Consequent to the economic agreements between the Gulf Cooperation Council States signed by their Majesties and Highnesses GCC Leaders back in 1981 several committees were formed to administer and implement the power grid. The idea for the project was conceived in 1986 when a study was conducted by a Committee from the GCC countries in cooperation with the Kuwait Research Institute and King Fahd University of Petroleum and Minerals. Subsequently, the GCC Committee recognized the technical benefits of the project and conducted a feasibility update study in 1990 in collaboration with Gulf Investment Bank and Canadian based SNC-Lavalin to determine the viability of the project on an economical and financial perspective, which resulted in the establishment of the GCCIA.

On December 31, 2001 the GCC Countries agreed to establish the GCC Interconnection Authority for the purpose of interlinking the power systems of the GCC Countries. As a result, a Royal decree no. M/21 dated July 28, 2001has been declared to establish the Authority with its official domicile in Dammam, Kingdom of Saudi Arabia.

In Year 2002 the Authority marked itself in history by initiating its business through employment of staff, undergoing pre-qualification exercise, and the hiring of a consultant to conduct the tendering of the project. In 2005 14 contracts were awarded totaling more than 1 billion dollars. Project execution began in November 2005 and ended in early 2009, where operations commenced. The project was segregated into three phases: the first phase which interconnects Kuwait, Saudi Arabia, Bahrain and Qatar; the second phase is the internal integration of the UAE and Oman power systems; and the third phase will connect phase one with phase two. The first phase member states were connected and have recently engaged in power exchanges amongst themselves. Future prospects will engage the Authority in market operations between the GCC states and hence create a regional power market exchange.