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US firm eyes construction of three gas-fired power plants in BiH

A US company is interested in building three gas-fired power plants in Bosnia and Herzegovina, according to Dragan Čović, First Deputy Speaker of the House of Peoples of the Parliamentary Assembly of BiH.

The natural gas power plants would be connected to the planned Southern Gas Interconnection and the liquefied natural gas (LNG) terminal in Krk, Croatia, Dragan Čović explained in an interview with Avaz.

The Southern Gas Interconnection is a project designed to provide BiH with an alternative natural gas supply. The country currently relies on Russian gas delivered via Serbia, while the new pipeline would secure imports from the Croatian LNG terminal. The interconnection has been in development for many years, but construction has yet to begin.

Čović revealed that the power plants would be built in the Mostar area, central Bosnia, and in Tuzla. He expressed the belief that the interconnection is crucial for BiH, arguing it would ensure the country’s long-term energy and political stability.

Čović spoke with Bechtel’s representatives

Because the pipeline passes through areas with a majority Croat population, the project is also of strategic interest to the Croat people in BiH, added Čović, who is also the president of the Croatian Democratic Union of Bosnia and Herzegovina (HDZ BiH).

Čović recently met with representatives of US construction company Bechtel and the United States Trade and Development Agency (USTDA), which provides financing and technical support for international projects. Bechtel is currently being considered as a potential contractor for the pipeline’s construction.

He met with Justin Siberell, Bechtel’s President for Regions and Corporate Relations, and Sam Kwon, the USTDA’s General Counsel.

AAFS Infrastructure and Energy also visited BiH

The guests from the US also met with Acting President of the Republic of Srpska Ana Trišić-Babić and Minister of Energy, Mining and Industry of the Federation of BiH Vedran Lakić. FBiH and the Republic of Srpska are the two entities making up BiH.

Earlier, representatives of US-based AAFS Infrastructure and Energy also visited the country. According to Čović, the company is expected to receive a 30-year concession to manage the gas pipeline through BiH.

He explained that the three proposed power plants were included in the letter of intent that the firm sent to BiH authorities. The US partners’ plans extend far beyond the construction of the pipeline, he added.

A broader geopolitical dimension

Čović expressed the belief that these investments would carry a significant geopolitical dimension, claiming that if the US invests somewhere, that region is protected. This is demonstrated by the policy of President Donald Trump around the world, he added.

Čović dismissed claims that HDZ BiH is hindering the construction of the gas pipeline due to disagreements with Bosniak officials about project details. It is in the strategic interest of the Croat people to implement it, he stressed.

Of note, the Republic of Srpska has also announced plans to build gas-fired power plants and a new gas interconnection with Serbia.

by in News

US firm eyes construction of three gas-fired power plants in BiH

A US company is interested in building three gas-fired power plants in Bosnia and Herzegovina, according to Dragan Čović, First Deputy Speaker of the House of Peoples of the Parliamentary Assembly of BiH.

The natural gas power plants would be connected to the planned Southern Gas Interconnection and the liquefied natural gas (LNG) terminal in Krk, Croatia, Dragan Čović explained in an interview with Avaz.

The Southern Gas Interconnection is a project designed to provide BiH with an alternative natural gas supply. The country currently relies on Russian gas delivered via Serbia, while the new pipeline would secure imports from the Croatian LNG terminal. The interconnection has been in development for many years, but construction has yet to begin.

Čović revealed that the power plants would be built in the Mostar area, central Bosnia, and in Tuzla. He expressed the belief that the interconnection is crucial for BiH, arguing it would ensure the country’s long-term energy and political stability.

Čović spoke with Bechtel’s representatives

Because the pipeline passes through areas with a majority Croat population, the project is also of strategic interest to the Croat people in BiH, added Čović, who is also the president of the Croatian Democratic Union of Bosnia and Herzegovina (HDZ BiH).

Čović recently met with representatives of US construction company Bechtel and the United States Trade and Development Agency (USTDA), which provides financing and technical support for international projects. Bechtel is currently being considered as a potential contractor for the pipeline’s construction.

He met with Justin Siberell, Bechtel’s President for Regions and Corporate Relations, and Sam Kwon, the USTDA’s General Counsel.

AAFS Infrastructure and Energy also visited BiH

The guests from the US also met with Acting President of the Republic of Srpska Ana Trišić-Babić and Minister of Energy, Mining and Industry of the Federation of BiH Vedran Lakić. FBiH and the Republic of Srpska are the two entities making up BiH.

Earlier, representatives of US-based AAFS Infrastructure and Energy also visited the country. According to Čović, the company is expected to receive a 30-year concession to manage the gas pipeline through BiH.

