During a Wednesday visit by a U.S. trade delegation, Iraq signed a memorandum of understanding with American energy company GE Vernova to generate 24,000 megawatts of electricity, according to the government.

Prime Minister Mohammed Shia al-Sudani personally oversaw "the signing of a Memorandum of Understanding as part of a strategic cooperation framework with GE Vernova," according to a statement from his office. The statement explained that "the MoU covers projects to establish combined-cycle gas power plants with a total capacity of approximately 24,000 megawatts." It described the move as "the largest and most advanced electricity generation initiative in Iraq's history". It noted that it "also includes provisions for securing external financing through major global banks."

The agreement was signed at the end of a visit to Iraq by a high-level U.S. delegation, including representatives from 60 private companies. Iraq has been working to recover from years of conflict and instability, including the sectarian violence that followed the 2003 U.S.-led invasion, which ousted Saddam Hussein.

These decades of turmoil have severely damaged the country’s infrastructure, leading to frequent power outages, especially during the scorching summer months when temperatures can hit 50°C (122°F).

Even though Iraq has vast oil and natural gas reserves, its power plants still rely heavily on gas imports from Iran, which currently supplies about a third of Iraq’s energy needs. Baghdad has often expressed its intention to reduce this dependence on Iranian energy, as Iran has, at times, disrupted the supply.

The U.S. government has also pushed Iraq to stop buying natural gas from Iran entirely. On March 8, Washington chose not to extend a sanctions waiver that had previously allowed Iraq to purchase electricity from its neighbour.

Steve Lutes, who headed the US trade delegation to Iraq, expressed confidence in American businesses, saying, "we think that we can compete with anyone when given a level playing field". Speaking at an event in Baghdad, he emphasised that "American companies want to lean into, you know, ideas of energy diversification and economic diversification." He also pointed out that there are "a lot of opportunities in oil and gas, and we want US companies pursuing those."

Iraq, long seen as a key ally of Iran and a strategic partner of the US, has spent years carefully managing its ties with both rival nations. The recent electricity agreement comes at the same time as US President Donald Trump's announcement that his administration is preparing to begin negotiations with Iran regarding its nuclear program.

Prime Minister's advisor on foreign affairs, Farhad Alaaldin, informed AFP, "The Iraqi government has drawn up plans to guarantee its energy independence and meet the population's demand for stable, uninterrupted electricity."

Iraq needs to generate 55,000 megawatts during peak demand times to prevent power outages. The country only produces around 16,000 megawatts, though the energy ministry aims to push that figure beyond 27,000 megawatts by this summer.

On Wednesday, Iraq also signed a memorandum of understanding with UGT Renewables to set up a solar power project with a capacity of 3,000 megawatts and to develop up to 1,000 kilometres (620 miles) of high-voltage transmission lines.

The U.S. Embassy in Baghdad shared on X that it was "proud that US companies GE Vernova and UGT Renewables signed agreements worth billions... to address Iraq's energy needs".

These deals come when there are growing concerns about a global recession following broad tariffs imposed by Trump, including a 39 per cent duty on imports from Iraq. As per the U.S. Trade Representative’s office in Iraq, trade between the two nations totalled $9.1 billion in 2024.