European Energy Law: Energy Markets, Security of Supply, and the Green Transition

European Energy Law: Energy Markets, Security of Supply, and the Green Transition

European Union energy law governs one of the most strategically important areas of European integration. It connects the operation of the internal market with national energy policy, infrastructure, consumer protection, environmental objectives, and the security of supply. Its purpose is not simply to regulate the production and sale of electricity and gas. It establishes a legal framework through which the Union and its Member States seek to maintain reliable and affordable energy supplies while transforming the energy system towards climate neutrality.

Energy law is also an area in which the limits of shared European and national authority become particularly visible. Member States retain important powers over their energy mix, the exploitation of natural resources, and the conditions under which they use different energy sources. At the same time, electricity and gas markets cross national borders, energy infrastructure requires coordination, and disruptions in one country can affect consumers and businesses throughout the Union. European legislation therefore combines common market rules with national responsibilities and mechanisms of cooperation.

The legal framework has developed substantially since the creation of the internal energy market. The 2009 Third Energy Package established important foundations for market liberalisation and regulatory independence. Subsequent legislation strengthened cross-border trading, infrastructure planning, renewable energy deployment, and energy efficiency. The energy crisis following Russia’s invasion of Ukraine accelerated reforms concerning diversification, storage, emergency preparedness, and the reduction of dependence on Russian fossil fuels. In 2024 and 2026, further legislation reshaped the electricity and gas markets, including the development of a regulatory framework for renewable gases and hydrogen.

This article examines the constitutional foundations of EU energy policy, the structure of the internal energy market, the regulation of electricity and gas, security of supply, infrastructure, consumer protection, and the relationship between energy law and the European Green Deal. It considers the legal position as at November 2026, distinguishing legislation already in force from longer-term policy objectives and implementation measures.

1. The Constitutional Foundations of EU Energy Law

The principal legal foundation of European Union energy policy is Article 194 of the Treaty on the Functioning of the European Union (TFEU). Introduced by the Treaty of Lisbon, it provides an express legal basis for a common European energy policy while preserving important national powers.

Article 194(1) identifies four central objectives:

1. Ensuring the functioning of the energy market.
2. Ensuring security of energy supply within the Union.
3. Promoting energy efficiency, energy saving, and the development of renewable energy.
4. Promoting the interconnection of energy networks.

These objectives must be pursued in a spirit of solidarity between Member States and with regard to the need to preserve and improve the environment. Energy policy is therefore not an isolated regulatory field. It intersects with internal market law, environmental protection, competition law, consumer protection, infrastructure policy, and external relations.

Article 194(2) TFEU authorises the European Parliament and the Council to adopt measures necessary to achieve these objectives through the ordinary legislative procedure. Energy policy is consequently a shared area of Union and Member State action. However, the Treaty expressly protects the right of each Member State to determine the conditions for exploiting its energy resources, its choice between different energy sources, and the general structure of its energy supply, subject to the relevant Treaty provisions.

This reservation is constitutionally significant. The Union may establish common rules for electricity markets, renewable energy targets, energy efficiency, cross-border infrastructure, and security of supply. It cannot simply assume that all Member States must adopt an identical energy mix. National governments retain substantial discretion concerning the role of nuclear power, natural gas, coal, hydroelectricity, and other energy sources within their domestic systems.

Article 194(3) establishes a special legislative procedure for measures that are primarily fiscal in nature. The Council must act unanimously after consulting the European Parliament. This distinction matters because energy taxation and certain fiscal instruments may be governed by different Treaty procedures from ordinary energy-market legislation.

Other Treaty provisions also contribute to the legal framework. Article 114 TFEU supports harmonisation measures necessary for the establishment and functioning of the internal market. Articles 170–172 TFEU provide the foundations for trans-European networks, including energy infrastructure. Article 122 TFEU allows the Council, in certain exceptional circumstances, to adopt measures appropriate to the economic situation, including where serious difficulties arise in the supply of particular products, notably in the area of energy. Articles 216–218 TFEU govern the Union’s capacity to conclude international agreements.

Nuclear energy has a distinct constitutional framework under the Treaty establishing the European Atomic Energy Community (Euratom). Euratom provides for cooperation in nuclear research, the development of nuclear energy, nuclear safety, safeguards, and the supply of nuclear materials. Nuclear power is therefore influenced both by the general framework of EU energy policy and by the separate Euratom legal order.

The result is a complex constitutional arrangement: European institutions establish common market and environmental rules, while national governments retain important decisions concerning the composition and organisation of their energy systems.

2. The Development of the European Energy Union

The creation of an integrated European energy market has been a gradual process. For much of the twentieth century, energy production and distribution were organised primarily through national systems. Electricity and gas networks were often controlled by vertically integrated undertakings, while cross-border trade remained comparatively limited.

The liberalisation of energy markets sought to introduce competition, separate network operation from commercial supply, and provide consumers with greater choice. The first and second energy packages established progressively more extensive market-opening requirements. The Third Energy Package, adopted in 2009, introduced a more developed framework for unbundling, regulatory independence, and cross-border cooperation.

The Clean Energy for All Europeans package, adopted mainly between 2018 and 2019, further developed the internal market and connected it more closely with renewable energy, energy efficiency, consumer participation, and climate policy.

The concept of the Energy Union subsequently became a central organising principle. Its purpose is to coordinate the Union’s energy policy across five connected dimensions: energy security, the internal energy market, energy efficiency, decarbonisation, and research, innovation, and competitiveness.

Regulation (EU) 2018/1999 on the Governance of the Energy Union and Climate Action established a common planning and reporting mechanism. Member States must prepare integrated national energy and climate plans (NECPs), covering the relevant ten-year periods, and report on their implementation. These plans address national contributions to Union objectives, renewable energy, energy efficiency, greenhouse gas emissions, energy security, and research and innovation.