He explained that the three proposed power plants were included in the letter of intent that the firm sent to BiH authorities. The US partners’ plans extend far beyond the construction of the pipeline, he added.

A broader geopolitical dimension

Čović expressed the belief that these investments would carry a significant geopolitical dimension, claiming that if the US invests somewhere, that region is protected. This is demonstrated by the policy of President Donald Trump around the world, he added.

Čović dismissed claims that HDZ BiH is hindering the construction of the gas pipeline due to disagreements with Bosniak officials about project details. It is in the strategic interest of the Croat people to implement it, he stressed.

Of note, the Republic of Srpska has also announced plans to build gas-fired power plants and a new gas interconnection with Serbia.

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Petrović: ERS to launch construction of Trebinje 3, Hrgud this year

Power utility Elektroprivreda Republike Srpske plans to start the installation of the Trebinje 3 solar power plant and the Hrgud wind farm this year, according to CEO Luka Petrović.

Elektroprivreda Republike Srpske (ERS) already has projects in a ready-to-build phase through its subsidiary companies, Luka Petrović explained, Srpskainfo reported.

ERS is the dominant power producer and supplier in the Republic of Srpska, one of the two entities constituting Bosnia and Herzegovina.

The Trebinje 3 solar power plant, with a capacity of 53 MW, will be built first. The company has received a concession from the Government of the Republic of Srpska. The tender for construction will be launched soon, Petrović stressed.

Preparations for the Hrgud wind farm are also in the final stages, he added. Multi-year wind potential assessments and environmental studies have been completed. Petrović anticipates the start of construction this year. The planned capacity is 60 MW.

Wind energy attracts the most attention in the Republic of Srpska

The installation of the two power plants is expected to be finished by the end of 2027 or in early 2028, he asserted. The CEO added they would significantly contribute to the development of renewable energy sources.

He noted that wind energy attracts the most attention in the entity. The concessions commission of the Republic of Srpska has also awarded approvals for the construction of more than 1,200 MW of photovoltaic plants, Petrović recalled.

In his view, investments by private firms are dormant because solar power production is no longer profitable without battery energy storage systems (BESS).

Petrović: Many solar projects will not be completed

Solar energy prices are significantly lower than they were four to five years ago, Petrović added.

Many of these solar projects will not be finished, he underscored.

Of note, ERS decided late last year to revive the Hrgud wind project, which was halted after a decision by the German government.

The concession for the Trebinje 3 solar power project was awarded in April 2025.

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Petrović: ERS to launch construction of Trebinje 3, Hrgud this year

Power utility Elektroprivreda Republike Srpske plans to start the installation of the Trebinje 3 solar power plant and the Hrgud wind farm this year, according to CEO Luka Petrović.

Elektroprivreda Republike Srpske (ERS) already has projects in a ready-to-build phase through its subsidiary companies, Luka Petrović explained, Srpskainfo reported.

ERS is the dominant power producer and supplier in the Republic of Srpska, one of the two entities constituting Bosnia and Herzegovina.

The Trebinje 3 solar power plant, with a capacity of 53 MW, will be built first. The company has received a concession from the Government of the Republic of Srpska. The tender for construction will be launched soon, Petrović stressed.

Preparations for the Hrgud wind farm are also in the final stages, he added. Multi-year wind potential assessments and environmental studies have been completed. Petrović anticipates the start of construction this year. The planned capacity is 60 MW.

Wind energy attracts the most attention in the Republic of Srpska

The installation of the two power plants is expected to be finished by the end of 2027 or in early 2028, he asserted. The CEO added they would significantly contribute to the development of renewable energy sources.

He noted that wind energy attracts the most attention in the entity. The concessions commission of the Republic of Srpska has also awarded approvals for the construction of more than 1,200 MW of photovoltaic plants, Petrović recalled.

In his view, investments by private firms are dormant because solar power production is no longer profitable without battery energy storage systems (BESS).

Petrović: Many solar projects will not be completed

Solar energy prices are significantly lower than they were four to five years ago, Petrović added.

Many of these solar projects will not be finished, he underscored.

Of note, ERS decided late last year to revive the Hrgud wind project, which was halted after a decision by the German government.

The concession for the Trebinje 3 solar power project was awarded in April 2025.

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Zhongbo group advances in preparation for construction of Leotar wind park

Zhongbo Group has taken another step in preparing for the construction of its Leotar wind farm near Trebinje, in the southeastern part of Bosnia and Herzegovina (BiH). It would be the largest wind power plant in the Western Balkans by capacity and one of the largest in Southeast Europe.

Zhogbo Group has conducted research and preparatory works on the site and obtained approval from electricity transmission company Elektroprenos BiH. In June last year, the Assembly of the City of Trebinje approved the proposition to develop a zoning plan.

