May 18, 2026

by AEA in News

US-Backed LNG Projects Reshape the Western Balkans’ Energy Landscape

The United States is seeking to reshape the energy map of the Western Balkans through a network of bilateral agreements and infrastructure projects centered on liquefied natural gas (LNG). The broader objective is to reduce the region’s dependence on Russian gas while strengthening a strategic energy corridor linking Southern and Central Europe.

A series of projects is being advanced across Croatia, Bosnia and Herzegovina, North Macedonia, Albania, Montenegro, Kosovo and Serbia. These initiatives include new gas pipelines, LNG terminals and gas-fired power plants, supported politically and financially by both Washington and Brussels. Some projects are already under construction or in the contracting stage, while others remain in planning. Together, they signal a gradual shift in the region’s energy mix toward gas supplies from the United States, Azerbaijan and the Mediterranean basin.

Jonathan Stern of the Oxford Institute for Energy Studies notes that Southeast Europe has already developed alternative gas supply routes. These include LNG terminals in Greece and Croatia, the Southern Gas Corridor from Azerbaijan, and Romania’s Neptun Deep offshore field in the Black Sea, whose exploitation is expected to begin next year and whose reserves are estimated at around 100 billion cubic meters.

Bosnia and Herzegovina Seeks to End Dependence on Russian Gas

Bosnia and Herzegovina has recently become a focal point of regional gas diversification efforts through the Southern Gas Interconnection project with Croatia. The pipeline would give the Federation of Bosnia and Herzegovina access to the LNG terminal on the Croatian island of Krk and to alternative gas suppliers. At the same time, Republika Srpska continues to pursue separate gas links with Serbia, including the Eastern Interconnection project from Bijeljina to Banja Luka.

For nearly five decades, Bosnia and Herzegovina has depended almost entirely on Russian gas, delivered through TurkStream and used mainly for heating in Sarajevo. In overall volume terms, the country remains a relatively small gas consumer compared with Serbia.

The intergovernmental agreement between Bosnia and Herzegovina and Croatia on the Southern Gas Interconnection was signed in Dubrovnik in April, in the presence of US Secretary of Energy Chris Wright. The pipeline is planned to extend from Dalmatia toward central Bosnia, with additional branches toward Herzegovina and the country’s northwest. Croatia’s state-owned Plinacro is leading the Croatian section, while the US-based company AAFS Infrastructure and Energy has been designated to manage the project on the Bosnian side.

The project has, however, drawn criticism from the European Commission and the Energy Community. Concerns center on the Federation of Bosnia and Herzegovina’s special-purpose law, or lex specialis, which named a private American company in the project framework, as well as questions over compliance with EU and Energy Community rules.

Bosnia and Herzegovina currently consumes up to 250 million cubic meters of gas annually, while the planned pipeline is expected to have a capacity of around 1.5 billion cubic meters. This has prompted discussion about the possible construction of gas-fired power plants capable of supplying electricity to roughly 400,000 households. At present, about 80% of the country’s electricity is generated by coal-fired thermal power plants, some of them more than half a century old.

The new pipeline would also connect with the existing gas route arriving from Serbia. Still, Stern argues that while the project is important for Bosnia and Herzegovina, its wider regional relevance is less clear. He also questions the commercial viability of an investment estimated at around EUR 1 billion, particularly given the lack of available LNG transit capacity from Croatia and Serbia’s expanding access to gas through Bulgaria.

Serbia Balances Diversification and Russian Gas Dependence

Serbia is expanding its gas infrastructure as it seeks to preserve its position as a regional energy hub while creating room for US LNG and broader Western investment in the sector.

In February this year, Serbian Minister of Mining and Energy Dubravka Đedović Handanović signed a joint statement with the United States and several Central and Eastern European countries during the Transatlantic Gas Security Summit in Washington. The statement focused on strengthening the resilience of regional gas markets and improving supply security.

Following the summit, Srbijagas Director Dušan Bajatović stated that Serbia would eventually need to purchase American gas, although no quantities or formal supply contracts have yet been defined. Serbia’s 2024 strategic energy cooperation agreement with the United States envisages diversification of energy sources, but it does not currently include a binding agreement to buy US LNG.

Potential US LNG deliveries to Serbia could come through the Krk terminal in Croatia or via Greece’s Alexandroupolis terminal, supported by new interconnections through Bulgaria and North Macedonia. Serbia currently operates approximately 2,500 kilometers of gas pipelines, is planning new links, including one toward North Macedonia, and is expanding the Banatski Dvor gas storage facility.

Despite these diversification efforts, more than 80% of Serbia’s gas still comes from Russia through TurkStream. Major energy assets, including the TE-TO Pančevo combined heat and power plant, remain tied to Russian-linked structures involving Gazprom and the Serbian oil company NIS.

Montenegro Explores an LNG Terminal and Gas-Fired Generation

Montenegro, which currently lacks a domestic gas network, is also being drawn into the emerging US-backed LNG framework. Plans include an LNG terminal at the Port of Bar and the possible development of gas-fired power generation.

