The first auction of contracts-for-difference is scheduled to take place in October, with deals worth £50m a year available to more established technologies such as solar and onshore wind power.
Another £155m a year will be granted for less established technologies like offshore wind and biomass.
The government said its reforms to the electricity market will reduce emissions from the power sector much more cheaply than through existing policies, about 6% lower on the average domestic electricity bill up to 2030.
UK Energy and Climate Change Secretary Ed Davey said: "Our plan is powering growth and jobs as we build clean, secure electricity infrastructure for the future.
"By radically reforming the electricity markets, we’re making sure that decarbonising the power sector will come at the lowest possible cost to consumers.
"Average annual investment in renewables has doubled since 2010 – with a record breaking £8 billion worth in 2013.
Davey estimated that there would be 250,000 jobs in the UK’s low-carbon energy sector by 2020.
RenewableUK has expressed disappointment that insufficient funding is being made available to ensure the country’s successful transition from fossil fuels to clean energy sources.
RenewableUK director of policy Gordon Edge said: "Whilst the industry understands the pressures facing Government when setting this budget, we are disappointed with the overly cautious approach used.
"Although we appreciate that it’s necessary to hold back budget for future years in order to allow potentially cheaper projects to come forward later, this initial release of the draft budget risks being insufficient to drive industrialisation, competition and cost reduction."
Image: Deals worth £50m a year are available to more established technologies such as solar and onshore wind power. Photo: Courtesy of Anusorn P nachol/FreeDigitalPhotos.net.