The company has now submitted a request to the Ministry of Spatial Planning, Construction, and Ecology of the Republic of Srpska, one of the two entities in BiH, to determine whether an environmental impact assessment (EIA) will be required.

“We are informing the public and interested parties that the project developer Zhogbo Group, Banja Luka, has submitted a request to the ministry for a preliminary environmental impact assessment for the Leotar wind farm project, with an installed capacity of 537.5 MW,” the ministry said.

The deadline for comments is 15 days

The public can review and send suggestions within 15 days from January 12, when the notice was published.

The construction of the Leotar wind farm is planned on Leotar mountain. The facility would consist of 86 wind turbines, each with a capacity of 6.25 MW, which will be placed on sites that depend on the terrain configuration and main wind directions, the accompanying document reads.

The expected annual production of the wind farm is 1.5 TWh per year. The plant’s utilization factor is 32.4%.

Of note, last year the owner of Zhongbo Group, registered in Banja Luka, was Everest Power Pte. Ltd., headquartered in Singapore, according to the business registry. Now, according to the registry, the owner is Zodic Energy PTE LTD, headquartered in Singapore.

The company is expected to obtain a concession for the wind farm

Back in September 2024, the Republic of Srpska signed an agreement on strategic cooperation in the field of renewable energy sources with Zhongbo Group and China Power. Zhongbo Group is expected to be awarded a concession for the Leotar project.

The largest wind farm in the Western Balkans is Čibuk 1 in Serbia, with a capacity of 158 MW. However, it won’t hold that title for long, as Alcazar Energy Partners began the construction of its Štip wind power plant, of 400 MW, in July last year in North Macedonia.

In the wider region of Southeast Europe, the largest is Romania’s Fântânele-Cogealac-Gradina, with 600 MW. In Europe, the top spot is held by Markbygden in Sweden, with a capacity of 2,000 MW.

by in News

Zhongbo group advances in preparation for construction of Leotar wind park

Zhongbo Group has taken another step in preparing for the construction of its Leotar wind farm near Trebinje, in the southeastern part of Bosnia and Herzegovina (BiH). It would be the largest wind power plant in the Western Balkans by capacity and one of the largest in Southeast Europe.

Zhogbo Group has conducted research and preparatory works on the site and obtained approval from electricity transmission company Elektroprenos BiH. In June last year, the Assembly of the City of Trebinje approved the proposition to develop a zoning plan.

The company has now submitted a request to the Ministry of Spatial Planning, Construction, and Ecology of the Republic of Srpska, one of the two entities in BiH, to determine whether an environmental impact assessment (EIA) will be required.

“We are informing the public and interested parties that the project developer Zhogbo Group, Banja Luka, has submitted a request to the ministry for a preliminary environmental impact assessment for the Leotar wind farm project, with an installed capacity of 537.5 MW,” the ministry said.

The deadline for comments is 15 days

The public can review and send suggestions within 15 days from January 12, when the notice was published.

The construction of the Leotar wind farm is planned on Leotar mountain. The facility would consist of 86 wind turbines, each with a capacity of 6.25 MW, which will be placed on sites that depend on the terrain configuration and main wind directions, the accompanying document reads.

The expected annual production of the wind farm is 1.5 TWh per year. The plant’s utilization factor is 32.4%.

Of note, last year the owner of Zhongbo Group, registered in Banja Luka, was Everest Power Pte. Ltd., headquartered in Singapore, according to the business registry. Now, according to the registry, the owner is Zodic Energy PTE LTD, headquartered in Singapore.

The company is expected to obtain a concession for the wind farm

Back in September 2024, the Republic of Srpska signed an agreement on strategic cooperation in the field of renewable energy sources with Zhongbo Group and China Power. Zhongbo Group is expected to be awarded a concession for the Leotar project.

The largest wind farm in the Western Balkans is Čibuk 1 in Serbia, with a capacity of 158 MW. However, it won’t hold that title for long, as Alcazar Energy Partners began the construction of its Štip wind power plant, of 400 MW, in July last year in North Macedonia.

In the wider region of Southeast Europe, the largest is Romania’s Fântânele-Cogealac-Gradina, with 600 MW. In Europe, the top spot is held by Markbygden in Sweden, with a capacity of 2,000 MW.

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EU’s amendments to CBAM: possibility of relief, but January 1 brought market uncertainty

Long-awaited implementing acts and amendments to the CBAM Regulation brought only a minor relief for the Western Balkans, investors in renewables, and electricity traders. Balkan Green Energy News has analyzed the documents that the European Commission published in December 2025, and the impact of the proposed measures on Energy Community contracting parties – Albania, BiH, Kosovo*, Montenegro, North Macedonia and Serbia.