The governance system is designed to make national planning more consistent and transparent. The Commission assesses national plans and progress reports, identifies gaps in collective ambition, and may issue recommendations. Member States are expected to take these recommendations into account, although the system does not transfer all national energy-planning authority to the Commission.

The framework also encourages regional cooperation. Energy networks do not follow national borders, and a Member State’s ability to maintain supply may depend on infrastructure and generation capacity located elsewhere. Coordinated planning is therefore essential to the functioning of the Energy Union.

3. The Internal Energy Market

The internal energy market is one of the central achievements of EU energy legislation. Its purpose is to permit electricity and gas to move across national borders under common market rules, reducing artificial barriers and enabling competition between suppliers.

The market depends on several interconnected principles: access to networks on regulated and non-discriminatory terms; separation of network operation from competitive energy activities; independent national regulation; cross-border cooperation; and transparent wholesale and retail markets.

The legal framework distinguishes between different activities within the energy sector. Generation concerns the production of electricity. Transmission concerns the high-voltage movement of electricity across the system. Distribution concerns delivery through local networks. Supply involves the commercial sale of electricity to customers. Similar distinctions apply to the gas sector, although the physical characteristics and infrastructure requirements differ.

This separation is important because electricity and gas networks often constitute natural monopolies. It would be difficult and economically inefficient to construct several competing transmission networks serving the same territory. Competition is therefore introduced principally in generation and supply, while network activities are subject to regulated access and oversight.

Unbundling of energy undertakings

Unbundling seeks to prevent an undertaking controlling essential network infrastructure from discriminating in favour of its own generation or supply business.

The EU framework recognises several models of separation, including ownership unbundling, independent system operators, and independent transmission operators, subject to the conditions established by the relevant legislation.

The objective is not necessarily to prohibit common ownership in every circumstance. Rather, the applicable rules seek to ensure that transmission system operators (TSOs) exercise their functions independently and that commercial interests do not distort access to essential infrastructure.

Distribution system operators (DSOs) are also subject to independence and non-discrimination requirements, although the rules may differ according to the size and structure of the undertaking.

The European Commission’s overview of internal energy market governance explains the role of unbundled network operators, national regulators, and European cooperation.

National regulatory authorities

Each Member State must maintain an independent national regulatory authority responsible for supervising the energy market within its jurisdiction.

Regulatory authorities generally monitor network tariffs, access conditions, market functioning, consumer protection, and compliance with relevant legislation. They also cooperate with regulators in other Member States and with the European Union Agency for the Cooperation of Energy Regulators (ACER).

Their independence is essential. Energy regulation involves decisions affecting infrastructure investment, market access, and the commercial interests of powerful undertakings. Regulatory decisions must therefore be made according to legal criteria rather than the immediate commercial or political preferences of market participants.

ACER and European regulatory cooperation

ACER was established by Regulation (EC) No 713/2009 and is now governed by Regulation (EU) 2019/942. Its role is to facilitate cooperation between national energy regulators and support the consistent application of EU energy-market rules.

The Agency contributes to the development of common network rules, monitors cross-border market functioning, and performs specific regulatory and supervisory functions assigned to it by EU legislation. It also has important responsibilities under the Regulation on Wholesale Energy Market Integrity and Transparency (REMIT).

ACER does not replace national regulatory authorities. Its functions are directed principally towards issues with a European or cross-border dimension and towards the coordination of regulatory action.

4. Electricity Market Regulation

The electricity market has particular characteristics that make its regulation technically and legally complex. Electricity must be balanced continuously across the system because large-scale storage remains limited in comparison with total consumption. Generation and consumption must therefore be coordinated in real time, while transmission networks must remain within technical operating limits.

The principal legislative instruments include:

• Directive (EU) 2019/944 on common rules for the internal market for electricity.
• Regulation (EU) 2019/943 on the internal market for electricity.
• Regulation (EU) 2019/942 establishing ACER.
• Regulation (EU) 2015/1222 establishing a guideline on capacity allocation and congestion management.
• Regulation (EU) 2016/1719 establishing a guideline on forward capacity allocation.
• Regulation (EU) 2017/2195 establishing a guideline on electricity balancing.

Together, these measures establish the rules governing market access, cross-border capacity, system operation, balancing, and the responsibilities of market participants.

Electricity market design reform

The electricity market experienced considerable pressure during the energy crisis of 2021–2023. High wholesale gas prices affected electricity prices in many Member States because gas-fired power stations frequently determined the marginal price in the wholesale electricity market.

The EU responded through a reform adopted in 2024, principally through Directive (EU) 2024/1711 and Regulation (EU) 2024/1747. The reform seeks to improve market resilience, strengthen consumer protection, encourage long-term contracting, and facilitate investment in low-carbon generation.

The revised framework entered into its principal application phase in 2026. The Commission reported that the new electricity-market rules apply from 17 July 2026.

One important element is the increased role of long-term electricity contracts. Power purchase agreements (PPAs) allow electricity producers and purchasers to agree on the sale of electricity over a longer period, potentially reducing exposure to short-term wholesale price volatility.

The legislation also strengthens the framework for two-way contracts for difference (CfDs) where public support is provided for certain new investments in low-carbon electricity generation. Under such arrangements, a reference price is agreed. If the market price falls below the agreed level, the producer may receive compensation. If the market price exceeds the reference level, the producer may be required to return the difference according to the contractual and statutory framework.

The purpose is to improve revenue stability for investors while allowing consumers and public authorities to benefit from unusually high market revenues. The legislation does not require every electricity producer to operate under a CfD. Its provisions concern the design of relevant public support schemes.

Wholesale and retail electricity markets

Wholesale electricity markets enable generators, suppliers, traders, and other market participants to buy and sell electricity. Trading takes place through different market arrangements, including forward markets, day-ahead markets, intraday markets, and balancing markets.

