Internal energy market

In order to harmonise and liberalise the EU’s internal energy market, three consecutive legislative packages of measures were adopted between 1996 and 2009, addressing market access, transparency and regulation, consumer protection, supporting interconnection, and adequate levels of supply. As a result of these measures, new gas and electricity suppliers can enter Member States’ markets, while both industrial and domestic consumers are now free to choose their own suppliers. Other EU policies related to the internal energy market address the security of the supply of electricity, gas and oil, as well as the development of trans-European networks for transporting electricity and gas.

Legal basis

Article 194 of the Treaty on the Functioning of the European Union (TFEU).


In the energy sector, completion of the EU’s internal market requires: the removal of numerous obstacles and trade barriers; the approximation of tax and pricing policies and measures in respect of norms and standards; and environmental and safety regulations. The objective is to ensure a functioning market with fair market access and a high level of consumer protection, as well as adequate levels of interconnection and generation capacity. The European Council set a deadline for completing the internal energy market by 2014. While the deadline has not been fully met, progress has been made in terms of the diversification of energy suppliers and cross-border energy trade (COM(2014) 0634).


a.Liberalisation of gas and electricity markets

During the 1990s, when most national electricity and natural gas markets were still monopolised, the European Union and the Member States decided to open these markets gradually to competition. The first liberalisation directives (First Energy Package) were adopted in 1996 (electricity) and 1998 (gas), to be transposed into Member States’ legal systems by 1998 (electricity) and 2000 (gas). The Second Energy Package was adopted in 2003, its directives to be transposed into national law by Member States by 2004, with some provisions entering into force only in 2007. Industrial and domestic consumers were now free to choose their own gas and electricity suppliers from a wider range of competitors. In April 2009 a Third Energy Package seeking to further liberalise the internal electricity and gas markets was adopted, amending the second package and providing the cornerstone for the implementation of the internal energy market.

In February 2015 the Commission published a communication on the Energy Union package entitled ‘A Framework Strategy for a Resilient Energy Union with a Forward-Looking Climate Change Policy’ (COM(2015) 0080). The package states that the goal of the Energy Union is ‘to give EU consumers — households and businesses — secure, sustainable, competitive and affordable energy’. In order to achieve these goals, five mutually reinforcing and closely interrelated dimensions were set out in the package: energy security, solidarity and trust; a fully integrated European energy market; energy efficiency contributing to moderation of demand; decarbonising the economy; and research, innovation and competitiveness.

As announced in the Energy Union strategy, the Commission put forward a set of legislative proposals for a new EU energy market design on 30 November 2016. The ‘Clean Energy for all Europeans’ (COM(2016) 0860) package aims to implement the Energy Union and covers energy efficiency, renewable energy, the design of the electricity market, security of electricity supply and governance rules for the Energy Union.

b.Energy market regulation

The European Agency for the Cooperation of Energy Regulators (ACER) has been fully operational since March 2011 (Regulation (EC) No 713/2009). ACER is mainly responsible for promoting cooperation between national regulatory authorities at regional and European level and for monitoring development of the network and the internal electricity and gas markets. It also has the competence to investigate cases of market abuse and to coordinate the application of appropriate penalties with the Member States. The responsibility for applying sanctions applicable to infringements lies, however, in the hands of the Member States.

As a further step, two regulations were adopted, creating structures of cooperation for European Network Transmission Systems Operators (ENTSOs): one for electricity (EC/714/2009) and one for gas (EC/715/2009 amended by Commission Decision 2010/685/EU). The ENTSOs, together with ACER, create detailed network access rules and technical codes, and ensure coordination of grid operation through the exchange of operational information and the development of common safety and emergency standards and procedures. ENTSOs are also responsible for drafting a 10-year network investment plan every two years, which are then in turn reviewed by ACER.

In addition, Directive 2008/92/EC seeks to improve the transparency of gas and electricity prices charged to industrial end-users by obliging Member States to ensure that these prices and the pricing systems used are communicated to Eurostat twice a year. In October 2011, the EU adopted Regulation (EU) No 1227/2011 on wholesale energy market integrity and transparency (REMIT) aiming to guarantee fair trading practices on European energy markets.

