This study argues that the development of electricity systems is a crucial aspect of the region’s sustainable development. Regulatory and technical cooperation among national power markets can help improve energy security in the South Caucasus. However, the concerted operation of electrical power systems might also be affected by competitive regionalism. Thus, the study looks at how two regional integration projects, the EU Energy Community and the Eurasian Economic Union, might affect developments in the power markets. Despite lucrative opportunities for the countries to serve as a crossroads between the emerging Eurasian and European electricity markets, political barriers remain substantial.