The country participated in the Transatlantic Gas Security Summit in Washington in February and joined a broader political statement on gas cooperation between the United States and several Central and Southern European countries.

In 2023, the Montenegrin government signed a memorandum of understanding with US companies Enerflex Energy Systems and Wethington Energy Innovation regarding potential LNG and power infrastructure. However, no LNG supply agreement has been finalized, no volumes have been specified, and no binding commercial contracts have been signed.

Montenegro has also supported the Ionian-Adriatic Pipeline (IAP), which would connect the Trans-Adriatic Pipeline (TAP) in Albania with Croatia, although the project remains at the conceptual stage. Separately, gas-fired power plants ranging from 50 MW to 400 MW are being considered in Bar, Podgorica and Pljevlja, including hybrid solutions and possible conversions of existing facilities.

Studies prepared for the Electric Power Company of Montenegro by Japan’s JERA and Switzerland’s SS&A Power Consultancy concluded that the options assessed are technically feasible and economically viable. Depending on the selected plant capacity and fuel supply source, estimated investments range from EUR 233 million to EUR 362 million.

Kosovo Remains Outside the Current Gas Push

Kosovo currently has no gas infrastructure and relies almost entirely on coal-fired power generation. A proposed gas interconnection with North Macedonia had been included in the European Union’s investment plan for the Western Balkans, but the project was suspended, with the government citing high costs and a strategic preference for renewable energy development.

The proposed pipeline would have provided Kosovo with access to gas from Greek LNG terminals in the Aegean Sea, while a separate link to Albania had also been considered. US officials have indicated that they remain open to supporting commercial cooperation if market conditions become more favorable.

Kosovo also declined to direct roughly USD 200 million in Millennium Challenge Corporation funding toward gas infrastructure, instead shifting the investment toward battery energy storage systems.

North Macedonia Emerges as a Strategic Southern Corridor Link

North Macedonia is building new gas infrastructure with support from Washington and Brussels, aiming to reduce its long-standing dependence on Russian gas and position itself as a regional energy transit hub. As a NATO member and EU candidate country, diversification of energy supply has also taken on a clear geopolitical dimension.

The TE-TO Skopje cogeneration plant, which provides heat to the capital and produces electricity, remains dependent on Russian gas and is controlled by interests linked to the Russian group Sintez.

Skopje has signed a memorandum related to the purchase of US LNG, though detailed commercial terms have not been publicly disclosed. The Gevgelija–Negotino gas pipeline is under construction and is expected to connect North Macedonia with Greek LNG terminals. Its initial annual capacity is planned at 1.5 billion cubic meters.

The European Union is financing the project through a combination of loans and grants. At the same time, an interconnection with Serbia is being planned, with construction expected to begin in 2027. North Macedonia’s Ministry of Energy, Mining and Mineral Resources has also stated that the country plans to develop 67 new energy facilities with a combined installed capacity of 4,416 MW, including a cogeneration plant near Negotino.

Albania Positions Vlora as a Future LNG Hub

In April 2026, Albania signed a strategic agreement worth USD 6 billion involving Venture Global and Aktor LNG USA for long-term LNG supply beginning in 2030. The agreement is part of a broader effort to turn Albania into a regional entry point for US LNG in Southeast Europe.

The plan includes the development of an energy hub in Vlora featuring an LNG terminal and a gas-fired power plant with a capacity of approximately 380 MW. The project would also connect with the Trans-Adriatic Pipeline (TAP), which has transported Azerbaijani gas to Italy since 2020.

Vlore, Albania

Washington views Albania as a potential distribution platform for supplying US gas to Kosovo, North Macedonia and other Western Balkan markets. This is particularly significant because Albania does not currently operate a functional internal gas network, while most of the infrastructure inherited from the socialist period is no longer usable.

For Albania, whose electricity system depends overwhelmingly on hydropower, a gas-fired power plant could serve as a strategic reserve during drought periods and times of rising power demand.

Energy expert Stavri Dhima has argued that Albania’s gasification strategy should combine several elements: construction of the Ionian-Adriatic Pipeline, connection to Croatia’s LNG terminal, access to the Trans-Adriatic Pipeline carrying Caspian gas, and development of an LNG terminal and gas storage facility in Dumrea.

If completed, the LNG terminal in Vlora could become a regional gas hub serving Albania, Montenegro, North Macedonia and Kosovo. Through IAP and TAP, gas could potentially also be directed toward Bosnia and Herzegovina and Italy.

Still, experts caution that infrastructure alone does not guarantee energy security. Countries seeking to reduce dependence on Russian gas must also secure reliable, long-term supply contracts with multiple alternative suppliers.

May 7, 2026

by AEA in News

Gramos Hashani appointed as permanent head of KEK in Kosovo

Kosovo Energy Corp. (KEK) has officially appointed Gramos Hashani as its Chief Executive Officer, following a fourteen-month period during which he served as interim head of the state-owned power utility. The decision was confirmed by the company’s Board of Directors after the completion of what it described as an open, transparent, and competitive selection process.