c.Security of the supply of electricity, natural gas and oil

Directive 2005/89/EC establishes measures aimed at safeguarding the security of electricity supply, to ensure the proper functioning of the internal market for electricity, an adequate level of interconnection between Member States, an adequate level of generation capacity, and balance between supply and demand. In light of the crucial importance of gas for the energy supply of the European Union and as a response to the Russian-Ukrainian gas crisis during the winter of 2008-2009, Regulation (EU) No 994/2010 concerning measures to safeguard the security of gas supply was adopted in 2010. The Regulation aims to strengthen prevention and crisis response mechanisms. With the aim of ensuring secure oil supply, Directive 2009/119/EC obliges Member States to maintain minimum oil stocks, corresponding to 90 days of average daily net imports or 61 days of average daily inland consumption, whichever of the two quantities is greater. In response to concerns regarding the delivery of Russian gas via Ukraine, the Commission released its Energy Security Strategy in May 2014 (COM(2014) 0330). The Strategy aims to ensure a stable and abundant supply of energy for European citizens and the economy. It lays out measures such as increasing energy efficiency, indigenous energy production and completing missing infrastructure links to redirect energy to where it is needed during a crisis.

d.Trans-European Networks for energy (TEN-E)

Regulation (EU) No 347/2013 lays down guidelines for trans-European energy networks that identify projects of common interest (PCI) and priority projects among trans-European electricity and gas networks. Projects of common interest have priority for the granting of financial aid provided for under Regulation (EC) No 2236/95. The budget allocated to the TEN-E is mainly intended for financing feasibility studies. Other instruments may also step in to part-finance investments, for example the European Structural and Investment Funds or the European Fund for Strategic Investments (EFSI). Regulation (EU) No 256/2014 of the European Parliament and of the Council of 26 February 2014 concerning the notification to the Commission of investment projects in energy infrastructure within the European Union requires Member States to notify the Commission of their investment projects in energy infrastructure.

In its communication entitled ‘A Budget for Europe 2020’ (COM(2011) 0500), the Commission put forward a new mechanism, the Connecting Europe Facility (CEF), for funding priority projects in the field of energy, transport and critical digital infrastructure from 2014 to 2020. In November 2013, Parliament endorsed the deal reached with the Council on the budget for the CEF, with EUR 5.12 billion earmarked for the development of trans-European energy infrastructure projects (P7_TA(2013)0463) . Several projects of common interest were selected for EU support, based on the energy infrastructure guidelines endorsed in March 2013 by the Council and Parliament (P7_TA(2013)0061).

Role of the European Parliament

In adopting the legislative package on internal energy markets, Parliament has strongly supported transmission ownership unbundling in the electricity sector as the most effective tool to promote investment in infrastructure in a non-discriminatory way, fair access to the grid for new entrants, and transparency in the market. Parliament has also stressed the importance of a European common view of mid-term investments (indicative European 10-year plan focused on interconnections); greater cooperation between regulatory authorities, Member States and transmission system operators; and a strong process of harmonisation of network access conditions. On the initiative of Parliament, special importance was placed on consumer rights, which was part of the deal achieved with the Council: the resolutions insisted on increasing consumer rights (change of suppliers, direct information through smart meters and efficient treatment of complaints made to an energy ‘ombudsman’). Parliament also obtained recognition of the concept of ‘energy poverty’. It has strongly supported the establishment of ACER, stressing that it had to be granted the necessary powers to overcome those issues that cannot be solved by national regulators and which hamper the integration and proper functioning of the internal market.

When adopting the guidelines for trans-European energy infrastructure (P7_TA(2013)0061), Parliament called particular attention to the importance of energy storage facilities and the need to ensure the stability of European electricity networks with the integration of renewable energy resources. It approved an amendment improving the transparency of the methodologies used by the ENTSOs in their network development plans. It also introduced an amendment protecting consumers from bearing a disproportionate burden of the costs of common interest projects.

More recently, in December 2015 Parliament adopted a resolution entitled ‘Towards a European Energy Union’ (P8_TA(2015)0444). Parliament called on the Commission to ensure that all legislative proposals forming part of the Energy Union would follow the ordinary legislative procedure, and stated that it expected the post-2020 governance framework for the Energy Union to be ambitious, reliable, transparent, democratic and fully inclusive of Parliament, and to ensure that the 2030 climate and energy targets were achieved.

Parliament further adopted positions on energy market design during the preparation of the Commission’s ‘Clean Energy for all Europeans’ package. Parliament’s resolution of 13 September 2016 entitled ‘Towards a new energy market design’ (P8_TA(2016)0333) advocates a combination of liquid short-term markets and long-term price signals, in order to make the market fit for a growing share of renewables and active consumers. It emphasises the importance of regional cooperation, calls for integrating renewable energy sources into the market and phasing out support for mature renewables and specifies criteria for capacity mechanisms, which should be market based and open to cross-border participation.

Dagmara Stoerring / Susanne Horl