The day-ahead market establishes prices for electricity delivery during the following day. Intraday trading allows market participants to adjust their positions as forecasts and consumption patterns change. Balancing markets address the remaining differences between electricity supply and demand.

Retail markets concern the relationship between suppliers and final customers. EU law requires consumers to be able to choose their electricity supplier, receive clear information, and benefit from transparent contractual terms.

The revised electricity-market framework strengthens consumer choice between fixed-price and dynamic-price contracts. A fixed-price contract provides greater predictability over the contractual period, while a dynamic-price contract may expose consumers to variations in wholesale market prices.

The legal framework does not assume that one type of contract is suitable for every consumer. Rather, suppliers must provide the information necessary for customers to understand the risks and conditions associated with their choice.

5. The Gas Market and the Hydrogen Transition

Natural gas has historically played a major role in European energy supply, including electricity generation, industrial production, heating, and other essential activities. Its importance has also created significant exposure to international supply disruptions and geopolitical developments.

The gas market was originally governed by the framework established under Directive 2009/73/EC and Regulation (EC) No 715/2009. These instruments were replaced and modernised through the hydrogen and decarbonised gas market package adopted in 2024.

The principal legislation consists of:

• Directive (EU) 2024/1788 on common rules for the internal markets for renewable gas, natural gas and hydrogen.
• Regulation (EU) 2024/1789 on the internal markets for renewable gas, natural gas and hydrogen.

The package establishes a regulatory framework for the gradual transition from a market dominated by fossil natural gas towards a system capable of accommodating renewable gases, low-carbon gases, and hydrogen.

The new gas-market rules apply from 5 August 2026, following the transposition deadline for the Directive.

Renewable and low-carbon gases

Renewable gases include biomethane and renewable hydrogen produced through processes meeting the applicable sustainability and greenhouse gas reduction requirements.

Low-carbon gases are not necessarily renewable. They may be produced from fossil or other sources but must satisfy the relevant greenhouse gas emissions reduction criteria established by EU legislation.

The distinction is important. Renewable hydrogen produced through renewable electricity is legally and technically different from hydrogen produced using fossil fuels with carbon capture. Both may contribute to decarbonisation under specified conditions, but they are not interchangeable categories.

The 2024 gas package seeks to facilitate market access for renewable and low-carbon gases while maintaining appropriate standards for infrastructure, certification, consumer protection, and cross-border trade.

Hydrogen infrastructure

Hydrogen may be used in industrial processes, certain transport applications, energy storage, and potentially other sectors where direct electrification is difficult or less practical.

However, hydrogen cannot simply be treated as natural gas under the existing infrastructure framework. Its physical properties, safety requirements, production methods, and end uses create distinct regulatory and technical challenges.

The new legislation introduces rules for dedicated hydrogen networks and supports the development of a European hydrogen market. It also provides for the separation of certain network activities, regulated access, and cooperation between national regulatory authorities.

The EU framework recognises the importance of cross-border hydrogen infrastructure. Without interconnected networks and sufficiently predictable rules, national hydrogen markets could develop in isolation, limiting investment and trade.

Nevertheless, the creation of a hydrogen market depends on substantial investment, the availability of renewable electricity, production capacity, storage, transport infrastructure, and demand from industrial users. Legislation provides the institutional framework; it does not by itself guarantee the commercial viability of every proposed project.

6. Security of Energy Supply

Security of supply is one of the fundamental objectives of Article 194 TFEU. It concerns the ability of the energy system to provide sufficient energy to households, businesses, public institutions, and essential services under normal and exceptional conditions.

The concept has several dimensions. It includes the availability of energy resources, diversification of suppliers, reliability of infrastructure, adequate storage, interconnection between national systems, emergency preparedness, and the capacity to respond to sudden disruptions.

The Union’s approach combines market mechanisms with public intervention in circumstances where ordinary market arrangements are insufficient.

Security of gas supply

Regulation (EU) 2017/1938 establishes the principal framework for safeguarding the security of gas supply. It has been amended several times, including through the hydrogen and decarbonised gas package and Regulation (EU) 2026/261.

The Regulation assigns responsibilities to Member States, competent authorities, natural gas undertakings, and the Commission. It requires risk assessments, preventive action plans, and emergency plans.

The framework recognises three principal crisis levels:

1. Early warning: where information indicates that an event may develop into a significant disruption.
2. Alert: where a disruption or exceptionally high demand occurs but the market can still manage the situation without non-market measures.
3. Emergency: where market-based measures are insufficient and non-market measures become necessary to protect supply.

The distinction is important because emergency intervention is not intended to replace ordinary market operation whenever prices rise or supply becomes more expensive. It is reserved for circumstances in which the market cannot adequately ensure the required supply.

The N–1 infrastructure standard

The gas security framework includes the N–1 infrastructure standard. In simplified terms, it requires the remaining infrastructure capacity to be sufficient to meet calculated gas demand following the disruption of the single largest gas infrastructure facility.

The standard encourages Member States to avoid excessive dependence on a single pipeline, import terminal, or other critical infrastructure installation.

Its practical significance depends on national geography and network configuration. A state with several alternative import routes and strong interconnections may have a different risk profile from a state dependent on one major supply corridor.

Gas storage

Gas storage is an important instrument of seasonal and emergency security. Regulation (EU) 2022/1032 introduced EU-level storage obligations, including a target requiring underground gas storage facilities in Member States to reach 90% of capacity by 1 November, subject to the applicable flexibility provisions.

The original emergency framework was subsequently amended, and storage obligations must be assessed under the legislation applicable to the relevant storage year. These measures were designed to reduce the risk that Member States would enter winter periods with insufficient reserves.