According to the board, the appointment procedure was conducted in full compliance with Kosovo’s Law on Public Enterprises and included the evaluation and interviewing of all candidates who satisfied the requirements outlined in the public vacancy announcement.

Hashani initially assumed the role of interim CEO in February last year, at a time when KEK was facing increasing pressure to improve operational efficiency, strengthen corporate governance, and accelerate modernization efforts within Kosovo’s electricity sector.

His permanent appointment is viewed as a move aimed at ensuring management continuity at one of the country’s most strategically important energy companies, particularly as Kosovo advances energy transition policies, regional market integration, and investment planning for generation and infrastructure upgrades.

Hashani graduated from the Faculty of Economics at the University of Prishtina – Hasan Prishtina and completed his master’s studies at the University of the Incarnate Word in San Antonio, Texas, in the United States.

His professional credentials include certification as an accountant and internal auditor through the Society of Certified Accountants and Auditors of Kosovo (SCAAK), while he is also a member of the United Kingdom-based Association of Chartered Certified Accountants (ACCA).

According to KEK’s Board of Directors, Hashani brings extensive expertise in strategic financial management, corporate governance, energy transition investments, and the implementation of international accounting standards, including IFRS and US GAAP.

The board also highlighted his professional experience across both the energy and financial sectors in Kosovo and the United States, where he has held senior management positions in international and domestic companies.

The appointment comes at a critical period for KEK and Kosovo’s broader energy sector, as authorities seek to modernize aging lignite-based generation assets, strengthen energy security, improve environmental performance, and attract investment into renewable energy and transmission infrastructure.

As Kosovo continues aligning its energy market framework with regional and European standards, KEK is expected to play a central role in balancing legacy thermal generation with the country’s long-term decarbonization and market reform objectives.

May 5, 2026

by AEA in News

Early-Stage Progress and Challenges Mark Energy Community’s Priority Infrastructure Projects

Most projects included in the first list of Projects of Energy Community Interest (PECI) remain at an early stage of development, with several challenges likely to affect their implementation timelines, according to an assessment by the Energy Community Regulatory Board.

The Evaluation Report on PECI projects provides a comprehensive overview of progress on initiatives selected in the 2024 PECI list. It covers six priority investments—five in electricity transmission and one in energy storage—identified as critical for strengthening cross-border interconnections, enhancing security of supply, and enabling greater integration of renewable energy across the Energy Community.

The projects under review include:

Completion of the 400 kV Albanian internal transmission ring;
Capacity expansion of the existing 220 kV interconnection between Bosnia and Herzegovina and Montenegro (Trebinje–Perućica overhead line);
The Trans-Balkan Corridor, specifically the 400 kV double overhead line linking Bajina Bašta in Serbia with Višegrad in Bosnia and Herzegovina and Pljevlja in Montenegro (with the latter two sections included in the PECI list);
Reconfiguration of Albania’s 400 kV grid alongside a new Albania–Kosovo* interconnection;
The 330 kV overhead line between Balti in Moldova and Dnestrovsk HPP-2 in Ukraine;
The 225 MW DTEK energy storage project.

To date, only the Bosnia and Herzegovina–Montenegro interconnection has secured direct financing, provided by the European Bank for Reconstruction and Development. Meanwhile, two projects—the Albanian internal ring and the Albania–Kosovo* interconnection—received financial backing in 2025 from the European Commission through the Western Balkans Investment Framework, as highlighted by the Energy Community Secretariat.

The report finds that most projects are still in conceptual, feasibility, or planning phases, with expected implementation timelines extending from 2028 to 2032. Throughout 2025, efforts have largely focused on feasibility assessments, preparatory activities, financing structures, and regulatory alignment, rather than physical construction.

Importantly, the evaluation notes that no systemic delays have been identified when measured against the expected level of project maturity following their designation in the 2024 PECI list.

However, the report underscores several structural challenges that could affect delivery in later stages. These include complex permitting and administrative procedures—particularly for cross-border infrastructure—ongoing financing constraints and rising investment costs, as well as external risks such as geopolitical and security factors, especially in relation to Ukraine.

The assessment emphasizes that early identification and mitigation of such risks will be essential to ensure a smooth transition from planning to construction in the coming years.

The ECRB also stresses the importance of continued regulatory oversight and proactive engagement by national regulatory authorities to maintain project momentum and ensure efficient implementation.

Looking ahead, the Energy Community Secretariat launched a public consultation in March on eight candidate projects for the next PECI list. The updated selection, aligned with the TEN-E Regulation framework, is expected to be adopted in December 2027, following an opinion from the ECRB anticipated by the end of August 2026.

April 30, 2026

by AEA in News

Bosnia and Croatia Advance Southern Gas Interconnection to Strengthen Regional Energy Security

Bosnia and Herzegovina and Croatia have formalized an intergovernmental agreement to advance the construction of the Southern Gas Interconnection, a strategic infrastructure project aimed at strengthening energy security and ensuring a more stable gas supply for Bosnia and Herzegovina.