From January 1, European firms importing aluminum, cement, electricity, iron and steel, hydrogen and fertilizers are obliged to pay a carbon price within the European Union’s Carbon Border Adjustment Mechanism (CBAM).

Last year, the CBAM Regulation was criticized by experts from the Western Balkans (Ljubo Maćić, Zoran Gjorgjievski), European think-tanks (Bruegel), and organizations (Energy Traders Europe). Even the European Network of Transmission System Operators for Electricity (ENTSO-E) requested that the transitional period be prolonged.

They said charging the tax, which started on January 1 as scheduled, would harm countries outside the EU, but also EU member states, market coupling of Western Balkan countries, and electricity trade.

Uncertainty surrounding electricity transit and trade remains high

The analysis showed that the European Commission is proposing changes to the CBAM regulation that would introduce a more favorable method for calculating the national emissions factor and actual emissions values. This benefits non-EU countries that export electricity to the EU, owners of operational renewable energy power plants in these countries, and future green energy investments.

The proposal foresees amendments to the procedure for market coupling, but it is unclear whether these will bring any concrete changes. The commission didn’t propose changes regarding transit, and consequently, electricity trading.

Provided that the proposal is accepted as proposed, it will bring the said positive changes in calculating the national emissions factor and actual emissions values only by the end of the year, meaning that uncertainty in the market will persist until then.

Uncertainty surrounding electricity transit and trade remains high. The impact on the Western Balkans, as well as on the EU member states Bulgaria, Croatia, Greece, Hungary, Romania, and Slovenia, will become clear in the coming weeks and months.

There are two legislative streams

There are two relevant streams currently ongoing in EU legislation for CBAM for electricity. The first are the so-called implementing acts, which are similar to secondary legislation in national law. They further define the technical details of the CBAM regulation.

The other part is the commission’s proposal to amend the CBAM Regulation itself. It will become part of the law when the other co-legislators in the EU – the Council of the EU, which includes the member states, and the European Parliament – together agree on it.

Nobody can say exactly when that process will be finished, but most likely not before the autumn.

National emissions factors, actual emission values: improvement

eu western balkans cbam electricity market coupling amendments
Photo: iStock

There is a proposal to change the way the national emission factors are calculated in the main CBAM Regulation. Currently it only includes the part of the electricity mix based on fossil fuels, regardless of their share in the country’s power generation mix.

For example, for Serbia, a contracting party of the Energy Community, this factor is 1.04. If the national power mix is taken into account, it would go down to 0.7, making the cost of CBAM about 40% lower.

The commission proposed to replace the electricity mix based on fossil fuels, in its accounting system, with one encompassing all energy sources.

The commission also intends to change the requirements for switching to actual emission values

The commission also intends to change the requirements for switching to actual emission values. These are relevant for the producers of renewable energy in non-EU countries. Current conditions are very strict and, to some stakeholders, not achievable.

For example, if a wind farm in the Western Balkans, owned by a domestic or foreign investor, cannot meet these conditions the CBAM payments for the electricity from the facility exported to the neighboring Croatia would be calculated based on the national emissions factor.

The commission suggested that an importer shouldn’t need to have a power purchase agreement (PPA) with a producer directly, which is one of the conditions, but that it could be done through intermediaries. It also proposed the removal of the requirements related to congestion.

These proposals could remove negative impacts on renewable electricity exports and development in non-EU countries, including contracting parties.

Transit: nothing new

The issue of transit hasn’t been addressed in the acts and amendments.

Under the CBAM Regulation, it is unclear how electricity transit costs would be calculated. For example, from Bulgaria to Hungary via Serbia, and who would be required to cover them.

The commission clarified several times that transit isn’t subject to CBAM. However, the physical, practical implementation is the problem.

For example, a trader buys electricity from Greece, transits it through North Macedonia, and puts it on the Serbian SEEPEX power exchange. Somebody else buys it and sells it in Hungary.

It would be very difficult or impossible to say that electricity from Greece was sold into Hungary.

This is why stakeholders take a conservative approach and say that they cannot prove. So, most likely they wouldn’t opt for these countries – non-EU countries, like contracting parties – for transit.

Retroactivity: possibility for improvement

eu western balkans electricity market cbam amendments
Photo: iStock

One of the provisions in the commission’s proposal to amend the CBAM Regulation is that the changes in the electricity sector could apply retroactively, starting from January 2026.

Just as a reminder, EU firms are obliged since the start of this month to pay a CBAM fee for importing designated goods and raw materials and electricity via purchasing so-called CBAM certificates.

Obviously, an importer will try to pass on this cost partly or fully to its counterparts in the third countries. But, importantly, EU firms won’t be able to purchase CBAM certificates yet this year, but only from February 1, 2027.