Storage obligations also raise questions concerning financing, market incentives, competition, and the allocation of costs between consumers and energy companies. EU law therefore seeks to balance the security benefits of storage with the proper functioning of the internal market.

Solidarity between Member States

The principle of solidarity is central to the EU’s security-of-supply framework. Regulation 2017/1938 provides for solidarity measures as a last resort in an extreme gas crisis.

Where a Member State cannot secure the necessary gas supplies for protected customers, it may request assistance from connected Member States, subject to the statutory conditions.

Protected customers principally include households and certain essential services, such as hospitals and other critical social facilities. The solidarity mechanism is designed to ensure that these customers retain access to gas even when a serious disruption affects the wider market.

Solidarity is not an unlimited obligation to provide energy regardless of domestic circumstances. It is subject to the conditions, procedures, compensation arrangements, and safeguards established by the Regulation.

The 2024 gas package also introduced default solidarity provisions intended to make the mechanism operational where bilateral agreements have not been concluded.

Electricity security and risk preparedness

Electricity supply requires a different risk-management framework because electricity systems must remain continuously balanced.

Regulation (EU) 2019/941 on risk-preparedness in the electricity sector requires Member States to identify and assess relevant risks, prepare national risk-preparedness plans, and cooperate regionally.

Risks include extreme weather, fuel shortages, technical failures, cyberattacks, malicious acts, and other events capable of disrupting electricity supply.

The framework promotes coordination between Member States and establishes procedures for information exchange and assistance during electricity crises. It also recognises the importance of protecting the internal market during emergencies.

National authorities must avoid measures that unnecessarily restrict cross-border electricity flows or undermine the security of neighbouring systems.

7. REPowerEU and the Reduction of External Energy Dependence

The Russian invasion of Ukraine in February 2022 exposed the strategic risks associated with the EU’s dependence on imported Russian fossil fuels. The resulting energy crisis accelerated efforts to diversify supplies, reduce consumption, increase renewable energy production, and improve infrastructure resilience.

The Commission presented the REPowerEU Plan in May 2022. Its objectives included reducing dependence on Russian fossil fuels, diversifying energy imports, accelerating renewable energy deployment, improving energy efficiency, and strengthening the Union’s energy security.

REPowerEU was initially a policy and legislative programme rather than a single legal instrument. Its implementation has involved amendments to existing legislation, new regulations, investment measures, and coordinated action by Member States.

Phasing out Russian natural gas imports

A major legislative development occurred with the adoption of Regulation (EU) 2026/261 on phasing out Russian natural gas imports and preparing the phase-out of Russian oil imports.

The Regulation establishes a gradual prohibition on imports of Russian natural gas, including pipeline gas and liquefied natural gas (LNG), together with monitoring and traceability requirements intended to prevent circumvention.

The prohibition is phased according to the nature and duration of existing contracts. Short-term contracts are subject to earlier restrictions, while certain long-term contracts benefit from transitional periods. The relevant final deadlines extend into 2027.

The Regulation also requires Member States to prepare diversification plans and establishes mechanisms for monitoring the origin of imported gas. Its objective is not merely to replace one supplier with another, but to reduce the risks associated with excessive external dependence.

This legislation illustrates how energy security can intersect with external trade policy. Article 194 TFEU provides the principal internal energy-policy basis, while Article 207 TFEU concerns the Union’s common commercial policy.

Diversification and infrastructure

Diversification requires more than identifying alternative suppliers. It depends on the physical capacity to transport energy from different sources and to distribute it throughout the Union.

LNG terminals, interconnectors, reverse-flow capacity, storage facilities, and upgraded transmission networks have therefore become important elements of European energy policy.

The legal framework also seeks to prevent the creation of new strategic dependencies. Diversification must be assessed not only in terms of the number of suppliers but also in relation to the concentration of infrastructure, contractual arrangements, and the reliability of alternative supply routes.

The Commission’s REPowerEU programme and phase-out framework provide an overview of the legislative and policy measures adopted in this area.

8. Energy Infrastructure and Trans-European Networks

The internal energy market depends on infrastructure capable of transporting electricity and gas across borders. Without adequate interconnection, national markets may remain isolated, and differences in generation capacity or demand may produce avoidable price disparities and supply vulnerabilities.

Articles 170–172 TFEU provide the legal foundations for trans-European networks. Regulation (EU) 2022/869 on guidelines for trans-European energy infrastructure, commonly known as the TEN-E Regulation, establishes the framework for identifying and supporting infrastructure projects of common interest.

Projects of common interest (PCIs) are intended to contribute to the development of integrated European energy networks. The framework covers electricity transmission, smart electricity grids, certain gas infrastructure, hydrogen networks, carbon dioxide transport networks, and other relevant infrastructure categories.

The Regulation also establishes rules for cross-border cost allocation, permitting procedures, and regulatory cooperation.

A project may produce benefits across several Member States while its construction costs fall primarily on one national system. Cross-border cost allocation seeks to address this problem by allowing the costs of certain projects to be distributed in a manner reflecting the benefits they generate.

The TEN-E framework has also evolved to reflect the Union’s climate objectives. The 2022 Regulation moved away from supporting conventional fossil-fuel infrastructure as a general category and placed greater emphasis on electricity interconnection, renewable integration, hydrogen, and other infrastructure compatible with the energy transition.

Network development and regional cooperation

Transmission system operators play a central role in infrastructure planning. Electricity TSOs cooperate through the European Network of Transmission System Operators for Electricity (ENTSO-E), while gas TSOs cooperate through ENTSOG.

These organisations contribute to network development planning, technical standards, and the coordination of cross-border infrastructure.

The European network development plans are important because energy infrastructure must be designed with a long-term perspective. A transmission line, interconnector, or hydrogen pipeline may require years of planning, permitting, financing, and construction.

The legal framework must therefore reconcile investment certainty with environmental assessment, public participation, land-use requirements, and the rights of affected communities.

