Scotland will set up a publicly-owned, not-for-profit energy company, providing locally generated renewable energy, Nicola Sturgeon has confirmed.

The First Minister told the Scottish National Party’s conference on Tuesday that the new company would be set up by the end of the current parliamentary term in 2021 to increase competition and choice for consumers.

“The idea, at its heart, is simple,” she said.

“Energy would be bought wholesale or generated here in Scotland – renewable, of course – and sold to customers as close to cost price as possible.”

“No shareholders to worry about. No corporate bonuses to consider.

“It would give people - particularly those on low incomes - more choice and the option of a supplier whose only job is to secure the lowest price for consumers.”

Responding to the announcement, Dermot Nolan, the chief executive of Ofgem, said the energy regulator would “welcome any form of potential new entry” into the energy market.

Ministers will publish further details on the proposals in an energy strategy to be published later this year.

The required licence for the new company could be granted within months, Mr Nolan told BBC Radio Scotland's Good Morning Scotland programme on Wednesday.

“We would try to facilitate any licence application,“ he said.

“We could see a real change in energy in the next five to 10 years, much more local production, much more peer to peer community trading of energy and I think something like is by and large something consumers will like.”