The planned interconnection will provide Bosnia and Herzegovina with an alternative supply route via Croatia, reducing its current dependence on Russian natural gas delivered through Turkey, Bulgaria, and Serbia. By enabling access to new sources, the project is expected to significantly enhance supply resilience.

The agreement was signed in Dubrovnik during the Three Seas Initiative summit by Borjana Krišto, Chairwoman of the Council of Ministers of Bosnia and Herzegovina, and Croatian Prime Minister Andrej Plenković.

The pipeline network will span multiple routes, including Split–Zagvozd in Croatia, extending into Bosnia and Herzegovina through Posušje, and continuing across key locations such as Tomislavgrad, Kupres, Bugojno, and Travnik. Additional शाखing routes will connect areas including Mostar, Livno, Jajce, Tuzla, and Čapljina, creating a comprehensive distribution network.

According to the Council of Ministers of Bosnia and Herzegovina, the project will diversify both supply routes and energy sources, contributing to greater energy independence. The pipeline is expected to be supplied with gas from the liquefied natural gas (LNG) terminal on the Croatian island of Krk.

The signing ceremony was attended by US Energy Secretary Chris Wright and Vedran Lakić, Minister of Energy, Mining and Industry of the Federation of Bosnia and Herzegovina. US-based AAFS Infrastructure and Energy has been designated to manage the pipeline within Bosnia and Herzegovina.

Although the project has been under consideration for years, tangible progress accelerated recently. In January, authorities in Bosnia and Herzegovina indicated that AAFS Infrastructure and Energy would receive a 30-year concession. Subsequently, in late February, twelve countries from Central and Eastern Europe and the Balkans, including Bosnia and Herzegovina, reached an agreement with the United States to strengthen cooperation on LNG supply.

The Federation of Bosnia and Herzegovina, the entity through which the pipeline will pass, recently adopted a special legal framework (lex specialis) designating the US firm as the project investor. This decision has drawn criticism from the European Union, which warned of potential consequences.

Borjana Krišto emphasized that Bosnia and Herzegovina occupies a strategic position at the crossroads of energy flows in Southeast Europe. She noted that, beyond being a consumer, the country has the potential to play an active role in developing a more secure and resilient regional energy system. She also highlighted the importance of transatlantic cooperation in accelerating investment and improving market integration.

Prime Minister Andrej Plenković underscored that the agreement reinforces Croatia’s role as a regional energy hub, particularly by enabling the transport of gas from the Krk LNG terminal to Bosnia and Herzegovina. He also pointed to the broader significance of the Three Seas Initiative, which brings together 13 EU member states from Central and Eastern Europe to enhance connectivity between the Baltic, Black, and Adriatic seas, with a focus on infrastructure, transport, and energy integration.

April 29, 2026

by AEA in News

Aktor LNG USA–Albgaz Deal Signals Structural Shift in Western Balkans Gas Market

A landmark long-term gas supply agreement between Aktor LNG USA and Albania’s state-owned Albgaz marks a significant step in the transformation of Southeast Europe’s energy architecture, reinforcing both market diversification and geopolitical realignment.

The agreement, valued at approximately $6 billion, establishes a 20-year framework for the delivery of liquefied natural gas (LNG) sourced from the United States, with contracted volumes of around 1 billion cubic meters annually starting in 2030.

From Hydro Dependence to Gas Integration

For Albania, the deal represents a structural pivot away from near-total reliance on hydropower toward a more diversified energy mix. The introduction of long-term LNG supply contracts provides a stable foundation for baseload generation, system balancing, and regional trading capacity.

The agreement is not limited to commodity supply. It is complemented by a memorandum of understanding between Aktor Energy USA and the Albanian government to develop an integrated energy hub, including a planned gas-fired power plant with an estimated capacity of 380 MW.

This integrated approach reflects a broader transition strategy: linking fuel supply, infrastructure development, and power generation into a single investment framework.

Infrastructure First: Vlora and the Missing Gas System

A central component of the strategy is the planned development of LNG infrastructure in Vlora, which is expected to evolve into a key entry point for imported gas. Until domestic infrastructure is completed, supply will be routed through Greece, leveraging the Revythoussa LNG terminal and the Trans Adriatic Pipeline (TAP) for onward delivery into Albania.

This transitional routing underscores a critical reality: Albania’s gasification remains at an early stage, and the success of the agreement depends heavily on timely infrastructure deployment.

The Vlora energy hub concept—combining LNG import, regasification, and power generation—positions Albania not merely as a consumer, but as a potential transit and redistribution node for the Western Balkans.

The Vertical Gas Corridor: Strategic Context

The deal is embedded within the broader framework of the “Vertical Gas Corridor,” a US-backed initiative aimed at expanding north–south gas flows from Greece into Southeast and Central Europe.

