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Journal of World Energy Law and Business, 2020, 13, 1-11
doi: 10.1093/jwelb/jwaa003
Advance Access Publication Date: 13 February 2020
Article
Trust in the invisible hand? The roles of the
State and the markets in EU energy law
Kaisa Huhta*
ABSTRACT
The article analyses the European Union (EU) legal approaches that govern security of electricity
supply. This legal analysis demonstrates how EU law allocates power and responsibility between the
State and the markets in the electricity sector to ensure the uninterrupted availability of affordable
electricity. The article argues that the allocation of roles and responsibilities has been similarly struc-
tured in respect of different timescales of security of supply in the Clean Energy for All Europeans
package. This legal structure relies heavily on the invisible hand of the market, in which context the
role of the State is limited to providing a fallback in the event that the market is unable to achieve
the objective of security of electricity supply.
1. INTRODUCTION
Modern societies are heavily and increasingly dependent on electricity. Consequently, active policy measures
are needed in order to guarantee security of electricity supply, ie the uninterrupted availability of affordable
electricity. Traditionally, these measures have focused on issues such as the availability of primary energy
sources and the goal of energy independence.' Although these issues are still highly relevant, the focus has
shifted. The new millennium has ushered in new security of supply measures, which focus on security phe-
nomena that have emerged in the context of the liberalization and the low-carbon transition of the electricity
sector. These measures are aimed, inter alia, at guaranteeing the uninterrupted supply of electricity in circum-
stances where generation is increasingly intermittent.
The importance of ensuring security of electricity supply is in itself uncontroversial. The policy instru-
ments and legal approaches by which this aim is pursued are more debateable. Since the beginning of the
1990s, energy policy in the European Union (EU) has been moving towards greater reliance on the markets
to meet the objective of ensuring security of supply.3 While command-and-control based policy instruments
continue to play a central role, the underlying expectation is increasingly that the invisible hand of the market
will work in favour of security of electricity supply.4 Theoretical discussions on the choice of policy
* Kaisa Huhta, senior lecturer in EU law, UEF Law School and the Centre for Climate Change, Energy and Environmental Law (www.uef.fi/
cceel), University of Eastern Finland. Email: kaisa.huhta(at)uef.fi.
1 SM Goldberg, 'Security of Supply in the Context of European Energy Market Liberalisation - A Brief Overview' (2011) 4 International
Business Law Journal 433-62, 434.
2 This change is also acknowledged in Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019 on common
rules for the internal market for electricity and amending Directive 2012/27/EU [2019] OJ L 158/125 (hereinafter the 'Electricity
Directive'), recital 3.
3 S Lavrijssen, 'Power to the Energy Consumers' (2017) 26 European Energy and Environmental Law Review 6, 172-87, 174; and, in general, D
Buchan and M Keay, Europe's Long Energy Journey: Towards an Energy Union? (OUP for the Oxford Institute of Energy Studies 2015).
4 K Huhta, Capacity Mechanisms in EU Energy Law: Ensuring Security of Supply in the Energy Transition (Kluwer 2019) 13-24; Lavrijssen, ibid
172-87, 174.
© The Author(s) 2020. Published by Oxford University Press on behalf of the AIPN. All rights reserved.
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