alisation of South Caucasus regional electricity markets would allow for spot price comparisons with the EU, aiding in feasibility assessments. While non-commercial benefits such as energy security and frequency regulation are also significant, commercial viability remains a primary concern. Stakeholder perspective Beyond technical and economic considerations, the region continues to face broader structural challenges. These in­clude discrepancies in national regulatory frameworks, mar­ket structures, and technical standards which hinder harmo­nisation. Infrastructure limitations and geopolitical uncer­tainties add further complexity to long-term energy planning and sustained regional cooperation. Moreover, variations in energy pricing, tariffs, and subsidies discourage private in­vestment and undermine regional trade incentives. Addressing these challenges requires a shift toward identify­ing mutual drivers and potential synergies across regional power systems. Georgia, Armenia, and Azerbaijan each pos­sess distinct yet complementary characteristics in their gen­eration profiles and resource availability. For instance, Geor­gia’s hydro potential, Armenia’s nuclear and solar capacity, and Azerbaijan’s fossil fuel resources provide a strong basis for balancing and reserve-sharing. A coupled electricity mar­ket between Armenia and Georgia would allow for more ef­ficient management of surplus clean energy, reduce resource curtailment, and create a more resilient power system. By leveraging these complementarities, the South Caucasus region can collectively enhance reliability, improve power quality, and accelerate the transition toward low-­carbon ­energy systems. A coordinated development strategy – ­focused on clean energy, operational reserve-sharing, and grid interconnection – should be paired with institutional market integration. This would enable deeper alignment with European Union energy markets and policy objectives, particularly in the areas of decarbonisation, diversification, and market liberalisation. In summary, cross-border energy cooperation offers Geor­gia and Armenia not only a pathway to greater energy se­curity and system reliability, but also a platform for align­ing with broader European energy frameworks. For Arme­nia in particular, it is an opportunity to move out of its semi-isolated status towards higher regional integration and cooperation with the EU, as the EU Commission has offered support to involve Armenia in the Black Sea inter­connection project. 39 While internal infrastructure and reg­ulatory challenges persist, strategic planning, policy har­monisation, and investment in interconnection capacity will be essential to unlocking the full benefits of regional and extra-regional energy integration. As a result of greater regional system integration, solar en­ergy suppliers in Armenia are likely to gain, as excess solar electricity can be sold abroad; since Georgia has limited so­lar development so far, autocorrelation(producing solar surplus in both countries at the same time) may not be an issue. However, such a risk grows the longer one waits for integration, and the more the two countries’ power systems develop in a semi-isolated mode. The benefit to solar sup­pliers may come at the expense of more costly electricity suppliers in Georgia(thermal power), who would otherwise have met the growing afternoon demand. Similar issues may be mirrored in Armenia, where cheaper Georgian wind power could undermine local electricity; this would depend on wind generation patterns and hours. In both countries, hydropower is well-developed, and low-cost hydropower can benefit as well, once again at the expense of more costly producers, as is often the case when the system moves towards higher efficiency. Wholesale suppliers, who would be outbid by low-cost re­newables, may be particularly hurt, as opposed to genera­tors with long-term guaranteed power purchase agreements. Consumers would benefit from a more efficient and secure system, though at some point the growing costs of higher renewable deployment due to maintenance of back-up ca­pacity and flexibility have to be considered. Through effi­cient system development, these costs would be offset up to a certain point by the environmental and security benefits of a growing share of renewables in regional systems. 39  Joint statement by Nikol Pashinyan and Ursula von der Leyen – Press releases – Updates – The Prime Minister of the Republic of Armenia 14 Friedrich-Ebert-Stiftung e.V.