It will introduce contracts to guarantee profits for firms that invest billions in new nuclear or offshore wind power stations.

Reforms to the UK’s electricity market will push up consumer bills by £160 a year to pay for new nuclear plants and renewables.

The government predicts that the policies will save people 4% of their bills over 20 years by reducing dependency on volatile fossil fuel prices.

Energy Secretary Ed Davey said £110bn of investment was crucial over the next decade and stressed that consumers “already pay for infrastructure at the moment in their bills”.

“We have nuclear power stations coming offline, we have coal power stations coming offline, and actually we have electricity demand going up as we see the transport sector increasingly becoming electrified.”

“What we want is a market structure that helps keep the lights on.”

It also emerged today that electricity giant EDF is in talks with the regulator about extending the life of its existing nuclear power stations.

The firm said this would help build flexibility into the nuclear building programme and not replace it.

Rival bidders for Britain’s first next generation nuclear power station Laing O’Rourke and Balfour Beatty are on presently on tenterhooks to find out who has one the £1bn job.

The firms have been told the decision, which was expected this week, will be delayed for a further two weeks.