The Energy Bill will allow energy companies to charge households an extra £7.6 billion until 2020, to go towards low-carbon electricity infrastructure.
An estimated £110 billion is needed in the next decade to renew the UK's ageing electricity infrastructure, with much set to go into low-carbon power sources such as wind farms.
Critics say the changes will be paid for by sharp rises in bills but Mr Davey insists state support for low-carbon electricity will cost the average household less than £100 a year.
And he said that he was "absolutely determined" to more than compensate for that by expanding efforts to encourage energy efficiency measures and lower energy demand.
A 10% reduction would save £4 billion in 2030, the Department for Energy and Climate Change (DECC) calculates, and reduce carbon emissions equivalent to those of a large city in a year.
It is the Government's long awaited light bulb moment. The Energy Bill published today envisages changes that would reach into our lives.
By 2020 we will be paying nearly £100 a year more for energy. But whether bills will come down again afterwards is still in dispute.
The coalition will announce plans on updating the energy infrastructure of pylons and power stations, and cutting our reliance on carbon.