9. Renewable Energy and Energy Efficiency

The transition to a low-carbon energy system is a central objective of EU energy law. It requires the expansion of renewable generation, improved energy efficiency, electrification of suitable activities, and the development of infrastructure capable of integrating variable energy sources.

The main legislative framework includes Directive (EU) 2018/2001 on the promotion of the use of energy from renewable sources, as amended by Directive (EU) 2023/2413, and Directive (EU) 2023/1791 on energy efficiency.

The renewable energy framework establishes a binding Union-level target for the share of renewable energy in gross final energy consumption by 2030, together with national contributions and sectoral measures. The revised framework also addresses renewable energy in transport, heating and cooling, industry, and electricity generation.

Energy efficiency legislation establishes obligations concerning energy savings, public-sector consumption, energy audits, and the performance of buildings and equipment.

These measures are closely connected with the EU’s broader climate framework, including the European Climate Law and the emissions reduction legislation examined in the preceding article on European environmental law.

Renewable energy permits

The development of renewable energy projects often depends on planning and authorisation procedures. Lengthy permitting processes may delay investment even where the underlying project is consistent with national and European energy objectives.

EU legislation therefore seeks to simplify and accelerate permitting for qualifying renewable energy projects, while preserving applicable environmental safeguards and public participation requirements.

The revised Renewable Energy Directive introduces provisions concerning designated acceleration areas and administrative procedures. These mechanisms are intended to facilitate deployment while ensuring that projects comply with the relevant environmental and technical requirements.

Grid integration and flexibility

The expansion of wind and solar generation creates new challenges for electricity systems. Their output depends on weather conditions and may fluctuate substantially over short periods.

A modern electricity system therefore requires flexibility. This may be provided through electricity storage, demand response, interconnection, dispatchable generation, improved forecasting, and digital network management.

EU electricity-market legislation increasingly recognises that flexibility is not merely a technical matter. Market rules must allow storage operators, aggregators, consumers, and other providers to participate under appropriate conditions.

Demand response allows electricity consumption to be adjusted in response to market conditions or system requirements. Aggregation enables smaller consumers and distributed energy resources to participate collectively in electricity markets.

These mechanisms can improve system efficiency and reduce the need for certain forms of conventional generation capacity.

Energy efficiency as a legal obligation

Energy efficiency is not limited to voluntary conservation. EU legislation establishes obligations for Member States and public authorities, including energy-saving requirements and measures addressing the efficiency of buildings, industrial processes, and public infrastructure.

The principle of energy efficiency first, reflected in EU energy governance, requires decision-makers to consider whether reducing energy demand may be more effective than expanding supply.

For example, improving the insulation of buildings may reduce the amount of energy required for heating and cooling. In some circumstances, this may be less costly and more sustainable than increasing generation or constructing additional network capacity.

The legal framework therefore treats efficiency as a central component of energy security and decarbonisation rather than merely as an environmental supplement.

10. Consumer Protection and Energy Poverty

Energy is an essential service. Interruptions in electricity or heating can affect health, education, employment, and the ability to participate in ordinary social and economic life.

EU energy legislation consequently includes consumer-protection obligations designed to ensure transparency, fair treatment, and access to essential supply.

Directive (EU) 2019/944 establishes consumer rights in the electricity market, while the revised electricity and gas legislation strengthens protections in response to the experience of the energy crisis.

Consumers are entitled to clear information about contractual terms, prices, billing, switching suppliers, and available dispute-resolution mechanisms. They must be able to compare offers and exercise their right to choose a supplier under the applicable national arrangements.

The revised electricity rules strengthen access to different types of supply contracts and introduce additional safeguards for vulnerable customers.

Vulnerable consumers and energy poverty

Energy poverty arises where households cannot secure adequate energy services at an affordable cost. It may result from low income, high energy prices, poor building efficiency, or a combination of these factors.

EU law does not establish a single universal definition that determines every national eligibility decision. Instead, it requires Member States to identify and address energy poverty through their national policy frameworks and relevant consumer-protection measures.

The revised electricity and gas rules strengthen protections for vulnerable customers, including safeguards concerning disconnection. In specified emergency circumstances, Member States may also adopt temporary measures to protect consumers against extreme price increases.

Such intervention must remain consistent with the applicable EU rules. Consumer protection does not automatically authorise unlimited price controls or discriminatory treatment of suppliers.

Collective self-consumption and energy communities

EU legislation increasingly recognises that consumers may also participate in energy production and distribution.

Renewable energy communities and citizen energy communities provide legal structures through which individuals, local authorities, and smaller organisations may participate in energy projects.

These arrangements can include collective self-consumption, shared renewable generation, and certain energy services.

The purpose is to enable citizens to participate more directly in the energy transition rather than remain exclusively passive purchasers of electricity.

However, energy communities must operate within the applicable rules on network access, licensing, balancing, taxation, consumer protection, and market participation.

11. Competition Law and State Intervention in Energy Markets

Energy markets are subject to the general competition rules of the Treaties. Articles 101 and 102 TFEU prohibit anti-competitive agreements and abuses of dominant position, while Articles 107–109 TFEU govern State aid.

The energy sector presents particular competition issues because network infrastructure is often a natural monopoly, generation markets may be concentrated, and public authorities frequently provide financial support for infrastructure or renewable energy projects.

State aid may be used to support renewable energy, energy efficiency, infrastructure, storage, and other projects contributing to public policy objectives. However, such support must comply with the applicable State aid framework.

The Commission assesses whether aid is compatible with the internal market, whether it is necessary and proportionate, and whether it produces distortions that are not justified by the objectives pursued.

The Guidelines on State aid for climate, environmental protection and energy 2022 provide an important framework for assessing many energy-related support measures. Other instruments, including the General Block Exemption Regulation, may also apply where their conditions are satisfied.

