EUR 95.5 million for the whole of 2025. By August 2026, export revenue had already exceeded three-quarters of that annual figure. The introduction of definitive CBAM treatment for electricity means that the value of these exports increasingly depends on the destination market, carbon costs and the evidence supporting emissions claims.
Cross-border electricity sales face different carbon costs
Montenegrin electricity producers can supply domestic consumers, neighbouring Western Balkan markets or EU buyers, with each route potentially involving different electricity prices, balancing charges, capacity costs and carbon-related expenses.
For electricity released for free circulation in the EU, CBAM applies either the relevant default emissions value or, where all legal requirements are met, installation-specific actual emissions.
The financial implications became apparent during the first quarter of 2026. According to Energy Community monitoring, commercially scheduled electricity exchanges across Western Balkan–EU borders declined by approximately 25%. Day-ahead electricity prices in Energy Community Contracting Parties averaged more than EUR 30/MWh below neighbouring EU markets. The expected arbitrage opportunity was constrained because the carbon adjustment could exceed the price difference between the markets.
Montenegro illustrated this effect in the Energy Community Secretariat’s first-quarter analysis. The assessment applied a default electricity emissions factor of 0.979 tCO2e/MWh and a CBAM certificate price of EUR 75.36/tCO2e, resulting in an indicative default-based carbon cost of EUR 73.78/MWh.
By comparison, the day-ahead electricity price spread between Montenegro and southern Italy was approximately EUR 43/MWh. The indicative carbon cost therefore exceeded the wholesale price differential, affecting the economics of electricity exports along that route.
Actual emissions verification affects renewable electricity exports
Montenegro’s generation mix includes large hydropower plants, wind and solar facilities, and the Pljevlja coal-fired power plant. Under a default-value approach, electricity from an individual hydropower or wind installation can be commercially affected by a national emissions factor that does not reflect the plant’s direct emissions profile.
Establishing an actual-emissions-based approach for specific electricity deliveries therefore requires more than identifying the generation technology. The relevant production and export arrangements must satisfy the applicable legal and verification conditions. The evidence chain must connect the electricity producer, physical power purchase agreement, EU declarant, network route, nominations, production interval and independent verification.
Production data and electricity nominations must be matched within a period of no more than one hour, while the verifier must receive supporting evidence at least monthly. Guarantees of Origin can support environmental claims, but they do not replace the evidence required to establish the eligibility of imported electricity under the CBAM framework.
Export contracts and grid access influence project economics
Montenegro’s energy investment decisions are increasingly connected to the commercial structure of its electricity exports. New wind and solar capacity can increase domestic generation, but the economic value captured from that production depends on transmission, balancing, carbon, financing and verification costs.
Depending on market conditions, a renewable energy project could achieve a different net return through a long-term domestic industrial power purchase agreement than through an export contract covering sales to Italy or another regional market.
Default-based electricity exports remain a lawful commercial option, while non-EU regional markets continue to provide alternative destinations. The applicable destination and importer increasingly determine how electricity should be valued commercially.
With electricity accounting for almost one-fifth of Montenegro’s merchandise exports, the ability to secure the highest defensible delivered value depends not only on generation capacity but also on contractual arrangements, grid access, emissions data and carbon treatment.
Electricity alone will not eliminate Montenegro’s merchandise trade deficit, but the sector combines significant export earnings, domestic production potential and direct access to EU energy markets. Establishing reliable emissions evidence for eligible deliveries could help ensure that electricity from lower-emission installations is assessed on the basis of its demonstrable emissions performance rather than a broader national default factor.
By Virtu.Energy
