An independent review aims to “sort out the facts from the myths about the cost of energy” at a time when there are concerns about rising bills.
The Government-backed study will look at how the UK can meet its climate change targets while also keeping costs down for consumers.
Ministers want the country to have the lowest energy costs in Europe for households and businesses.
But earlier this week there was anger when British Gas said it was putting up electricity prices by 12.5% for 3.1 million customers.
The review, headed by Oxford University professor Dieter Helm, will investigate key factors affecting bills, including energy and carbon pricing, efficiency measures and regulation.
He said: “My review will be independent and sort out the facts from the myths about the cost of energy, and make recommendations about how to more effectively achieve the overall objectives.”
It will look for ways of reducing costs and consider how moving to electric vehicles and developments in storing energy, robotics and artificial intelligence will affect the industry.
Image: There was anger after British Gas raised electricity bills for millions of its customers
Extending the scope for auctions in the energy market will also be investigated along with making the supply chain less complex.
But the study will not examine whether there should be a cap on price rises for 17 million households – a Tory pre-election commitment watered down after Theresa May lost her Commons majority.
The Government has said it is taking action to cut bills and has asked energy regulator Ofgem for proposals to extend price protection to more people on the poorest value tariffs.
By 2050, the UK is legally obliged to reduce greenhouse gas emissions by at least 80% from 1990 levels.
Business and Energy Secretary Greg Clark said: “The review will consider how we can take advantage of changes to our power system and new technologies to ensure clean, secure and affordable supplies over the coming decades.”
Alex Neill from consumer group Which? said: “It is right to look at how to keep costs down, but yet another review is going to be cold comfort to the millions overpaying on their energy bills right now.
“Consumers need to see urgent action from the Government and regulator to tackle the lack of competition in the market and to ensure they are getting a good deal.”
Source: Sky