This thesis presents a novel methodology for generation expansion planning. The method is based on the Optimal Power Flow (OPF), a common tool for the economic operation of power systems. New generation capacity is simulated with the real power of virtual generators located at the candidate connection points, so OPF is used to plan generation expansion with respect to operating constraints of the existing network. A new method had to be developed for the direct incorporation of protection constraints in generation expansion. The modelling of new capacity with virtual generators gives access to power flow control variables. Binding constraints for generation expansion can be expressed as constrained functions of those variables. Accordingly, expected fault currents were expressed as functions of OPF variables and protection equipment specifications were converted to constraints for these functions. Thereafter, the allocation of new capacity by the OPF directly respects both system and fault constraints. The iterative approach has been proven less efficient than the later approach, but still maintains some advantages if the method is to be commercially exploited. Generator voltage control policies can also be converted to OPF constraints. The functionality of the suggested generation capacity allocation method was expanded to operate as an assessment tool of their impact on the amount of new capacity that a network can absorb. The method was expanded further, so as to consider the impact of capacity allocation on transmission losses. With a minor reformulation of the original method a new tool was designed for the optimal sitting of reactive power compensation banks for the implement of network headroom. Finally, a network planning method is presented based on the LaGrange multipliers, sensitivity by-products of the OPF solution method, which connect network constraints with generation expansion. Generation expansion is planned simultaneously with network reinforcement, so the overall optimum is achieved. The main conclusion of this work is that OPF can be used as a powerful planning, as well as operating tool. Its flexible formulation allows the incorporation of emerging constraints in generation and network expansion, such as those imposed by protection.