Market integrity and transparency

Wholesale energy markets are also subject to sector-specific market integrity rules.

Regulation (EU) No 1227/2011 on Wholesale Energy Market Integrity and Transparency (REMIT) prohibits insider trading and market manipulation in wholesale energy markets.

The Regulation requires the reporting of relevant wholesale energy transactions and establishes a framework for monitoring market conduct. ACER plays a central role in collecting and analysing information, while national regulatory authorities and other competent bodies exercise enforcement responsibilities within their respective powers.

Regulation (EU) 2024/1106 strengthened REMIT in response to developments in energy trading and the lessons of the energy crisis. Further implementing rules were adopted in 2026, including updated requirements concerning data reporting and the supervision of relevant reporting entities.

These rules are particularly important because wholesale energy markets are vulnerable to manipulation through false information, concealed transactions, misuse of inside information, and other forms of abusive conduct.

The objective is to preserve confidence in the market and ensure that wholesale prices reflect legitimate market conditions rather than manipulation.

12. Nuclear Energy and the Euratom Framework

Nuclear energy occupies a distinct position within European energy law. Some Member States rely substantially on nuclear generation, while others have chosen to phase it out or refrain from developing it.

The Union’s constitutional framework does not impose a single nuclear-energy policy on all Member States. Article 194(2) TFEU protects national authority over the choice of energy sources, while the Euratom Treaty establishes a separate legal framework for cooperation and regulation in the nuclear field.

Euratom legislation addresses nuclear safety, radiation protection, safeguards, and the supply of nuclear materials.

Directive 2009/71/Euratom, as amended by Directive 2014/87/Euratom, establishes a Community framework for the nuclear safety of nuclear installations. It requires Member States to maintain national regulatory frameworks, competent regulatory authorities, and systems of supervision.

Directive 2011/70/Euratom establishes a framework for the responsible and safe management of spent fuel and radioactive waste. It requires national policies and programmes addressing the long-term management of such materials.

Radiation protection is also governed by Directive 2013/59/Euratom, which establishes basic safety standards for protection against the dangers arising from exposure to ionising radiation.

The CJEU has clarified aspects of the relationship between Euratom and national regulatory authority. In Austria v Commission, Case C-594/18 P, the Court examined the application of State aid rules to support for the construction of a nuclear power station. The judgment illustrates that nuclear projects are not automatically excluded from the ordinary rules of EU law merely because they concern a sector governed by Euratom.

Nuclear energy is therefore subject to a combination of national energy choices, Euratom safety and regulatory obligations, environmental requirements, and applicable internal market and competition rules.

13. Environmental Assessment and Energy Projects

Energy infrastructure and generation projects may have substantial environmental effects. EU law therefore requires certain projects to undergo environmental assessment before authorisation.

Directive 2011/92/EU on environmental impact assessment, as amended by Directive 2014/52/EU, requires the assessment of specified public and private projects likely to have significant effects on the environment.

Depending on the project, the assessment may consider effects on biodiversity, water, air, soil, climate, landscape, cultural heritage, and human health.

Strategic environmental assessment under Directive 2001/42/EC may also apply to certain plans and programmes establishing the framework for future development consent.

Renewable energy projects are not automatically exempt from environmental obligations. Accelerated permitting procedures must operate within the conditions established by EU legislation and the relevant safeguards.

This is particularly important for wind farms, hydropower projects, transmission lines, and other infrastructure that may affect protected habitats or species.

The legal challenge is to reconcile the need for timely energy investment with environmental protection, public participation, and the rights of affected communities. EU law does not treat these objectives as mutually exclusive. Instead, it establishes procedures intended to make decisions both effective and legally defensible.

14. External Energy Relations and International Cooperation

The Union’s energy security depends partly on relations with external suppliers and transit countries. Energy policy therefore has an international dimension involving trade agreements, infrastructure cooperation, sanctions, investment, and diplomatic relations.

The Union may conclude international agreements concerning energy cooperation under the Treaty framework. Such agreements can address energy trade, infrastructure, regulatory cooperation, energy efficiency, and the development of renewable energy.

The Energy Community Treaty is an important example of regional cooperation. It seeks to extend elements of the EU energy acquis to participating non-EU countries and to create a more integrated regional energy market.

The Energy Charter Treaty historically provided a multilateral framework for energy investment and trade. However, the Union’s relationship with the Treaty has changed substantially in recent years, particularly because of concerns about compatibility with EU climate policy and the legal position of intra-EU investment arbitration.

The EU and Euratom’s withdrawal from the Energy Charter Treaty took effect on 28 June 2025. The development reflects the growing importance of ensuring that international energy arrangements remain consistent with the Union’s wider legal and climate commitments.

External energy relations also intersect with sanctions and trade restrictions. Regulation (EU) 2026/261 demonstrates how energy policy, trade policy, and security considerations may operate together when the Union seeks to reduce strategic dependence on a particular supplier.

15. Enforcement and Judicial Review

EU energy legislation is enforced through a combination of European institutions, national regulators, administrative authorities, and national courts.

The European Commission monitors the implementation of directives and regulations and may initiate infringement proceedings under Articles 258–260 TFEU where a Member State fails to fulfil its obligations.

National regulatory authorities supervise market participants and enforce the rules within their jurisdiction. They may investigate non-compliance, impose administrative measures, and apply sanctions where authorised by EU and national legislation.

ACER exercises the functions assigned to it under its founding Regulation and sector-specific legislation. Its decisions may be subject to judicial review under the applicable EU procedures.

National courts also play an important role. They may examine disputes involving energy suppliers, network operators, consumers, regulatory authorities, and public bodies. Where interpretation of EU law is necessary, national courts may refer questions to the Court of Justice under Article 267 TFEU.

