Brussels,

Governance of the internal energy market

Established under the 2009 Third Energy Package, the Governance framework was updated in 2019 for electricity and 2024 for gas, renewables, and hydrogen. 

​The EU’s governance system—built on unbundling, independent regulation, ACER oversight, and cross-border TSO cooperation—is designed to foster a transparent, competitive, and secure internal energy market covering electricity, gas, renewable gas, and hydrogen.

⚖️ Two Core Pillars

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• Independent Network Operators (Unbundling)
  • Ensures TSOs (Transmission System Operators) and DSOs (Distribution System Operator) operate free from conflicts of interest with producers or suppliers.
  • Implements three models:
    • Ownership Unbundling – full separation of networks from supply.
    • Independent System Operator (ISO) – networks may be owned by suppliers but operated independently.
    • Independent Transmission System Operator (ITO) – subsidiary handles operations independently 
  • Electricity TSOs cooperate at EU level in ENTSO-E, gas TSOs in ENTSOG and electricity or gas DSOs in the EU DSO Entity 
  • European Commission offers guidance and issues certification opinions through a public procedure.
• Independent Regulators + ACER
  • Each Member State must have a national regulatory authority (NRA) that is legally and financially independent, with binding enforcement powers, budget autonomy, and a mandate for data collection and cross-border cooperation 
  • Established in 2009, the Agency for Cooperation of Energy Regulators (ACER) coordinates NRAs, mediates cross-border issues, drafts guidelines, monitors market integrity and consumer protection, and supports network development 

Pillars
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1. Unbundling (TSO/DSO) - Key Features: 3 models (OU, ISO, ITO); EU certification; prevents conflicts of interest
2. Regulation - Key Features: Independent NRAs with enforcement power; cross-border coordination via ACER
3. TSO Collaboration - Key Features: ENTSO‑E (electricity) & ENTSOG (gas) manage codes, planning, and transparency \

🌍 Cross-Border Coordination

TSOs collaborate via:
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• ENTSO‑E (electricity), created in 2009, now comprising 40 TSOs across 36 countries to coordinate network codes, ten-year development plans, transparency, and reserve adequacy
• ENTSOG (gas), established in December 2009 to harmonize gas network codes, infrastructure planning, and data flows 

These bodies undertake:
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• Drafting European Network Codes to harmonize grid operation and access rules,
• Publishing Ten-Year Network Development Plans (TYNDPs) to guide investment,
• Maintaining centralized timeline and data transparency.​​​