The minister also announced the government was funding a further project involving Drax at the Selby site.
The conversion plant, which sees Drax burn wood pellets instead of coal, is designed to reduce carbon emissions by 80% compared to coal and provide enough low carbon energy to power the equivalent of around one million homes.
Meanwhile, the government is providing new multi-million pound government funding for a study to support the White Rose project at Selby, involving Drax, BOC and Alstom.
The White Rose project involves building a £2bn power plant next to the existing facility, burning coal with the added ability to co-fire sustainable biomass.
It will be equipped with carbon capture storage technology, capturing 90% of the carbon dioxide emitted by the plant and then transporting it by pipeline for permanent storage deep beneath the seabed of the North Sea.
