The objective of this article would improve the levels of energy security expected to decrease their level of energy import and fossil fuels dependencies under the expansion of power trade. The effects of hydropower development in Laos and power trade between Laos and Thailand on economy wide, energy resource mix, power generation capacity mix, energy system cost, environment, as well as, energy security. A MARKAL based model for an integrated energy system of Laos and Thailand was developed to assess the effects of energy resource development and trade to meet the national energy demands of the two countries.