If the amendment on national emissions factor is adopted, for example in October, this could mean lower CBAM costs for EU importers of electricity from non-EU countries.

Without details on the path forward, market participants lack certainty about the level of CBAM costs

The commission intended to remedy some of the negative impacts on the electricity markets with amendments with retroactive effect. But without details on the path forward, market participants lack certainty about the level of CBAM costs to be paid for 2026.

Based on the current rules, CBAM costs for countries which have lignite in their generation mix could be EUR 70 per MWh to EUR 80 per MWh if the EU ETS price is around 80 EUR per ton of CO2. In some cases, the fee is almost 100% above the electricity price itself.

It is clear that it would rarely make sense to import electricity to the EU from third countries. The price difference, let’s say between Hungary and Serbia, would need to be more than EUR 70 per MWh to EUR 80 per MWh to make the business case.

Market coupling: nothing new or possibility for improvement

eu cbam western balkans electricity market amendments
Photo: Sergio Cerrato – Italia from Pixabay

There are several references to market coupling in the proposal. Energy Community contracting parties are in different phases of market coupling with EU countries.

The commission has proposed signing memoranda of understanding with third countries. It would set out the timeline and conditions for an exemption from CBAM on electricity.

This could be done after the commission approves the so-called verification process of a contracting party’s transposition of the Electricity Integration Package (EIP). It would be a green light for the next stage, which entails the technical tests, leading up to the completion of market coupling.

The current wording in the proposal leaves room for various interpretations

The current wording in the proposal leaves room for various interpretations, one being that the MoU may open the door for an exemption already when the “point of no return” is reached. It is when the contracting party has done all its homework and only the technical tests remain.

However, the commission didn’t propose the other conditions for CBAM exemption to be changed, such as the development of a roadmap on the introduction of a CO2 price that would be equivalent to the level in the EU’s Emissions Trading System (EU ETS).

The question is what the MoU would exactly be about, and if “equivalent” could be defined more precisely.

Why is this important?

No contracting party has yet met the conditions to receive a CBAM exemption in the electricity sector. A critical requirement is to agree to charge an emissions price from 2030 equivalent to the EU ETS.

The CBAM regulation says that the tax cannot technically be implemented on a market which is coupled with the EU internal energy market

If equivalent means the same price, here is the outcome for Serbia, for example: The current CO2 price in the EU is EUR 80 per ton of CO2 equivalent, but is expected to rise to above EUR 100 by 2030, or even reach EUR 150. It would raise prices to consumers by about EUR 75 per MWh and EUR 110, respectively.

The CBAM regulation says that the tax cannot technically be implemented on a market which is coupled with the EU internal energy market. This is why there is a possibility for an exemption for electricity for imports from those countries which are coupled until a technical solution is found how to implement CBAM.

Starting from January 1, any country that is ready to be coupled would in parallel also need to qualify for and receive an exemption from CBAM for electricity. If you fulfil the conditions, you get coupled and get an exemption and CBAM will disappear.

What next?

It could be said that CBAM implementation as of January 1 will certainly affect market integration in the sense that people, businesses would react to market uncertainty.

Trade will be impacted; imports from contracting parties to the EU will be expected to disappear. Of course, contracting parties will continue to import electricity from the EU member states.

The weeks and months ahead will show to what extent the prices and liquidity would be affected in the contracting parties and neighboring EU member states Bulgaria, Croatia, Greece, Hungary, Romania, Slovenia.

For example, Greece would have only the Bulgaria-Romania route to export electricity, and it is already congested. Greece could face curtailments in renewable electricity.

We will also see what the effect on the renewables deployment in contracting parties will be. Are investors going to postpone investments until they see if the changes proposed by the commission are adopted, or are they going to leave for other markets?


Pozsgai: Amendments point in the right direction

Péter Pozsgai, Lead of the EU Carbon Border Adjustment Mechanism Readiness Task Force in the Energy Community Secretariat:

“The European Commission’s proposed amendments point in the right direction, reflecting a consideration of the progress of contracting parties in electricity market coupling, and better outlining the operational details of an exemption via an MoU. The refinement of the rules on national emission factors and the conditions for using actual emission values also demonstrate the intention to minimize the unintended impacts of CBAM on renewable development in contracting parties”.


 

by in News

EU’s amendments to CBAM: possibility of relief, but January 1 brought market uncertainty

Long-awaited implementing acts and amendments to the CBAM Regulation brought only a minor relief for the Western Balkans, investors in renewables, and electricity traders. The documents has been analyzed that the European Commission published in December 2025, and the impact of the proposed measures on Energy Community contracting parties – Albania, BiH, Kosovo*, Montenegro, North Macedonia and Serbia.

