Albania’s Hydropower Surge Strengthens Its Position in Regional and EU Energy Markets
The first three months of 2026 marked a substantial increase in electricity generation in Albania, driven primarily by a sharp rise in hydropower output. Production from hydropower plants was 70% higher in January–March 2026 compared to the same period a year earlier.
According to data published in the report of the Energy Community on the Carbon Border Adjustment Mechanism (CBAM), Albania gained a clear advantage over other regional countries in exporting electricity generated from renewable sources.
Specifically, the first quarterly report on CBAM implementation highlights that Albania’s hydropower generation increased significantly, positioning the country as a far more aggressive net exporter of electricity to both the regional market and the European Union.
“Hydropower production in Albania increased by 1.34 TWh (+70%) in the first quarter of 2026 compared to the same period in 2025, rising from 1.93 TWh to 3.27 TWh,” the report states. This growth was concentrated in January and February, with increases of +72% and +84% respectively, reflecting exceptionally favorable hydrological conditions.
This surplus translated directly into higher exports. Albania increased scheduled electricity exports by approximately 4,100 MWh per day to Greece, 3,700 MWh per day to Kosovo, and 2,000 MWh per day to Montenegro.
The report estimates that “these shifts in trade flows represent a net movement of approximately 1.2 TWh of Albanian electricity exported in the first quarter of 2026,” a volume that closely matches the incremental increase in hydropower generation.
The economic impact is further amplified by how CBAM treats Albanian electricity. Unlike Serbia, Bosnia and Herzegovina, or Montenegro, Albania benefits from a zero emissions factor. This means its electricity exports to the European Union are not subject to additional carbon costs.
“Electricity imported into the European Union from Albania was not financially affected by CBAM,” the report notes, adding that this “created a commercial incentive to import Albanian electricity into EU markets.”
Such dynamics position Albania as a preferential energy corridor դեպի the European market, particularly through Greece and onward to Italy. The report observes that exports from Albania to Greece intensified, with Albanian electricity—combined with strong Greek domestic production—subsequently redirected toward Bulgaria and Italy.
The Energy Community further warns that hydropower-dominated systems like Albania’s “appear to be in a structurally more competitive position,” suggesting that CBAM is already creating long-term winners and losers in the region. In contrast, countries with higher coal-based generation face substantial financial penalties.
For example, Montenegro pays approximately €73.8 per MWh of electricity exported to the European Union, while Albania pays zero. “The contrast between Albania and Montenegro illustrates how country-level emission factors shape cross-border electricity trade,” the report concludes, placing Albania firmly on the side of Europe’s evolving energy transition.