The CJEU’s jurisdiction is relevant to the interpretation of internal market rules, competition law, environmental obligations, State aid, consumer protection, and the institutional limits of energy regulation.

Selected judicial developments

In Commission v Poland, Case C-848/19 P, the Court examined the scope of the solidarity principle in the context of EU energy policy and the rules governing the internal energy market. The judgment is important because it confirms that energy solidarity is not merely a political aspiration but a legal principle relevant to the interpretation of EU obligations.

The Court has also addressed energy-market regulation through competition and internal market cases. In Federutility and Others, Case C-265/08, it considered national price regulation in the natural gas market and the conditions under which public intervention may be justified. The judgment illustrates the need to reconcile public-service objectives with the principles of market liberalisation and proportionality.

In PreussenElektra, Case C-379/98, the Court considered national support for electricity generated from renewable sources under the State aid rules applicable at the time. The case remains relevant to the development of renewable energy support mechanisms and the relationship between national policy measures and the internal market.

These decisions demonstrate that energy law is not a self-contained technical discipline. Its principles are interpreted through the wider constitutional structure of the Union, including proportionality, solidarity, competition, effective judicial protection, and the allocation of powers between the Union and its Member States.

16. The Future Development of European Energy Law

The future of EU energy law will be shaped by the interaction of three major requirements: decarbonisation, security of supply, and affordability.

The transition to renewable electricity requires substantial investment in generation, storage, transmission, and distribution. At the same time, industrial sectors that depend on high-temperature processes or chemical feedstocks may require solutions that cannot be achieved through direct electrification alone.

Hydrogen, biomethane, carbon capture and storage, and other technologies may therefore have roles within the developing energy system, subject to their technical, economic, and environmental characteristics.

The expansion of digital infrastructure also introduces new legal and regulatory questions. Smart meters, automated demand response, digital network management, and interconnected energy systems may improve efficiency but increase exposure to cyber risks and data-protection concerns.

Energy security must consequently be understood more broadly than the availability of imported fuel. It includes the resilience of electricity networks, the security of digital systems, the availability of critical materials, the capacity to manufacture essential equipment, and the ability to withstand extreme weather events.

The legal framework will also need to address the distribution of transition costs. Energy prices affect households and businesses differently, and the transition may create unequal burdens between regions and economic sectors. Consumer protection, social policy, regional development, and investment support will therefore remain important components of energy regulation.

The development of the Energy Union is not simply a process of replacing fossil fuels with renewable sources. It is a restructuring of the legal, economic, and institutional organisation of Europe’s energy system.

17. Key Takeaways

• Article 194 TFEU establishes the principal legal basis for EU energy policy, identifying market functioning, security of supply, renewable energy, energy efficiency, and network interconnection as central objectives.
• Energy policy is a shared area of Union and national action, but Member States retain important powers over their energy resources, energy mix, and general supply structure.
• The internal energy market is based on non-discriminatory network access, unbundling, regulatory independence, cross-border cooperation, and competition.
• ACER coordinates European regulatory cooperation and performs specific supervisory functions, while national regulatory authorities retain important domestic responsibilities.
• Directive (EU) 2019/944 and Regulation (EU) 2019/943 form the central electricity-market framework, substantially revised by the 2024 electricity-market reform.
• Directive (EU) 2024/1788 and Regulation (EU) 2024/1789 establish the updated framework for renewable gas, natural gas, and hydrogen markets.
• Regulation (EU) 2017/1938 governs gas security of supply through risk assessments, emergency planning, infrastructure standards, and solidarity mechanisms.
• Regulation (EU) 2019/941 establishes risk-preparedness obligations for the electricity sector.
• Regulation (EU) 2026/261 creates a phased framework for ending Russian natural gas imports and strengthening monitoring of energy dependencies.
• Regulation (EU) 2022/869 governs trans-European energy infrastructure and supports cross-border projects necessary for an integrated energy system.
• Renewable energy and energy efficiency are governed by binding EU legislation, including Directive (EU) 2018/2001 as amended and Directive (EU) 2023/1791.
• Consumer protection, energy poverty, and the participation of energy communities form increasingly important parts of the internal energy market.
• Competition law, State aid control, REMIT, environmental assessment, and judicial review apply alongside the sector-specific energy framework.
• Nuclear energy remains subject to the distinct Euratom legal order as well as relevant EU environmental, competition, and internal market rules.

18. Frequently Asked Questions

1. What is the main legal basis of European Union energy law?

Article 194 TFEU is the principal legal basis. It establishes the objectives of ensuring the functioning of the energy market, security of supply, energy efficiency, renewable energy development, and interconnection of energy networks.

2. Does the European Union determine the energy mix of each Member State?

No. Article 194(2) TFEU expressly preserves Member States’ rights to determine the conditions for exploiting their energy resources, their choice between different energy sources, and the general structure of their energy supply. However, national choices must comply with applicable EU law.

3. What is the European internal energy market?

It is the integrated market in which electricity and gas may be traded across national borders under common EU rules. It is based on regulated network access, competition, unbundling, consumer choice, and cooperation between national regulators.

4. What is the role of ACER?

The Agency for the Cooperation of Energy Regulators facilitates cooperation between national regulatory authorities, contributes to the consistent application of EU energy rules, and performs specific functions concerning cross-border markets and wholesale market integrity.

5. What is the difference between electricity transmission and distribution?

Transmission concerns the movement of electricity through high-voltage networks, generally over longer distances and between regions or countries. Distribution concerns delivery through local networks to final customers.

6. What is the purpose of the EU gas security framework?

Regulation (EU) 2017/1938 establishes preventive and emergency measures designed to maintain gas supply during disruptions. It includes risk assessments, national emergency plans, infrastructure standards, storage measures, and solidarity arrangements.

