Britain will need to invest "eye-wateringly large sums of money" just to keep the lights on, according to Philip Hammond.
The Chancellor put the cost at around £100 billion in the next 20 years to ensure the country meets its energy needs.
He also backed efforts to reduce the amount of energy used by people and businesses.
Speaking in the Commons, Labour former minister Caroline Flint asked Mr Hammond: "Would you agree with me that energy efficiency should be a priority for infrastructure development both nationally and regionally?
"To that end, will you seriously consider that proceeds of the shale gas sovereign wealth fund should be earmarked for energy efficiency measures so we can not only save on bills but create jobs and encourage innovation?"
Mr Hammond replied: "I'm not necessarily in favour of earmarking hypothecation of funds for that specific purpose.
"But I do think you make an important point.
"We have a serious challenge over energy capacity in this country over the next 20 years and we're going to have to invest eye-wateringly large sums of money - perhaps £100 billion - just to ensure that the lights stay on.
"Of course it makes sense to look at ways of reducing demand from energy through energy conservation measures, alongside the demands for new energy generation plants."