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As decarbonization and climate policy are gaining relevance in the European Union (EU) energy policy, the present paper seeks to present both priorities and challenges for of the EU energy transition. As priorities, we outline the key targets and initiatives proposed and set by the European institutions in relation to the energy matters. The EU identifies renewable energy sources, energy efficiency and reduction of the greenhouse gas (GHG) as the three pillars to achieve its carbon neutrality. The final goal for to the EU energy and climate targets is to achieve climate neutrality by 2050. Nevertheless, since given energy policy is being a “shared competence” between the EU institutions and Member States, each Member State plays a critical role for the achievement of the EU energy transition. Different socioeconomic structures and the energy mix across Europe have caused the implementation process of each EU target to develop at a different pace among European countries. We illustrate this drawing on four countries: Italy, the UK, Germany and Poland. We assess their political commitment to the energy transition and their actions regarding energy transformation. These four countries are only an example of the different pace in the implementation of the EU energy and climate targets. The last part of the paper is devoted to the ambitious plan, called Green New Deal, launched by the present Commission President, Ursula von der Leyen. It sets key priorities, reaffirming European commitments to the energy and climate transition. However, the plan faces significant obstacles. For example, division among Member States (North-South and West-East) might be a factor that could undermine the achievement of the European energy transition, due to multiple and divergent interests (also on the future role of the energy transition in the aftermath of COVID-19 and the resulting economic crisis). Another challenge is constituted by popular opposition, especially from those people that see the energy transition — and consequent economic and industrial transformation — as a potential threat to their well-being and jobs, as the French gilets jaunes show. Lastly, we explain that the European energy transition will impact also its external relations, for example with Russia, proposing how the two blocs can preserve their energy relationship in light of the energy transition, notably through the conversion of natural gas to hydrogen and storing/using the resulting CO2.

The aim of this paper is to estimate the potential impacts of different COVID-19 scenarios on the Italian energy sector through 2030, with a specific focus on transport and industry. The analysis takes a multi-disciplinary approach to properly consider the complex interactions of sectors across Italy. This approach includes the assessment of economic conditions using macroeconomic and input-output models, modelling the evolution of the energy system using an energy and transport model, and forecasting the reaction of travel demand and modal choice using econometric models and expert interviews. Results show that the effect of COVID-19 pandemic may lead to mid-term effects on energy consumption. The medium scenario, which assumes a stop of the emergency by the end of 2021, shows that energy-related emissions remain 10% lower than the baseline in the industry sector and 6% lower in the transport sector by 2030, when compared with a pre-COVID trend. Policy recommendations to support a green recovery are discussed in light of the results.

Europe’s energy landscape is characterized by a great heterogeneity due to differences in terms of population, economy, energy resources (availability of different energy sources) and differing policies in favor or against specific energy sources. Over the decades, the European energy mix has undergone important transformations. The EU set an energy policy framework based on three pillars (security of supply, competitiveness and sustainability) with the goal to address three different priorities: competitiveness (affordable prices), security (of energy supply) and sustainability (clean energy). These three pillars appear to pursue contradictory goals, especially in the short term, but they are seen as converging in the longer term. This chapter aims to analyze how these different objectives have been key drivers of the European energy policy and economics. To illustrate this, the authors also present five case studies: the United Kingdom, Italy, France, Germany and Poland. Lastly, the chapter presents the “European Green Deal”, whose ultimate goal is to reach carbon-neutrality by 2050. The chapter analyzes how a climate-neutrality goal requires a substantial transformation of the EU economy, which comes with some internal and external frictions.

This chapter argues that pricing mechanisms are a key element of gas trade, as they concur to determine price levels and define commercial strategies. It explains why gas suppliers traditionally defended long-term oil-indexed contracts and analyses the main features of historical contracts. The old consensus on oil indexation, which had been a pillar of international gas trade for a decade, has been eroded in several regions. The chapter discusses how more impersonal market exchange now prevails. Beyond Europe and North America, Asia is also gradually moving towards a larger share of hub indexation, although it is still lagging behind in the process of establishing its own hubs. The chapter concludes that gas prices remain regional even if additional convergence is materialising thanks to the globalising effect of flexible LNG.

