The Western Balkans will increase their energy capacity by 20 GW by the year 2040.

The total installed energy capacity in Albania, Kosovo, North Macedonia, Montenegro, and Bosnia and Herzegovina is projected to increase by 20 GW by 2040 and up to 35 GW by 2060, resulting in investments worth tens of billions of euros, according to UK-based Aurora Energy Research.

Renewable sources are anticipated to contribute nearly 65% of this growth, primarily driven by solar PV expansion, while the remainder will come from battery energy storage systems (BESS), interconnectors, and hydrogen combined-cycle gas turbines (CCGT), as noted in their Western Balkans Power & Renewables Market Forecast.

Panos Kefalas, research lead at Aurora Energy Research, remarked that the Western Balkans are experiencing rapid changes in power markets due to aging thermal fleets, market liberalization, supportive policies, and strong economic fundamentals, positioning the region prominently on developers' agendas.

Prices in the area are expected to hover around or exceed 100 euros ($113.5) per MWh until 2030 because of short-term volatility and high commodity costs, whereas long-term baseload prices might stabilize between 70–80 euros per MWh as increasing renewable energy mitigates cost pressures.

The pace of decarbonization in the region will predominantly depend on the implementation of the EU's Carbon Border Adjustment Mechanism (CBAM) and its alignment with the EU Emissions Trading System (EU ETS).

Additionally, the transition away from lignite is anticipated to be gradual, with a complete phase-out expected by 2045, although its share in the power system is projected to decline significantly in the coming decade due to pressures from CBAM and carbon taxes, Aurora concluded.