The first three months of 2026 marked a significant surge in electricity production in Albania, driven largely by hydropower. Output from hydroelectric plants increased by 70% compared to the same period last year, reflecting exceptionally favorable hydrological conditions.
According to data published by the Energy Community in its report on the Carbon Border Adjustment Mechanism (CBAM), Albania gained a competitive edge over other regional countries thanks to its renewable-based energy exports.
Hydropower production rose from 1.93 TWh to 3.27 TWh in Q1 2026 an increase of 1.34 TWh (+70%). The growth was particularly strong in January and February, with increases of 72% and 84% respectively.
Rising Exports Across the Region
This surplus energy quickly translated into increased exports. Albania significantly boosted its planned electricity flows toward:
- Greece (+4,100 MWh/day)
- Kosovo (+3,700 MWh/day)
- Montenegro (+2,000 MWh/day)
In total, around 1.2 TWh of electricity was exported in the first quarter alone almost entirely matching the additional hydropower production.
Competitive Advantage Under CBAM
A key factor behind Albania’s advantage is its zero emissions factor. Unlike countries such as Serbia or Bosnia and Herzegovina, Albania’s electricity exports are not subject to carbon costs under CBAM when entering the European Union market.
This effectively creates a trade incentive for EU countries to import Albanian electricity, making it more competitive compared to energy generated from coal-heavy systems.
For example, while Montenegro faces carbon-related costs of around €73.8 per MWh for exports to the EU, Albania pays zero highlighting a stark contrast in competitiveness.
A Strategic Energy Corridor
This dynamic positions Albania as a preferred energy corridor into the European market, especially through Greece and onward to Italy and Bulgaria.
The report emphasizes that hydropower-dominated systems like Albania’s are structurally more competitive in the evolving European energy landscape. In contrast, coal-dependent countries risk falling behind due to increasing carbon costs.
Overall, the findings suggest that CBAM is not just an environmental policy but a powerful economic filter that is reshaping regional energy trade, creating clear winners and losers in the Western Balkans.