From January 1, European firms importing aluminum, cement, electricity, iron and steel, hydrogen and fertilizers are obliged to pay a carbon price within the European Union’s Carbon Border Adjustment Mechanism (CBAM).

Last year, the CBAM Regulation was criticized by experts from the Western Balkans (Ljubo Maćić, Zoran Gjorgjievski), European think-tanks (Bruegel), and organizations (Energy Traders Europe). Even the European Network of Transmission System Operators for Electricity (ENTSO-E) requested that the transitional period be prolonged.

They said charging the tax, which started on January 1 as scheduled, would harm countries outside the EU, but also EU member states, market coupling of Western Balkan countries, and electricity trade.

Uncertainty surrounding electricity transit and trade remains high

The analysis showed that the European Commission is proposing changes to the CBAM regulation that would introduce a more favorable method for calculating the national emissions factor and actual emissions values. This benefits non-EU countries that export electricity to the EU, owners of operational renewable energy power plants in these countries, and future green energy investments.

The proposal foresees amendments to the procedure for market coupling, but it is unclear whether these will bring any concrete changes. The commission didn’t propose changes regarding transit, and consequently, electricity trading.

Provided that the proposal is accepted as proposed, it will bring the said positive changes in calculating the national emissions factor and actual emissions values only by the end of the year, meaning that uncertainty in the market will persist until then.

Uncertainty surrounding electricity transit and trade remains high. The impact on the Western Balkans, as well as on the EU member states Bulgaria, Croatia, Greece, Hungary, Romania, and Slovenia, will become clear in the coming weeks and months.

There are two legislative streams

There are two relevant streams currently ongoing in EU legislation for CBAM for electricity. The first are the so-called implementing acts, which are similar to secondary legislation in national law. They further define the technical details of the CBAM regulation.

The other part is the commission’s proposal to amend the CBAM Regulation itself. It will become part of the law when the other co-legislators in the EU – the Council of the EU, which includes the member states, and the European Parliament – together agree on it.

Nobody can say exactly when that process will be finished, but most likely not before the autumn.

National emissions factors, actual emission values: improvement

eu western balkans cbam electricity market coupling amendments
Photo: iStock

There is a proposal to change the way the national emission factors are calculated in the main CBAM Regulation. Currently it only includes the part of the electricity mix based on fossil fuels, regardless of their share in the country’s power generation mix.

For example, for Serbia, a contracting party of the Energy Community, this factor is 1.04. If the national power mix is taken into account, it would go down to 0.7, making the cost of CBAM about 40% lower.

The commission proposed to replace the electricity mix based on fossil fuels, in its accounting system, with one encompassing all energy sources.

The commission also intends to change the requirements for switching to actual emission values

The commission also intends to change the requirements for switching to actual emission values. These are relevant for the producers of renewable energy in non-EU countries. Current conditions are very strict and, to some stakeholders, not achievable.

For example, if a wind farm in the Western Balkans, owned by a domestic or foreign investor, cannot meet these conditions the CBAM payments for the electricity from the facility exported to the neighboring Croatia would be calculated based on the national emissions factor.

The commission suggested that an importer shouldn’t need to have a power purchase agreement (PPA) with a producer directly, which is one of the conditions, but that it could be done through intermediaries. It also proposed the removal of the requirements related to congestion.

These proposals could remove negative impacts on renewable electricity exports and development in non-EU countries, including contracting parties.

Transit: nothing new

The issue of transit hasn’t been addressed in the acts and amendments.

Under the CBAM Regulation, it is unclear how electricity transit costs would be calculated. For example, from Bulgaria to Hungary via Serbia, and who would be required to cover them.

The commission clarified several times that transit isn’t subject to CBAM. However, the physical, practical implementation is the problem.

For example, a trader buys electricity from Greece, transits it through North Macedonia, and puts it on the Serbian SEEPEX power exchange. Somebody else buys it and sells it in Hungary.

It would be very difficult or impossible to say that electricity from Greece was sold into Hungary.

This is why stakeholders take a conservative approach and say that they cannot prove. So, most likely they wouldn’t opt for these countries – non-EU countries, like contracting parties – for transit.

Retroactivity: possibility for improvement

eu western balkans electricity market cbam amendments
Photo: iStock

One of the provisions in the commission’s proposal to amend the CBAM Regulation is that the changes in the electricity sector could apply retroactively, starting from January 2026.

Just as a reminder, EU firms are obliged since the start of this month to pay a CBAM fee for importing designated goods and raw materials and electricity via purchasing so-called CBAM certificates.

Obviously, an importer will try to pass on this cost partly or fully to its counterparts in the third countries. But, importantly, EU firms won’t be able to purchase CBAM certificates yet this year, but only from February 1, 2027.

