This causal loop diagram illustrates the interlocking financial and structural barriers slowing Egypt’s energy transition. A reinforcing loop captures how high perceived investment risk drives up the cost of capital (WACC), which in turn discourages investment in renewables and delays capacity growth. At the same time, low renewable capacity sustains fossil fuel reliance, further increasing uncertainty and reinforcing risk perception. A balancing effect could emerge as investment in renewables grows, but the dominant loop currently traps the system in a cycle of underinvestment and slow progress.
