The story: In connection with the recent Arab summit in Jeddah, Iraq and Saudi Arabia are forging ahead with efforts to connect their electricity grids. The plan revolves around a new power line between the two neighbors with a capacity of 1 gigawatt (GW). Separately, Iraq and the Gulf Interconnection Authority (GCCIA) are advancing a scheme to power southern Iraq.

While Iraq has long been under pressure from the US and some Arab states to reduce reliance on energy imports from Iran, informed sources in Baghdad characterize the shifts underway as a win-win for all sides—pointing to burgeoning domestic demand in Iran, and the possibilities offered by a new regional electricity market.

The details: Early this year, Iraq and Saudi Arabia signed a memorandum of understanding (MOU) to connect their electricity grids. An executive report which outlines the framework for the endeavor was approved in Jeddah on July 15...