If the amendment on national emissions factor is adopted, for example in October, this could mean lower CBAM costs for EU importers of electricity from non-EU countries.

Without details on the path forward, market participants lack certainty about the level of CBAM costs

The commission intended to remedy some of the negative impacts on the electricity markets with amendments with retroactive effect. But without details on the path forward, market participants lack certainty about the level of CBAM costs to be paid for 2026.

Based on the current rules, CBAM costs for countries which have lignite in their generation mix could be EUR 70 per MWh to EUR 80 per MWh if the EU ETS price is around 80 EUR per ton of CO2. In some cases, the fee is almost 100% above the electricity price itself.

It is clear that it would rarely make sense to import electricity to the EU from third countries. The price difference, let’s say between Hungary and Serbia, would need to be more than EUR 70 per MWh to EUR 80 per MWh to make the business case.

Market coupling: nothing new or possibility for improvement

eu cbam western balkans electricity market amendments
Photo: Sergio Cerrato – Italia from Pixabay

There are several references to market coupling in the proposal. Energy Community contracting parties are in different phases of market coupling with EU countries.

The commission has proposed signing memoranda of understanding with third countries. It would set out the timeline and conditions for an exemption from CBAM on electricity.

This could be done after the commission approves the so-called verification process of a contracting party’s transposition of the Electricity Integration Package (EIP). It would be a green light for the next stage, which entails the technical tests, leading up to the completion of market coupling.

The current wording in the proposal leaves room for various interpretations

The current wording in the proposal leaves room for various interpretations, one being that the MoU may open the door for an exemption already when the “point of no return” is reached. It is when the contracting party has done all its homework and only the technical tests remain.

However, the commission didn’t propose the other conditions for CBAM exemption to be changed, such as the development of a roadmap on the introduction of a CO2 price that would be equivalent to the level in the EU’s Emissions Trading System (EU ETS).

The question is what the MoU would exactly be about, and if “equivalent” could be defined more precisely.

Why is this important?

No contracting party has yet met the conditions to receive a CBAM exemption in the electricity sector. A critical requirement is to agree to charge an emissions price from 2030 equivalent to the EU ETS.

The CBAM regulation says that the tax cannot technically be implemented on a market which is coupled with the EU internal energy market

If equivalent means the same price, here is the outcome for Serbia, for example: The current CO2 price in the EU is EUR 80 per ton of CO2 equivalent, but is expected to rise to above EUR 100 by 2030, or even reach EUR 150. It would raise prices to consumers by about EUR 75 per MWh and EUR 110, respectively.

The CBAM regulation says that the tax cannot technically be implemented on a market which is coupled with the EU internal energy market. This is why there is a possibility for an exemption for electricity for imports from those countries which are coupled until a technical solution is found how to implement CBAM.

Starting from January 1, any country that is ready to be coupled would in parallel also need to qualify for and receive an exemption from CBAM for electricity. If you fulfil the conditions, you get coupled and get an exemption and CBAM will disappear.

What next?

It could be said that CBAM implementation as of January 1 will certainly affect market integration in the sense that people, businesses would react to market uncertainty.

Trade will be impacted; imports from contracting parties to the EU will be expected to disappear. Of course, contracting parties will continue to import electricity from the EU member states.

The weeks and months ahead will show to what extent the prices and liquidity would be affected in the contracting parties and neighboring EU member states Bulgaria, Croatia, Greece, Hungary, Romania, Slovenia.

For example, Greece would have only the Bulgaria-Romania route to export electricity, and it is already congested. Greece could face curtailments in renewable electricity.

We will also see what the effect on the renewables deployment in contracting parties will be. Are investors going to postpone investments until they see if the changes proposed by the commission are adopted, or are they going to leave for other markets?


Pozsgai: Amendments point in the right direction

Péter Pozsgai, Lead of the EU Carbon Border Adjustment Mechanism Readiness Task Force in the Energy Community Secretariat:

“The European Commission’s proposed amendments point in the right direction, reflecting a consideration of the progress of contracting parties in electricity market coupling, and better outlining the operational details of an exemption via an MoU. The refinement of the rules on national emission factors and the conditions for using actual emission values also demonstrate the intention to minimize the unintended impacts of CBAM on renewable development in contracting parties”.


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Elektroprivreda BiH to invest EUR 885 million over next three years

Government-controlled power company Elektroprivreda BiH plans to invest BAM 1.73 billion (EUR 884.6 million) over the next three years, according to its 2026-2028 business plan.

The investments would be financed through loans, and BAM 538 million (EUR 275 million) from own funds of Elektroprivreda BiH (EPBiH), which operates in the Federation of BiH. Of note, it is one of the two entities making up Bosnia and Herzegovina. The other one is the Republic of Srpska.

