Geopolitics and uncertainty for power generation in the context of the energy transition

The ongoing energy transition, driven in the first place by EU regulatory requirements, has been characterized by further degrees of complexity due to the forced disruption of traditional Russian- European natural gas supply relationships. Unprecedented scenarios unveil from a geopolitical standpoint. In this evolving landscape, natural gas, long considered a key element in the transition to less carbonintensive energy generation, faces new challenges with the increasing role of LNG at the expenses of piped gas. Albeit current economic slowdown appears favorable for achieving decarbonization goals - with gas quotations showing reduced volatility compared to the initial phases of the Ukraine conflict - prices remain above pre-war levels. An economic rebound could ignite natural gas demand thus heightening the commodity’s vulnerability to disruptive events, exacerbated by growing LNG dependence. But commodity markets are undergoing a further fundamental transformation, with critical metals gaining prominence in the global economy. This shift, particularly evident in the EU’s push toward decarbonization targets, suggests a transition from a "well to mine" economic paradigm. The emergence of new energy solutions and storage technologies has intensified the demand for these critical materials, while simultaneously raising concerns about supply chain stability and geopolitical risks. Finally, a further factor in the drifting process from fossil fuels is the renewed narrative about nuclear power. Since the elements involved in nuclear power generation processes display a dual uses, we find ourselves in the peculiar condition whereby electric generation (potentially) competes with the military industry, so much in vogue in recent times. This research aims to analyze the complex interplay between geopolitical risk, market dynamics, and the energy transition, focusing on both traditional energy sources like natural gas and critical materials, essential for renewable technologies and base-load alternatives. The objective is bi-fold: on one hand disclosing risk and uncertainty threats on the unpaved road of energy transition and, on the other hand, sketching new scenarios shaped by new geopolitical equilibria that the energy transition can reveal. Providing these insights is crucial for policymakers and market participants called to navigate this turbulent changeover process.