The managing director of Ferrybridge’s operators SSE Paul Smith said the company would support workers at Ferrybridge through the closure.
Mr Smith said the decision to close the 48-year-old site was made after a “comprehensive review” of its coal-fired power stations.
He said Ferrybridge would close by the end of March 2016 due to rising costs and environmental legislation. He said the plant was forecast to lose £100m during the next five years.
Mr Smith, managing director for generation at SSE, said: “It has been an extremely difficult decision to make because of the impact it will have on the workers, their families and the surrounding area.
“We have been working hard to ensure that Ferrybridge is sustainable moving forward but we simply couldn’t and we had to make the difficult decision to close the site.
“It costs £10m a year to keep Ferrybridge going and we estimated that the site would lose £100m over the next five years and that’s just not sustainable.”
Workers and sub-contractors at the site were told about the closure during a meeting on Wednesday.
Mr Smith said: “It was a difficult announcement to make to the workers but it is nothing compared to how difficult it was for them to hear.
“Our team at Ferrybridge are fantastic folk, highly skilled and passionate about what they do, so our emphasis now will be on supporting them over the next ten months and through the closure.”
A new £300m multifuel site at Ferrybridge is due to be complete by the end of the year and SSE has also submitted a planning application for a second plant next to the site.
Mr Smith said: “We already have our team in place for the first multifuel plant but we have also announced that we will be reopening our Keadby Power Station in Lincolnshire and those who face losing their jobs at Ferrybridge have already shown an interest in working there.”
Mr Smith added: “I recognise the width and the depth that closing a site the size of Ferrybridge can have on the community but we will work extremely hard over the next ten months to minimise the impact.”