The Scottish Government's plans to set up a publicly owned energy company have been welcomed by regulator Ofgem.

First Minister Nicola Sturgeon announced her intention to set up not-for-profit energy firm by 2021 at the SNP's annual conference on Tuesday.

More details are expected to be revealed when ministers publish their energy strategy later this year.

Ofgem chief executive Dermot Nolan said he would "welcome any form of potential new entry" into the market.

The process of granting a licence to the company could probably be completed in a few months, he said.

Mr Nolan told the BBC's Good Morning Scotland programme: "I don't think it should take overly long. We would try to facilitate any license application.

"We could see a real change in energy in the next five to ten 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."

Sturgeon said the company will sell renewable energy to customers "as close to cost price as possible".

It could be the largest reform of the sector in Scotland since British Gas was privatised in the 1980s.

Speaking in Glasgow on Tuesday, Sturgeon said: "The idea, at its heart, is simple. 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."