The plans are designed to secure massive investment in clean energy to prevent a looming gap in supplies as a number of power stations come to the ends of their lives.
There are fears that the reforms will lead to higher energy bills for consumers, who are already suffering from high global prices.
But Energy Secretary Ed Davey said £110 billion of investment was crucial over the next decade and stressed that consumers “already pay for infrastructure at the moment in their bills”.
“What we want is a market structure that helps keep the lights on. The real challenge for the UK, let’s face it, is energy security,” he said.
“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.”
The energy Bill - announced in the Queen’s Speech earlier this month - is expected to alter the structure of the electricity market with long-term contracts that pay a steady rate of return for energy over the lifetime of new low-carbon generators.