According to Aktor leadership, the agreement is intended to unlock the corridor’s full potential, enabling the distribution of American LNG across multiple Balkan markets and reducing dependency on traditional supply routes.

The corridor concept is particularly relevant as Europe continues to recalibrate its gas supply strategy, with long-term LNG contracts increasingly viewed as essential for supply security beyond 2030.

Geopolitical and Market Implications

The presence of US and Greek stakeholders highlights the geopolitical dimension of the agreement. The United States is actively expanding its LNG footprint in Southeast Europe, using infrastructure and long-term contracts as instruments of strategic influence and market integration.

At the same time, Greece reinforces its role as a regional energy gateway, providing the initial infrastructure backbone for LNG imports and transmission into the Western Balkans.

The agreement also signals potential regional expansion. Discussions are already underway to extend LNG supply arrangements to additional Western Balkan markets, including Serbia and North Macedonia, as interconnection projects progress.

Commercial Structure and Market Significance

From a market perspective, the deal reflects several emerging trends:

Shift toward long-term LNG contracting as a hedge against future supply tightness and price volatility
Integration of infrastructure and supply agreements to de-risk investment in emerging gas markets
Growing role of private-sector intermediaries (such as Aktor LNG USA) in structuring cross-border energy flows

The estimated contract value—around $6 billion over 20 years—indicates a substantial commitment for a relatively small market, underscoring Albania’s ambition to scale beyond domestic demand and participate in regional gas trade.

Execution Risks and Critical Dependencies

Despite its strategic significance, the project faces several execution risks:

Infrastructure delivery risk, particularly the timely development of LNG import capacity and internal gas networks
Demand risk, given Albania’s currently limited gas consumption base
Regulatory and market integration challenges, especially in aligning with EU gas market frameworks

The reliance on interim routing through Greece also introduces transitional dependencies that must be carefully managed.

Conclusion: From Peripheral Market to Emerging Energy Node

The Aktor LNG USA–Albgaz agreement is more than a supply contract—it is a foundational step in repositioning Albania within the regional energy system.

If successfully implemented, it could transform the country from a hydropower-dependent system into a flexible, gas-integrated market with regional relevance. More broadly, it reinforces the Western Balkans’ gradual integration into European energy networks, underpinned by transatlantic LNG flows and new infrastructure corridors.

The real test, however, will lie not in the signing of the agreement, but in its execution—particularly the alignment of infrastructure, regulation, and market demand over the coming decade.

April 29, 2026

by AEA in News

The Border Wall of Carbon: How CBAM Rewrote Balkan Power Trade in Q1 2026

Q1 2026 marked an abrupt break in Southeast Europe’s electricity market structure. Exceptional hydro output pushed WB6 prices down, but CBAM prevented the old price convergence mechanism from doing its job. The result was a wider-than-usual spread of more than €30/MWh between WB6 and EU benchmarks, a 25% drop in scheduled cross-border commercial exchanges, and a visible re-routing of trade toward CBAM-free corridors. The data suggest that CBAM did not merely tax imports; it changed the geography of trade.

Origin of imported electricity	Default value (tCO2eq/MWh)	CBAM cost per imported MWh (€)
Albania	0	0
Bosnia and Herzegovina	1.148	86.513
Kosovo*	0.984	74.154
Moldova	0.530	39.941
Montenegro	0.979	73.777
North Macedonia	0.887	66.844
Serbia	1.041	78.450
Ukraine	0.907	68.352

Table 1. CBAM default factors and implied import costs in Q1 2026

The Hydro Paradox

The irony of Q1 2026 is that the region’s own luck partly disguised CBAM’s first-quarter damage. Hydro generation surged across the WB6 and neighbouring markets, rising regionally by 33% year on year, with Albania alone up 70%. That flood of carbon-free output softened domestic prices and kept some markets liquid, which made the underlying CBAM shock look less severe than it would have in a normal hydrological quarter. The report itself warns that these results are preliminary and heavily shaped by exceptional water conditions, not just the new carbon border regime.

Figure 1. Hydro vs coal generation in Q1 2026 versus Q1 2025

But the same hydro boom also exposed a second vulnerability: it showed how quickly the region can swing from shortage to surplus, which matters for solar and wind investment signals. The Energy Community Secretariat notes that growing solar capacity may generate renewed surplus conditions in spring and summer, even as hydro declines. That means renewable developers are now financing into a market where merchant upside can be sharply altered by a carbon border charge on exports, especially in systems that are not as clean as Albania.

Technical Deep-Dive: Trade Diverges from Physics

The most unsettling finding in the report is the widening gap between commercial schedules and physical reality. Commercially, WB6-EU trade contracted and transit-based trading weakened. Physically, however, electricity still moved according to network physics, not trader preferences. The report gives concrete examples: Albanian export schedules to Greece rose strongly, yet physical flows did not align proportionally; power continued to move through Albania toward Montenegro and Bosnia and Herzegovina and onward to EU border countries.