This chapter provides an introduction to the economics of electricity generation, presenting the major economic differences between the multiple power generation solutions and highlighting the comparative advantages and disadvantages of each. In order to provide a satisfactory treatment of power generation technology and economics, a single chapter would have expanded beyond a practical dimension: accordingly the discussion has been divided into a general introduction and a sequence of specific chapters each devoted to a different generation solution: thermal power based on fossil fuels (coal, oil, and gas), thermal power based on nuclear fission, hydroelectricity chapter, solar power, wind power, geothermal power, and power from tides and waves. The present introductory chapter explains where on the load curve the different power generation options should be placed depending on costs, the issue of dispatchability, as well as the difference in the economic cost approach between dispatching and future capacity planning. Also flexibility mechanisms to integrate a large share of non-dispatchable renewable energy sources are discussed. Finally, issues related to space occupation and locational constraints are addressed.

Hydrogen is currently enjoying a renewed and widespread momentum in many national and international climate strategies. This review paper is focused on analysing the challenges and opportunities that are related to green and blue hydrogen, which are at the basis of different perspectives of a potential hydrogen society. While many governments and private companies are putting significant resources on the development of hydrogen technologies, there still remains a high number of unsolved issues, including technical challenges, economic and geopolitical implications. The hydrogen supply chain includes a large number of steps, resulting in additional energy losses, and while much focus is put on hydrogen generation costs, its transport and storage should not be neglected. A low-carbon hydrogen economy offers promising opportunities not only to fight climate change, but also to enhance energy security and develop local industries in many countries. However, to face the huge challenges of a transition towards a zero-carbon energy system, all available technologies should be allowed to contribute based on measurable indicators, which require a strong international consensus based on transparent standards and targets.

Globally about 800 million people live without electricity at home, over two thirds of which are in sub-Saharan Africa. Planning electricity access infrastructure and allocating resources efficiently requires a careful assessment of the diverse energy needs across space, time, and sectors. Because of data scarcity, most country or regional-scale electrification planning studies have however assumed a spatio-temporally homogeneous (top-down) potential electricity demand. Poorly representing the heterogeneity in the potential electricity demand across space, time, and energy sectors can lead to inappropriate energy planning, inaccurate energy system sizing, and misleading cost assessments. Here we introduce M-LED, a Multi-sectoral Latent Electricity Demand geospatial data processing platform to estimate electricity demand in communities that live in energy poverty. The platform shows how big data and bottom-up energy modelling can be leveraged together to represent the potential electricity demand with high spatio-temporal and sectoral granularity. We apply the methodology to Kenya as a country-study and devote specific attention to the implications for water-energy-agriculture-development interlinkages. A more detailed representation of the demand-side in large-scale electrification planning tools bears a potential for improving energy planning and policy.

Achieving the Sustainable Development Goals (SDGs) requires ensuring universal energy access. Yet, governments of low-income countries face significant budget constraints for the capital-intensive infrastructure required to reach the hundreds of millions of households and businesses without grid electricity. In this context, private investors are the key actors capable of channelling such large capital requirements. Compared to the previous decades, the 2010s witnessed a growing mobilization of private funding in the off-grid electricity access sector, including some success stories. Nonetheless, with less than ten years left until the SDGs horizon, off-grid companies systematically struggle to ensure the financial sustainability of projects, as the industry still seeks to demonstrate its maturity and profitability. In this paper, we critically review the main business approaches adopted by private decentralised electricity access service providers. The aim of the analysis is to identify the main drivers of risk and failure which have been hindering sectoral investment. We then propose and discuss four potential game-changing factors that could foster the next generation of private investment in decentralised electricity solutions: (i) anchor-businesses-community (ABC) models; (ii) the design of integrated business models centred around income generation; (iii) the growing role for “local” financiers; (iv) the securitization of assets. Our paper targets private infrastructure developers and financiers aiming at fostering investment in financially sustainable decentralised electricity access projects.

Before exploring risk mitigation solutions available to public and private actors, this chapter first focuses on the identification and definition of investment risks associated with clean energy access solutions in sub-Saharan Africa. It provides the reader with a comprehensive understanding of the hurdles linked to clean energy access financing across the region.

This chapter aims at introducing the book by presenting its focus, the main objectives and the scope of the analysis. In addition, it presents the content of each chapter in order to provide an overview of the book’s structure and to guide the reader.

This chapter focuses on instruments aimed at mitigating specific investment risks, including political, credit, currency and liquidity risks. It explores solutions emanating from both the public and private sectors.

The objective of this chapter is to provide the reader with an overall view of the current situation regarding clean energy access in sub-Saharan Africa, as well as to compare it with other developing and emerging economies. It focuses on the role played by energy in our daily lives and the financing gaps in the power and clean cooking sectors in the subcontinent. This section aims at setting the scene and giving more information about the dramatic energy challenges the region is currently facing.

