Liberalisation of energy markets has been progressing among OECD countries since the early nineties. In Europe this trend was accelerated by the decision in December 1996 by the EU Council of Ministers to adopt a new EU directive on liberalisation of the electricity market. This decision was based on the assumption that a liberalised market with commercial competition would lead to higher efficiency and lower consumer prices. Most EU governments have accepted the new EU directive based on these commercial arguments. Denmark has, however, been in a different situation because its energy policy is based primarily on environmental considerations. Danish energy policy involves government promotion of energy conservation and of systems based on renewable energy sources. This type of policy may in some instances conflict with the principles of the unregulated commercial market. The official Danish target is that 35% of energy demand should be covered by renewables by year 2030. The present paper analyzes the problems and possibilities of meeting this target taking into account the rules of the new EU directive on liberalisation.