That divergence is not just a bookkeeping issue. It creates operational risk. The report links the pattern to unscheduled and loop flows, less efficient transmission capacity use, and a growing burden on balancing and security management. It also explicitly recalls the June 21, 2024 blackout, when near-simultaneous outages on 400 kV lines in Montenegro and Albania exposed the fragility of the South-North corridor and the costs of weak cross-border coordination. In the current setting, the same corridor could again become heavily loaded, but with less predictable commercial schedules to guide system operation.

Market Fragmentation: The Rise of CBAM-Free Routing

The report reads like a map of avoidance behaviour. Intra-WB6 exchanges intensified, while trade moved toward routes that do not trigger CBAM exposure. Albania’s zero default emission factor made it a natural winner, with export routes to Greece gaining importance. Greece then became a bridge to Bulgaria and Italy, effectively allowing some power to bypass the more exposed WB6 transit geography.

Figure 2. Average day-ahead prices across the region

This is why the Secretariat’s “CBAM-free route” language matters. It suggests that the market is not simply shrinking; it is reorganising itself around carbon liability. Transit-based trading through the WB6 is becoming less attractive, and that is a structural problem for regional integration because the WB6 has historically functioned not only as a set of markets, but also as a corridor between larger EU systems.

Financial Outlook

For project finance, the message is straightforward: ETS-linked carbon costs are now a core merchant-risk variable in the Western Balkans. The report states that the relevant Q1 2026 CBAM certificate price was based on an EU ETS quarterly weighted average of €75.36/tCO2eq, and that this price fell sharply after an initial increase as political debate over ETS reform intensified. That level of volatility matters because it directly changes export economics quarter by quarter.

Figure 3. Scheduled commercial exchanges between the WB6 and the EU

For EBRD-style underwriting, this means more conservative assumptions are unavoidable. Revenue cases for new renewable projects in the WB6 should be stress-tested not only against power-price volatility and hydrology, but also against CBAM-induced basis risk on export routes. Projects that depend on merchant access to EU markets will need stronger carbon-risk sensitivity, more robust route diversification, and a clearer view of whether they are selling into a CBAM-exposed corridor or a CBAM-free one. The report’s core warning is that low-carbon systems may send stronger investment signals, while more carbon-intensive systems face a worsening structural handicap.

Strategic Recommendations

The Secretariat’s own policy direction is the right one: better clarity in CBAM electricity rules, stronger coordination between market participants and TSOs, and continued alignment of carbon pricing and market design across the region. Building on that, the practical priorities are clear. WB6 TSOs need tighter coordinated capacity calculation, stronger congestion management, and more transparent handling of transit flows. Policymakers should also close the information gap around proof of transit and improve rules that currently reward route avoidance over efficient system use.

The deeper objective is to stop the region from sliding into transit-based trading collapse. That means preserving market integration even as carbon policy changes the economics of exchange. If WB6 markets are left to fragment into isolated hydro winners and carbon-heavy losers, the region will not simply lose trade; it will lose the very interoperability that made its system valuable in the first place.

March 27, 2026

by AEA in News

Strengthening Europe’s Energy Sovereignty: The Imperative of a Clean Heat Transition

While often framed as a macroeconomic abstraction, Europe’s reliance on fossil fuel imports carries direct, tangible consequences for millions of households. Domestic energy security is fundamentally tied to the home; space and water heating account for 77.6% of the average EU household’s energy consumption, with approximately one-third of these homes relying on gas. By 2025, 90% of the EU’s gas supply was sourced from third countries, creating a strategic vulnerability to energy coercion that endangers the stability of millions of residences.

Diversification vs. Decarbonization: The REPowerEU Challenge

Historically, Russia served as the primary architect of Europe’s gas supply. In the wake of the full-scale invasion of Ukraine, the EU successfully pivoted, slashing Russian imports from 45% to 12%. This shift was codified through the REPowerEU Regulation, which aims to secure energy independence by permanently banning Russian fossil gas.

However, the broader imperative is not merely to swap suppliers, but to reduce gas demand entirely. This requires equal commitment to the other two pillars of the 2022 REPowerEU Plan: energy conservation and an accelerated clean energy transition. Current projections are sobering:

Heat Pump Shortfall: Europe is currently on track to meet only half of its deployment targets.
Demand Impact: This lag means fossil gas demand will likely only decrease by 60% of 2024 Russian import levels, rather than the intended 120%.

Bridging the €78 Billion Funding Gap

Achieving a clean heat transition requires significant capital. A study by LCP Delta for the Cool Heating Coalition identifies an annual investment gap of €78 billion through 2050. At present, combined public and private sector contributions cover only half of this requirement.

To close this disparity, Europe must look toward smarter fiscal reallocation:

Subsidy Realignment: The EU currently directs approximately €111 billion per year toward fossil fuel subsidies. Redirecting this capital toward renewable solutions would effectively bridge the clean heat funding gap.
Innovative Business Models: Policymakers should incentivize “social leasing” frameworks. This requires updating the Consumer Credit Directive to ensure these schemes are covered by robust consumer protection laws.
The Role of ETS2: The upcoming ETS2—which prices emissions from buildings and road transport—will be a pivotal market driver. When paired with the Social Climate Fund, it provides a mechanism to finance the transition while shielding the most vulnerable consumers.

