Drax has signed a contract to provide ancillary services to National Grid from one of the coal-fired units at its Yorkshire plant.

The year-long contract commenced at the start of this month. Drax chief executive Dorothy Thompson said: “We are pleased to have agreed this contract with National Grid. At a time when many power stations are closing, this contract recognises the supportive role Drax continues to play in providing secure and dependable electricity to the UK.”

The group said it expects the profits from the contract, as well as lower fuel prices, to push its EBITDA for 2016 towards the upper end of current market forecasts of £132 million to £161 million.

However, analysts at Citigroup said the announcement was likely to have a “limited impact” on their estimate. They said their target price for the group’s shares remained 271p.

Yesterday (31 March) SSE announced it was not closing three of the four units at its Fiddler’s Ferry coal-fired plant as previously planned, after it was awarded a contract to provide ancillary services to National Grid.