Availability of adequate and cheap electricity is one of the necessary requirements for industrial and agricultural development and it is also a basic requirement of urban life. Due to very rapid growth of demand for electricity and widespread shortages experienced in India, investment planning in the power sector is of prime importance. As power sector is also highly capital intensive, there is a definite need for determining least-cost investment plans and the use of operations research techniques for choosing the best expansion path from a large number of alternative system expansion plans for power generation. The present paper describes an optimal investment planing model for determining the least-cost expansion plan for generating capacity of a power system under growing demand over a planning horizon of 15 to 25 years. Given projections of future demand for power, the expected shape of the annual load duration curve and relevant capital and operating cost information, a solution of the mixed integer linear programming model would provide the type, capacity and time schedule of commissioning the additional generating plants needed for meeting the given demand with an accepted standard of service in terms of reserve requirements or load-loss probability.