This work addresses the internalization of externalities in energy decision making and in generation expansion planning (GEP). Although the linkage between externalities and energy is well recognized, the issue of the internalization in GEP models and from a sustainability perspective is still far from being fully explored. A critical literature review is presented, including scientific articles published in the period from 2011 to 2021 and selected from scientific databases according to a set of pre-defined keywords. The literature is vast and quite heterogeneous in the models and methods used to deal with these externalities, and therefore a categorization of these studies was attempted. This categorization was based on the methods used, the geographical scope, the externalities included in the planning model and the strategies for their inclusion. As a result, it was possible to perceive that most studies tend to focus on the internalization of externalities related to CO₂ and equivalent emissions from a national perspective. Departing from the critical analysis, pathways for future research were presented, highlighting the need to improve the internalization of social externalities to overcome environmental and economic bias, and also highlighting the importance of recognizing regional specificities and development priorities.