This report examines three major issues associated with power generation investment in liberalized electricity markets. The first issue is how liberalization and investment risk have affected technology choices in power generation. The second issue is how power generation investors are adapting to investment risks. The third major issue is inspired by recent developments in several OECD electricity markets. The report reviews recent cases of electricity price volatility in Australia, Canada, New Zealand and Norway, and the authors discuss the impact of governments' responses to these crises on the prospects for efficient new generation investment.