The Path to Strategic Autonomy

The postponement of ETS2 for one year in December 2025 sent a confusing signal to the clean heat market. There is no longer room for delay. Member States must utilize this additional window to aggressively support the shift to decarbonized heating, remediate housing inadequacies, and reduce the energy load of the continent’s worst-performing buildings.

Since 2022, the EU has demonstrated remarkable resilience in reducing its dependence on Russian energy. However, as new geopolitical shocks emerge, Europe must prioritize the elimination of all strategic vulnerabilities. The legal framework exists; the transition now requires the political resolve to see it through.

March 27, 2026

by AEA in News

Albania to Launch New Renewable Energy Auction in Q3 2026

Albania is preparing to launch a new renewable energy auction in the third quarter of 2026, as the focus of its energy policy increasingly shifts toward strengthening the transmission grid and international interconnections.

Speaking at an event with foreign investors, the Minister of Energy and Infrastructure, Enea Karakaçi, emphasized that geopolitical developments have rendered the sector one of the most exposed to external shocks. “Dealing with global crises has now become routine; today, once again, due to a war far from our borders, the energy sector is being placed in a stressful and difficult situation,” he stated.

According to the Minister, this situation requires a rapid response and stronger institutional coordination to guarantee energy security. In this regard, the government has undertaken reforms to build a more resilient system and attract investment, moving beyond the standard obligations of European integration. “This is not only a result of the need for EU alignment but also a necessity to attract investments,” the Minister added.

Diversification and Private Investment

One of the primary pillars of this transformation remains the diversification of energy sources. Since 2019, Albania has built a more balanced energy portfolio, where solar energy is steadily gaining ground. “Approximately 10 percent of domestic production now comes from solar energy, reducing our dependence on hydropower plants,” he underlined.

The sector’s development has been increasingly supported by private investments that extend beyond state support schemes. According to the Minister, the market now includes both projects realized through formal auctions and independent private investments.

Strengthening the Transmission Grid

However, recent developments in Europe have highlighted a structural vulnerability: the critical importance of the transmission network. “Energy security is not only about production but also about transmission. If we build generation capacities, we must simultaneously build the corresponding transmission infrastructure,” he said.

In this framework, Albania is accelerating regional interconnection projects, including the link with North Macedonia, the doubling of capacity with Greece, and a strategic project with Italy. These investments aim to increase flexibility and enable more efficient utilization of production resources.

Strategic Goals for 2030

Another strategic objective remains the country’s transformation from a net importer to a net exporter of energy by 2030. “Our goal is for Albania to become a net exporter of energy,” the Minister declared.

In parallel, the government aims to increase energy efficiency through dedicated financial instruments. “We will create a financing fund for energy efficiency,” he said, noting that approximately 400 MW of self-production capacity has already been installed by businesses and households.

Investments will not be limited to infrastructure alone. The Minister emphasized the need for human capital development, announcing the creation of an Energy Academy with international support. Simultaneously, major public projects are being planned, including the development of dams and storage technologies such as “pumped storage,” aimed at increasing overall system flexibility.

The upcoming 2026 renewable energy auction is expected to be a significant step toward market consolidation and capacity growth, reflecting an integrated approach between energy production and transmission.

March 18, 2026

by AEA in News

Albania Proposes Strategic Shift: State to Take Over Emergency Oil Reserves from Private Sector

Enea Karakaçi, Minister of Infrastructure and Energy (Ministry of Infrastructure and Energy), stated that one of the ministry’s principal priorities remains ensuring the uninterrupted supply of fuel to the market.

Minister Karakaçi announced that a new draft law on the oil reserve, expected to be approved by the government within two to three weeks, will transfer physical custody of the reserve from private operators to a state agency for up to 90 days.

“With respect to the reserve obligation, which is calculated based on last year’s daily turnover, we have notified all operators that they are required to hold a 30-day reserve, with the remainder contracted by other means, to ensure there is no shortage of hydrocarbons.

The blockade of the Strait of Hormuz has not affected supplies to our country.

The new draft law on the oil reserve, prepared in accordance with the European Union directive, will be adopted by the government within two to three weeks. Under the draft law, oil reserves will no longer be held by companies but by a state agency that will ensure the physical availability of hydrocarbons for up to 90 days.”

Minister Karakaçi also reported that retail inspections indicate no abuse in fuel pricing, and that company profit margins ranging from 13 to 14 lekë per litre are acceptable.

“The final retail price in Albania is largely determined by import costs, which makes domestic prices volatile. A cost of 147 lekë excluding VAT reflected the real cost of the product. This indicates a gross profit of 13 to 14 lekë, which is an acceptable margin. We have not observed price abuse, and therefore did not find it justified to convene the board.”

