The European Union has called on member states to work together to ensure steady and secure energy supplies.
Mr Barroso wants the EU's energy market to reform quickly
The European Commission said in a green paper on energy that the EU's joint bargaining power would be second only to the US and let it get better deals.
EC president Jose Manuel Barroso said that "political will" was now needed.
The vision of a more unified power market may stumble, however, as nations including France, Spain, Italy and Germany fight to control key providers.
"We are in a new energy century, demand is rising, Europe's reserves are declining, there is underinvestment and the climate is changing," Mr Barroso said in Brussels.
"We must have an approach which matches the new reality."
Mr Barroso said that it was vital EU leaders abandoned their 25 "different and uncoordinated" energy policies and spoke with one clear voice.
However, energy is still regarded by many member governments as vital to national security.
This attitude was reinforced over the winter, when a spat between Russia and Ukraine led to supplies being compromised in a number of European nations.
At the same time, attempts to shake up the European energy market have encountered resistance, with France and Spain attempting to block takeovers of domestic power firms by foreign rivals.
As a result, the European Commission has now recommended the appointment of a single energy regulator and the setting up of a single European power grid.
The EU also should look at forming an energy pact with Russia, it said.
Mr Barroso said that he had been invited to Moscow by Russian President Vladimir Putin to discuss energy security.
"I believe that we are in interdependence," he explained.
The EU wants to improve conditions for energy consumers and firms
"Of course we need the flow of energy resources from Russia, namely gas. I believe it is also in the interest of Russia to have a stable market."
The EU imports more than 40% of the gas it uses. About half of that comes from Russia via pipeline through Ukraine.
Speaking to the European Parliament in October, UK Prime Minister Tony Blair said Europe would soon be importing 90% of oil and gas and needed to "up its game considerably".
Mr Barroso said Europe should look at all forms of energy production, including nuclear, in order to ensure that half of its supplies were from low carbon sources with 20 years.
"We must respond better to sharp emergency oil and gas shocks," he said. "There should be no taboos in this debate."
Another of the problems that have been hampering supplies and affecting prices is a lack of infrastructure and storage facilities.
The EC said that companies and governments need to spend about 1 trillion euros (£685bn; $1.2 trillion) on updating and expanding its infrastructure.
One of the countries that has complained loudest about the problems with pipelines and an unliberalised energy market has been the UK.
Consumers have had to endure a steep rise in gas and electricity prices, while companies complain that they are still shouldering most of the burden.
The UK is currently reviewing its national energy policy and Energy Minister Malcolm Wicks called the European plans "an ambitious agenda for action".
"The publication of the Green Paper is timely as we continue our own national energy debate," he said.
The Commission's recommendations were part of its green paper on a Secure, Competitive and Sustainable Energy Policy for Europe.
However despite the positive sounds about the energy plan, one analyst said the report did not look at the practicalities.
Jayesh Parmar, gas partner and head of security of supply at Ernst & Young, said: "The European Commission green paper on energy has highlighted the core themes for creating a more diverse European energy market.
"But the report fails to address the practical realities around, for example, policy diversification, gas storage and changes to the infrastructure to support a liberalised, rather than single, market."