Construction of the first windfarm off the south coast of England will begin early next year, it has been announced.

The 400-megawatt Rampion windfarm, situated eight miles from the Sussex coast, could power up to 300,000 homes and will cost £1.3bn.

Up to 450 jobs could be created during the main building phase of the Rampion project, which consists of 116 turbines and could cut CO2 emissions by up to 600,000 tonnes a year.

Amber Rudd, the energy secretary, said: “This huge investment is a vote of confidence in the UK, creating local jobs, bringing business opportunities and providing clean, homegrown energy.”

E.ON said onshore construction of the substation at Twineham, West Sussex, will start next month, followed by preparations for the onshore cable route. The energy company said offshore construction was expected to be completed by 2018.

Tony Cocker, the E.ON chief executive, said: “This is an important milestone for what is a strategically important project for the UK.”

Shaun Kingsbury, the chief executive of the Green Investment Bank, E.ON’s project partner, said: “Our investment gives the developer the confidence to begin construction on this important wind project, boosting UK energy supply and generating enough power annually for around 300,000 homes.”

Alasdair Cameron, a renewable energy campaigner with Friends of the Earth, said: “This is positive news. Offshore wind is a once in a generation opportunity for the UK, providing jobs, cutting emissions and boosting our energy security.

“It’s great to see the Green Investment Bank backing wind power, but there is a real risk that without renewed government support, and a timetable beyond 2020, investment could dry up. Germany is already poised to overtake the UK as the largest offshore wind market.

“Costs are falling rapidly in offshore wind, but if we want to get the most out of this crucial, clean energy source, ministers must show real ambition.

“At the same time the government should rethink its proposed ban on onshore wind. It makes no sense to attack one of the cheapest and most popular forms of energy while ploughing ahead with fracking in the face of local opposition.”