The UK will require an investment of £200m ($320bn) in power plants and infrastructure over the next decade to meet climate-change targets and secure power supplies, according to the industry regulator.
The Office of Gas & Electricity Markets (Ofgem) said that by 2020, the UK's domestic energy bills may increase by 25% to help fund spending.
Ofgem CEO Alistair Buchanan said that increasing energy bills is a big challenge as consumers are already enduring high energy prices.
Ofgem said that carbon emissions are expected to decline by 12 to 43% in the next 15 years compared to 2005 levels.
Major challenges to the UK power and gas supplies include an increasing exposure to a volatile gas market and power plants reaching the end of their life, Ofgem said.
In winter 2009-2010, supplies are expected to be efficient with a considerable reserve margin in electricity, according to Ofgem.