Because of another extremely dry years in a row, electricity production in hydroelectric power plants Elektroprivrede Srbije was in 2025 the lowest in EPS production history. Hydro production was about 25 percent lower than in 2024, and even 40 percent lower than in 2023.
Nevertheless, thanks to abundant rain and snowfall, the production of hydroelectric power plants in the first three months of 2026 was finally at the level of the medium-term average, while in March, compared to the same month last year, production growth of about seven percent was recorded, according to the publication Macroeconomic Analysis and Trends (MAT).
Higher production, however, did not bring export income because EPS almost did not export to the EU market. It is the cause dirty energy tax, better known as CBAM, which was introduced this year, which made Serbian electricity uncompetitive.
EU “dirty energy” tax: EPS faces the heaviest blow
The impact of the tax on the Balkans: Only Serbia fell
The Energy Community has done an assessment of the impact of the tax on carbon emissions between the European Union and the countries of the Western Balkans, which is better known as CBAM.
The Serbian electricity exchange is the only one in the region that recorded a decline for the first three months of 2026, for the first three months it fell by 11 percent, the report of the Secretariat of the Energy Community showed. Neighbors, on the other hand, record good results.
The volumes of the Albanian stock exchange almost doubled, the Montenegrin stock market grew by 49 percent, and the electricity stock market in North Macedonia recorded a jump of 19 percent.
EPS plans
However, in the three-year business plan until 2028, EPS predicted that excess electricity will be absorbed mainly in the domestic and regional markets.
"Taking into account the proposal of the trade plan in the function of balancing and optimization, i.e. the sale of around 120 GWh in 2026 and the sale of 750-2100 GWh in 2027-2028, it is envisaged that all sales will be made within Serbia (that is, mainly on the Serbian stock exchange) or within the region of the Western Balkans, in order to avoid CBAM costs," the business plan states.
EPS, however, expressed concern that in 2028, given the relatively high planned volume of sales, there is a significant risk that the entire amount will not be absorbed in Serbia or the Western Balkan region, reports Biznis.rs.
"However, it is expected that by 2028, the Serbian electricity market will be connected with one of the neighboring EU markets, which is the main condition for exemption from CBAM".
However, the EPS states in the business plan that the exemption from CBAM until 2030 could only be approved if the market integration process is completed and if Serbia develops a plan and undertakes to implement a carbon pricing mechanism that ensures a price equivalent to the EU ETS in 2030. Additional conditions are that Serbia undertakes to achieve carbon neutrality by 2050 at the latest, as well as to comply with Union legislation in the areas of environment, climate, competition and energy.
CBAM: The region is asking for a fee change
In response to the first results of CBAM implementation, representatives of five regional markets asked the European Parliament to amend the regulations that introduced a tax on the export of electricity to the EU starting this year based on the Cross-Border Carbon Price Adjustment Mechanism. The Minister of Energy of Montenegro, Admir Šahmanović, indicated on behalf of the region in a letter sent to the European Parliament that the charging of taxes on electricity originating from the region, regardless of the source of production, led to a reduced interest of EU partners in purchasing that energy.
The letter states that the introduction of CBAM from 1 January 2026 has led to uncertainty in the region's electricity markets and as a result a lack of interest from EU partners to purchase electricity, including from renewable sources from producers, which has been abundant and clean due to increased hydropower production due to seasonal rainfall.
"Although the principles and goals of the CBAM policy regarding facilitating the transition to energy systems with a high share of renewable energy sources, as well as the integration of third countries into the Union's electricity market in order to contribute to security of supply, are commendable, we are concerned that the goal, especially the one related to market integration, may not be achievable with the current provisions of the Regulation," Šahmanović stated.
Source: Biznis.rs/Vreme
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