Demand for electricity in the northern Middle East region has experienced considerable growth in the past few decades. However, power sector planning in the countries of this region has been mainly carried out in an independent manner. Electricity trade has been discussed as a means for regional cooperation and a viable option for integrated regional planning. This paper reports on a study to evaluate the potential economic benefits from such an integrated planning approach. A mathematical model is formulated and used with country level technical and economic data with different acceptable levels of trade and for different demand growth scenarios. This demonstrates potential gains from complementarities of peak load and diversity of fuel resources in the studied region. Results obtained for a northern Middle East region consisting of Egypt, Iraq, Jordan, Lebanon and Syria estimate savings of more than 13% in required installed generation capacity in these countries. The savings occur over a 15-year planning horizon when an integrated regional planning approach is followed allowing individual countries to have up to 50% of their peak demand met by other countries in the region. The analytical model developed and applied here can prove to be a valuable tool to decision makers in the region as they study future plans for the energy sector and negotiate their participation in regional interconnection projects. (C) 2006 Published by Elsevier Ltd.