Wind power plays a major role in the decarbonization of the power sector. Already now, it supplies increasing shares of the global energy demand. This book chapter provides an overview on the economics of wind energy and highlight global trends in the wind sector. It describes the technical characteristics of onshore and offshore wind energy and explains how these affect the economic competitiveness of the respective technologies. The authors describe how wind power, as an intermittent source of energy, can be integrated into power systems. They also discuss how renewable energy support schemes contribute in fostering the deployment of wind power.

This book presented investment risks associated with the sub-Saharan African clean energy industry and an overview of risk mitigation strategies and innovative financing schemes available to public and private players, while focusing on the power and clean cooking sectors and specific energy resources. Starting from this basis, we identified the following areas for future work: (i) the quantification of investment risks; (ii) the selection of risk mitigation actions and their impact on the cost of capital; (ii) the exploration of additional sectors and energy resources; (iv) an in-depth analysis of subsidy reforms.

This chapter concentrates on multilateral and development agencies, either located in Africa or pursing activities in the continent. The main objective is to understand what are their role in the financing of clean energy access in sub-Saharan Africa.

This chapter focuses on financial investments, coming either from public or private asset managers and institutions. It has two main targeted readers (without any exclusion): (i) public and private capital providers, with the objective of presenting traditional and alternative financial instruments and schemes capable to align risk-return profiles of several investment opportunities in the clean energy sector, (ii) project developers, in order to increase awareness of the financial mechanisms available in the market.

After having presented various financial instruments and mechanisms available for financing clean energy access projects and companies, this chapter focuses on a key element enabling an efficient use of some of the schemes exposed in the previous section. Indeed, well-functioning capital markets not only increase the trust of potential capital providers, but also enhance financial flows among countries and actors.

This chapter aims at synthesising the conclusions of the preceding chapters and it presents specific policy recommendations to foster the redirection of financial flows towards clean energy access solutions in sub-Saharan Africa.

This chapter primarily targets project developers and managers. Apart from the public policies and initiatives, as well as the private financial schemes previously presented, private actions emanating from the persons behind clean energy access projects have also a crucial role to play in the allocation of capital. Capital providers, profit-oriented or not, usually value the way a business is conducted, including how potential risks are managed as well as the capacities of the team to deal with complex situations.

This chapter focuses on the public sector and the tools at its disposal to decrease the risk perception in the clean energy sector in sub-Saharan Africa, encompassing policies, regulations and specific initiatives. It particularly targets policy-makers across the region, as well as development institutions supporting government agencies.

This annex includes the following tables discussed in previous chapters of the book: (i) definition of the Tiers of the Multi-Tier Framework (MTF) initiative; (ii) population with access to electricity and clean cooking in African countries; (iii) risks associated with investment opportunities and stakeholders; (iv) the de-risking matrix; (v) carbon tax and emission trading systems; (vi) MSCI market classification framework and requirements.

This chapter presents an overview of the existing literature on the geopolitics of the global energy transition. Notwithstanding its potentially re-defining role for international relations, this issue has, so far, not been analysed in a comprehensive manner but in a rather fragmented way. This chapter represents a useful summary to the state-of-the-art of knowledge in the field, and therefore a useful starting point for the book.

This chapter presents a range of policies that support an effective decarbonization of the transport sector, considering both the measures that favor a reduction and/or a modal shift of transport demand, and those that promote the spread of cleaner vehicles. The chapter also provide examples of best practices, i.e., cases in which local, national, or international authorities have attempted and been able to successfully implement these measures. Following analysis of individual policies, the chapter will look to take a more holistic approach to policy implementation. In this context, it will illustrate the governance levels that involve each singular policy, the taxation issue, potentially emerging risks, and the distributional effects deriving from the implementation of these policies.

This chapter aims at providing an overview of the multiple aspects involved in passenger and freight transport, which are the base for the understanding of the energy consumption of the sector, as well as for the current trends and prospects related to digitalization and decarbonization. A brief historical discussion and some trends will be presented, followed by a description of the main modes and technologies, both for passenger and freight transport, and a final focus on the differences across world regions in mobility patterns and behaviors. The evolution of transport systems has led to very different situations worldwide, depending on different strategies related to economic development, geographical limitations and cultural, political and social aspects. Proper sustainable mobility plans need to be based on the specific characteristics of each location, and the integration between different governance levels is of utmost importance to improve the reliability, affordability, and energy performance on the entire transport system.

