Alkane Energy, which mines methane gas from redundant Yorkshire coal mines, has won a contract with National Grid to supply 56MW of standby power for this winter.
Alkane said the contract will help “keep the lights on this winter” as the UK faces a power shortfall.
The firm said that Yorkshire mines will supply half the methane for the contract, which will provide a new income stream for Alkane.
The contracts are to supply capacity to National Grid during periods of high demand over the winter season running from November 1 to the end of February.
They are among the first contract awards under interim measures introduced by National Grid to deal with coming winters.
Alkane will cover the winter peak period from 4pm to 8pm each weekday.
The company will receive a two-hour warning from National Grid if it is required to generate.
The group said it is not expecting any significant additional capital expenditure or operating costs to service this new market.
Alkane’s CEO Neil O’Brien said the standby power will be essential if the UK is to avoid power cuts.
“It’s as simple as keeping the lights on,” he said.
Mr O’Brien said that Wheldale, Houghton Maine and Grimethorpe will all contribute to the methane production.
All three are former mines that have no methane left but the mine workings are used to buy in gas to produce power to feed the grid.
They are known in the trade as power response sites.