As uncertainties for generation investment have increased after the implementation of emission right trading，the traditional net present value analysis is unable to meet the needs of power generation investment decision making.Firstly，generalized autoregressive conditional heteroscedasticity is used to describe the price of electricity，coal，natural gas，emission rights and cost of carbon capture and storage（CCS）.Secondly，according to the real option theory，a real option model is developed to help investors make decisions in face of various uncertainty factors，such as fluctuations of electricity price，fuel price and emission rights price，policy change，carbon capture and storage technology development.Investors should choose to invest in conventional coal-fired power，combined cycle gas turbine（CCGT）units or wind power，nuclear power and other forms of renewable energy.Finally，Monte Carlo simulation is used to determine the options for each investment project and its best investment time.The effectiveness of the model is verified.