7. What is energy solidarity under EU law?

Energy solidarity is a principle requiring cooperation between Member States in addressing energy security risks. In the gas sector, it includes a last-resort mechanism under which connected Member States may be required to assist in protecting specified customers during an extreme crisis.

8. What is REPowerEU?

REPowerEU is the Union’s programme for reducing dependence on Russian fossil fuels, diversifying energy supplies, accelerating renewable energy deployment, and improving energy efficiency and security. Its objectives have been implemented through several legislative measures, including Regulation (EU) 2026/261 on Russian natural gas imports.

9. Does EU law regulate hydrogen?

Yes. Directive (EU) 2024/1788 and Regulation (EU) 2024/1789 establish a regulatory framework for renewable gas, natural gas, and hydrogen markets. They address infrastructure, market access, regulatory supervision, and the development of cross-border hydrogen networks.

10. Are renewable energy projects exempt from environmental assessment?

No. Renewable energy projects remain subject to applicable environmental legislation. EU law provides for accelerated permitting in specified circumstances, but this does not remove all environmental assessment and protection obligations.

11. How does EU law protect energy consumers?

It establishes rights concerning supplier choice, transparent contracts, billing information, switching, dispute resolution, and protection of vulnerable customers. Recent reforms have strengthened safeguards against disconnection and improved access to different types of electricity contracts.

12. Is nuclear energy governed by the same legislation as renewable energy?

No. Nuclear energy is subject to the separate Euratom Treaty framework, including legislation on nuclear safety, radioactive waste, and radiation protection. It is also affected by relevant EU environmental, competition, and internal market rules.

13. Can the European Commission intervene in national energy policy?

The Commission may monitor compliance with EU energy legislation, issue recommendations under the governance framework, assess State aid, and initiate infringement proceedings where a Member State breaches EU law. However, its powers remain subject to the Treaty allocation of competences and the national discretion preserved by Article 194(2) TFEU.

14. Which courts resolve disputes concerning EU energy law?

National courts resolve many disputes involving energy companies, consumers, regulators, and public authorities. They may refer questions of EU law to the Court of Justice under Article 267 TFEU. The EU Courts also review acts of EU institutions and agencies within their respective jurisdiction.

Conclusion

European Union energy law has developed from a framework primarily concerned with market liberalisation into a comprehensive legal system addressing energy security, infrastructure, consumer protection, decarbonisation, and external dependence.

Article 194 TFEU provides the constitutional foundation, but the practical operation of the system depends on a substantial body of legislation governing electricity, gas, hydrogen, network infrastructure, renewable energy, and emergency preparedness. The internal energy market requires common rules because national energy systems are economically and technically interdependent. At the same time, the Treaty preserves important national choices concerning energy resources and supply structures.

The energy crisis following Russia’s invasion of Ukraine demonstrated that energy security cannot be separated from geopolitical stability, infrastructure resilience, and the organisation of international supply relationships. The subsequent legislative developments, particularly the 2024 electricity and gas reforms and Regulation (EU) 2026/261, illustrate the Union’s effort to make its energy system more diversified and resilient.

The green transition introduces an additional legal challenge. It requires substantial investment and changes in the organisation of energy production, transmission, consumption, and storage. European law must facilitate this transformation while maintaining market competition, protecting consumers, respecting environmental obligations, and ensuring that the costs and benefits of the transition are addressed fairly.

The central feature of EU energy law is therefore the attempt to reconcile objectives that may sometimes be in tension: a competitive market, secure supply, affordable energy, environmental protection, and national energy autonomy. Its future development will depend on how effectively the Union and its Member States coordinate these objectives within a common legal framework.

Primary Legal Sources and Further Reading

Treaty provisions

• Article 122 TFEU – Economic measures in exceptional circumstances
• Articles 170–172 TFEU – Trans-European networks
• Article 194 TFEU – Energy policy
• Articles 216–218 TFEU – International agreements
• Treaty establishing the European Atomic Energy Community (Euratom)

Internal energy market and electricity

• Directive (EU) 2019/944 on common rules for the internal market for electricity
• Regulation (EU) 2019/943 on the internal market for electricity
• Directive (EU) 2024/1711 amending the electricity market framework
• Regulation (EU) 2024/1747 improving the Union’s electricity market design
• Regulation (EU) 2019/942 establishing ACER

Gas, hydrogen, and security of supply

• Directive (EU) 2024/1788 on renewable gas, natural gas and hydrogen markets
• Regulation (EU) 2024/1789 on renewable gas, natural gas and hydrogen markets
• Regulation (EU) 2017/1938 concerning security of gas supply
• Regulation (EU) 2019/941 on risk-preparedness in the electricity sector
• Regulation (EU) 2026/261 on phasing out Russian natural gas imports

Infrastructure, governance, and market integrity

• Regulation (EU) 2022/869 on trans-European energy infrastructure
• Regulation (EU) 2018/1999 on the Governance of the Energy Union and Climate Action
• Regulation (EU) No 1227/2011 on wholesale energy market integrity and transparency (REMIT)
• Regulation (EU) 2024/1106 amending REMIT

Renewable energy and energy efficiency

• Directive (EU) 2018/2001 on the promotion of the use of energy from renewable sources
• Directive (EU) 2023/2413 revising the renewable energy framework
• Directive (EU) 2023/1791 on energy efficiency

Nuclear energy

• Directive 2009/71/Euratom on nuclear safety
• Directive 2011/70/Euratom on spent fuel and radioactive waste
• Directive 2013/59/Euratom on basic safety standards

European institutions and policy resources

• European Commission – Energy
• European Commission – REPowerEU
• European Union Agency for the Cooperation of Energy Regulators (ACER)
• European Network of Transmission System Operators for Electricity (ENTSO-E)
• European Network of Transmission System Operators for Gas (ENTSOG)
• Court of Justice of the European Union – CURIA