In line with available funds and restructuring plans, the company intends to continue investing in coal mines within the EPBiH group over the three-year period.

The goal is a stable and sustainable coal production at the volume needed for the planned operation of the thermal power plants, the utility said.

The previous business plan, for the 2025-2027 period, provided for investments of BAM 2.1 billion (EUR 1.074 billion).

The three-year period should be marked by the construction of a large number of PV plants

EPBiH has highlighted the construction of new renewable energy power plants as a long-term strategic and priority goal. The construction of several solar power plants at already identified locations are particularly significant, the plan reads.

The upcoming three-year period should be marked by the construction of a large number of PV facilities at multiple locations on mining sites, company-owned land, on the roofs of its own facilities and those of its customers, EPBiH explained.

EPBiH also plans to acquire operational renewable energy facilities as well as projects in development. The plan envisages the purchase or lease of land suitable for the construction of solar power plants.

Positive business performance and maintaining the position as the dominant electricity supplier in BiH are also outlined in the business plan, adopted by the company’s assembly.

Desulfurization and denitrification of flue gases projects are planned for two thermal power plants

EPBiH has launched flue gas desulfurization and denitrification projects for its Tuzla and Kakanj coal-fired power plants. It would also upgrade unit 7 in Kakanj, unit 4 in Tuzla, and the Salakovac hydropower plant.

The document envisages the establishment of the distribution system operator (DSO), based on the provisions of the Law on Electricity of the Federation of BiH. It came into force in August 2023.

The law stipulates unbundling the distribution activity from EPBiH and establishing the DSO as a separate legal entity, a 100%-owned subsidiary, the company underlined.

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EU4CAET project pre-selects 43 ideas for first renewable energy communities in BiH

A total of 43 project ideas from 28 local authorities for establishing the first renewable energy communities in Bosnia and Herzegovina have been pre-selected to receive assistance under the EU for Collective Action for Energy Transition project.

The EU for Collective Action for Energy Transition (EU4CAET) project is jointly financed by the European Union and the German Federal Ministry for Economic Cooperation and Development (BMZ). Under the slogan ‘Together for Energy Transition,’ the EUR 3 million project is implemented by GIZ.

The initiative aims to empower local municipalities, citizens, and private actors to develop sustainable energy solutions that create jobs, improve energy efficiency, and advance climate goals, according to the EU Delegation to Bosnia and Herzegovina.

A total of 51 municipalities submitted 89 project ideas

In the project’s development phase, 51 municipalities submitted a total of 89 project ideas, such as solar power plants, heat pumps, biomass heating systems, public lighting upgrades, and electric vehicle charging stations.

The proposed projects also included kindergartens, youth centers, sports halls, theaters, health centers, and other public facilities. Following the evaluation, 28 local self-governments submitted their first concept notes, and 43 ideas were pre-selected.

“The final selection, based on detailed concept notes, is currently ongoing. The number of final projects will depend on the quality of submitted concepts and available funding under EU4CAET,” the Communication Office of the Delegation of the EU to BiH & EU Special Representative in BiH told Balkan Green Energy News.

The evaluation will begin in January 2026

The deadline for the pre-selected local authorities to submit their detailed concept notes was December 20. The evaluation of the submitted concepts will begin in January 2026.

Selected local authorities will be invited to present and discuss their ideas in more detail, according to the Communication Office.

The strongest concepts will receive assistance for capacity development, business planning, feasibility studies, and the preparation of technical design documentation.

The 28 municipalities pre-selected for further evaluation are as follows: Bijeljina, Bileća, Centar Sarajevo, Doboj, Donji Vakuf, Drvar, Goražde, Ilijaš, Kakanj, Kalesija, Laktaši, Maglaj, Milići, Modriča, Mostar, Novi Grad, Novi Travnik, Novo Sarajevo, Šamac, Sokolac, Srebrenica, Teslić, Travnik, Višegrad, Vogošća, Zenica, Živinice, and Zvornik.

BiH does not yet have renewable energy communities, but one of its two entities – the Republic of Srpska – managed to adopt the necessary regulations for their establishment in May this year, becoming the first in the region to do so.

Hahr: The grant call is planned for February 2026 and 2027

Mareike Hahr, Head of EU4CAET, said the project is now focused on tailored technical assistance to further refine the ideas and prepare high-quality applications for the grant call, planned for February 2026 and 2027.

“What has been particularly encouraging is the remarkable level of interest and readiness shown by local communities from both entities to ‘enter new terrain’—to propose their own project concepts, explore innovative solutions, and actively shape their energy future,” she explained.

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