Prime Minister Edi Rama added that Albania does not produce petroleum suitable for final retail use, because the oil we extract is heavy crude. Processing it for consumer-grade fuel would require a refinery and entail high costs for conversion to a usable product.

“As history has shown, this oil has not proven suitable for direct consumer use, except for certain industrial applications.”

March 17, 2026

by AEA in News

The Green Backbone: Albania and Western Balkan Partners Unveil Strategic Energy Projects for 2026 EU Funding

The Energy Community has officially opened the public consultation for the 2026 list of Projects of Energy Community Interest (PECI), marking a pivotal moment for the Western Balkans’ energy infrastructure. Running from March 16 to April 17, 2026, the consultation evaluates eight critical projects designed to dismantle cross-border bottlenecks and pave the way for a massive influx of renewable energy.

For Albania and its neighbours, Kosovo, North Macedonia, Montenegro, and Bosnia and Herzegovina the selected projects represent a shift from traditional hydroelectric production to a sophisticated, integrated system of large-scale storage and high-voltage transmission corridors. These projects are now positioned to seek diverse financing, including EU grants, Western Balkans Investment Framework (WBIF) funds, and favourable loans from international financial institutions.

Below is a detailed technical and strategic breakdown of the flagship projects currently in the PECI selection pipeline.

1. Project E12: Moglice Pumped-Storage – The Balkans’ “Giant Battery”

At the heart of Albania’s green transition is the Moglice Extension Pumped-Storage Hydropower Plant (PSH). Developed by Devoll Hydropower Sh.A. (part of the Statkraft Group), this project is set to become one of the largest flexibility assets in the region.

Technical Parameters:
- Maximum Power (Pmax): 1,620 MW (with a dynamic operational range of -1,620 MW to +1,620 MW).
- Storage Capacity: 30,000 MWh (approx. 30 GWh).
- Voltage: 400 kV.
- Efficiency: 77% roundtrip efficiency.
Strategic Role: The plant will function as a “green battery,” utilizing the existing Moglice reservoir (380 million m³) and a new upper reservoir (25 million m³). It is designed to store surplus energy during periods of high production and release it during peak demand, providing critical balancing services to Albania and neighboring EU markets like Greece and Italy.
Timeline: Currently in the economic feasibility stage, with the earliest commissioning targeted for 2033.

2. Project E04: The 220 kV Balkan Triangle Rehabilitation

To ensure the reliability of the “Balkan Triangle” (Albania, Montenegro, and Bosnia & Herzegovina), the rehabilitation of the aging 220 kV Trebinje–Vau i Dejës corridor has been prioritized. This line is a vital artery that has recently struggled with congestion due to new solar and hydro capacities.

Technical Parameters:
- Voltage: 220 kV.
- Length: 162.92 km.
- Transmission Power: Upgraded to carry 1,500 A using specialized high-capacity conductors.
- Promoters: NOS BiH, Elektroprijenos-Elektroprenos BiH, and CGES (Montenegro).
Strategic Role: The project addresses severe climatic challenges and infrastructure depreciation. By replacing OPGW, insulation, and conductors on existing poles without increasing mechanical load, the project will increase Net Transfer Capacity (NTC) and resolve long-standing congestions between BA–ME, ME–AL, and AL–BA.
Timeline: Currently in the Detail Design Study phase, with an expected commissioning date of 2030.

3. Project E05 & Regional Corridors: Integrating Wind and Strengthening East-West Links

The expansion of the 400 kV network is a two-pronged strategy: strengthening regional East-West ties and unlocking wind potential in Northeast Albania.

A. The East-West Western Section (Project E05)

Connecting Kosovo and North Macedonia, this 103 km interconnector is a key link in the regional transmission “rings.”

Technical Parameters: 400 kV; 1330 MW Pmax.
Objective: Connecting the upgraded Prizren (XK) substation to a new substation in Tetovo (MK). This project enhances the security of supply and supports the large-scale integration of Renewable Energy Sources (RES) across the corridor.
Timeline: Expected commissioning by 2035.

B. The Albania–Kosovo Interconnection (Strategic Link)

As highlighted by recent strategic filings, Albania is pushing for a new 400 kV interconnection between Fierza (AL) and Prizren (XK).

Strategic Role: This link is deemed essential to facilitate the integration of over 1 GW of planned wind energy capacity in Northeast Albania. It will alleviate existing 220 kV grid overloads and significantly boost regional energy trading.

Financing the Future

These PECI projects are governed by the revised EU TEN-E Regulation, which streamlines the path toward final approval in December 2026. Because these projects provide cross-border benefits, they are eligible for a “blended” financing model. This includes state budget allocations, private investment from promoters like Statkraft and KOSTT, and significant support from European Union grants and loans.

As the Western Balkans move away from coal and toward a renewable-heavy mix, these projects—Moglice’s storage, the 220 kV rehabilitation, and the 400 kV corridors—form the essential hardware of a modernized, secure, and decarbonized European energy market.