The plant, constructed on 25 acres in the Sadr City slum in northeastern Baghdad, has two 160-MW turbines, one of which was connected to the national grid on Sunday. The other was scheduled to be hooked up next month.
"No power station of this size has been installed in Baghdad in years," electricity ministry spokesman Musab al-Mudarres said.
Intermittent power is one of Iraqis' main complaints. Eight years after the fall of dictator Saddam Hussein, the grid still only supplies a few hours of power a day. Protesters at recent demonstrations frequently complained about the power supply.
Iraq needs more than 15,000 megawatts to meet peak summer demand. Its supply this summer is projected to be just 7,000 megawatts, the electricity minister said last month.
Sunir Vice President Amir Anvari said the company plans to install two more gas units in a second phase of the plant and should sign a contract for the project in about a month.
The new turbines would bring total capacity of the plant to 640 MW.
The turbines can be run on natural gas or gasoil. Each unit needs 1 million liters of gasoil a day, which requires 80 fuel tanker trucks to travel to the site every day.
"There is a real problem in transferring fuel to this plant ... with these unpaved roads, these traffic jams and these (security) checkpoints," said Ghalib al-Zamili, the head of the energy committee of Baghdad's provincial council.
Sunir is in negotiations with the ministry to install a natural gas pipeline between Iran and Iraq to feed the Sadr City power station and another in northern Baghdad, Anvari said.