Hitachi has this morning confirmed it will buy the Horizon nuclear venture from E.ON and RWE in a £696m deal that could see the Japanese conglomerate build between four and six new reactors in the UK.

The widely trailed purchase is a much-needed shot in the arm for the government’s plans to build 16GW of new nuclear capacity by the mid-2020s, which had looked in jeopardy after the two German utilities put Horizon up for sale earlier in the year.

Hitachi said it intends to progress with plans to build between two and three new nuclear plants at Wylfa on Anglesey and the same number at Oldbury in Gloucestershire, which could generate enough clean power to supply up to 14 million homes over 60 years.

The first plant could be up and running in the first half of the 2020s, the Department of Energy and Climate Change (DECC) said in a statement this morning.

UK engineering companies Babcock International and Rolls-Royce have signed preliminary contracts to join the Hitachi deal, which the Japanese company said should be completed by the end of November.

Prime Minister David Cameron said the deal was a major step forward for the UK’s nuclear programme.

“This is a decades-long, multi-billion pound vote of confidence in the UK that will contribute vital new infrastructure to power our economy,” he said. “It will support up to 12,000 jobs during construction and thousands more permanent highly skilled roles once the new power plants are operational, as well as stimulating exciting new industrial investments in the UK’s nuclear supply chain.”

The news was similarly welcomed by Angela Knight, chief executive of industry body Energy UK, who argued the investment demonstrated “the benefits in jobs and growth that the UK could see if the right policies and regulations are in place to attract the investment that we need”.

“There are more than 600,000 jobs linked to the energy sector up and down the UK, and with the right investment framework the number of people employed can increase even further,” she said in a statement. “Today’s announcement represents a vote of confidence in the UK’s energy future.”

Hitachi’s entrance into the UK market means the country’s nuclear programme is no longer dependent on a handful of companies, which had raised fears a lack of competition would force the government to set higher than anticipated subsidies for nuclear energy in the forthcoming Energy Bill.

In particular, the move strengthens the government’s hand in its current negotiations with EDF over the level of support, or strike price, the French utility can expect to receive if it goes ahead with its plans for a new nuclear plant at Hinkley Point in Somerset. According to sources, the government is pushing for a strike price significantly below the £100/MWh mark that had been mooted by some commentators as a means of ensuring the level of support for nuclear power matches that available to offshore wind.

In related news, Energy and Climate Change Secretary Ed Davey also announced the creation of a new Nuclear Industry Council working across industry and government to build a strong strategy for the sector.