In spite of abundant generation potential, as of 2019 East Africa has an electricity access level of 36%, with over 140 million people without service. Here, a bottom-up geospatial model (OnSSET) is used to estimate least-cost pathways to universal access to electricity by 2030 for different consumption-tier objectives under three regional grid electricity generation mix scenarios. Results suggest median total required investments of $57 and $110 billion for guaranteeing basic (160 and 44 kWh/person/year in urban and rural areas) and moderate - i.e. including potential to enable some productive uses - (423 and 160 kWh/person/year) consumption for newly connected households by 2030, respectively. This corresponds to an average of $5.6 billion/year, and implies median capacity additions of 12.2 GW (59% on-grid, 37% mini-grids, and 4% standalone solutions). At least further $2.7 billion/year in generation capacity are required to satisfy the projected demand growth from already electrified consumers. A grid electricity scenario with 25% lower photovoltaic costs and a higher penetration of renewables reveals to be up to 10% cheaper and 46% less carbon-intensive, while also requiring less up-front investment. To achieve such objectives, investment must be channelled within an enabling policy environment, which we discuss.

This paper aims at better understanding the potential future of shale gas in the light of the evolution of its wellhead production costs. Based on the most recent literature, we focus on cost data in the US to identify the structure of shale gas costs, their evolution and drivers. In particular, while the role of technology, which has led to a 25%–30% decline of unit capital costs since 2012 is emphasized, the relevance of considering additional risk factors when analyzing future costs is discussed. Further, we investigate future shale production costs on the long term by simulating contrasted supply and demand scenarios (from the authors, as well as replicated IEA scenarios) with consideration of different cost curves adjusted with the latest EIA cost data. Modelling results show costs ranging from $2.5/MMBtu to $6.0/MMBtu in 2040, with the conclusion that shale production costs are expected to remain relatively moderate until 2040, whereby the role of technological progress is deemed to be crucial. The paper finally assesses the key determining factors explaining the current gap in shale gas production costs between the US and other world regions. Keywords: Shale gas resources, Production costs, Drilling and completion, Outlook, Cost curves

EA-8 hosts 3.6% of world’s population but only accounts for 1.5% of total global primary energy consumption (The World Bank 2017; IEA 2017a). With South Africa (the second economy of SSA and an outlier in the region) excluded, this unbalance gets even more pronounced, with 2.9% of world’s population consuming 0.2% of total primary energy. While the share of EA-8 population without access to electricity has fallen from 90% in 2000 to 61% in 2016 (IEA 2017b), the absolute number of people without access has instead increased by eight million as electrification efforts have been outpaced by rapid population growth.

Irrespective of technical abundancy, RE potential per se does not imply a structural and inclusive expansion of energy access and an overall sustainable energy development of EA. Proper technological, economic, institutional, and policy considerations must be made to assess which are the best ways and most apt policies to sustain the exploitation of such potential in the regional context in relation to other energy sources, as well as which roadblocks and challenges are faced. A first meaningful consideration in this sense is that EA is characterised by a strong rural-urban imbalance: the majority of the population lives in poorly interconnected rural communities away from the electricity grid, which serves predominantly densely populated urban centres. While plans to tackle the imbalance are in place in virtually every country (both Kenya and South Africa have achieved notable results in this sense), the issue is not going to be structurally overcome rapidly. Thus, as highlighted by the least-cost electrification scenarios in Chap. 4, when discussing the case for renewables to increase and improve access, a distinction must be made between national grid expansion to reach additional shares of the population, and specific decentralised solutions.

A highly relevant question in the discussion on the energy development of EA concerns the relationship that will materialise between RE and the abundant NG resources that are undergoing production in the region. Already in previous chapters it was evidenced that a configuration of RE-NG complementarity could become the least-cost and most sustainable pathway: (1) to guarantee a full electrification of EA; (2) to match the steeply growing demand for power to feed an emerging industrial sector; and (3) to contribute to the objective of clean cooking. In particular, gas could indeed contribute to the displacement of coal in electricity generation, and thus allow for substantial potential greenhouse gas emissions’ reductions.

With an installed capacity of 41 MW and a total generation of 300 GWh in 2015 (United Nations 2015), Burundi is characterised by particularly low electricity access figures. Only 10% of the ten million inhabitants is served by electricity, with the rate reaching 35% in urban areas and dropping to 6% in rural areas (IEA 2017b). Households located in the capital Bujumbura account for the bulk of electricity consumption. Electricity represents however just 1.3% of the national energy consumption, and—as seen in Fig. 3.1—most of the generation capacity (91%) comes from hydropower, with two small (