Eggborough power plant in East Yorkshire is to close, leaving England and Wales with just six coal-fired power plants.
The plant’s owners have opted for closure after failing to secure funding through the ‘capacity market’ for 2018-2019.
The funding pays suppliers to be available to provide electricity to ensure the lights do not go out.
In a statement Eggborough Power Limited said it would meet its obligations under its current capacity market contract which runs through to the end of September 2018.
But without a contract for future years it “will cease to be economically viable to continue operations at the station”, which supplies 5% of the power in the UK, equivalent to powering around two million homes.
Britain faces an ongoing challenge in meeting the energy requirement for the winter period as coal continues to be phased out and older nuclear plants are decommissioned.
It is estimated that about 60 per cent of UK generating capacity in 2010 is forecast to have disappeared by 2030.