BARRY Power Station is to stay open - after the threat of closure was raised last year - but more than a third of staff will lose their jobs as part of restructuring at the plant.
The news comes after owner Centrica began a consultation in November last year, after halting output at the gas-fired plant on Sully Moors Road and starting a review of its options.
As reported in the Barry & District News, the future of the station was under threat if a contract could not be found to continue to provide power from the site.
But on Friday (March 9), Centrica said it was pleased that the station would continue to provide peak power after a new contract was agreed with the national grid.
Sarwjit Sambhi, the company's Director for Power Generation, said: "Our older, less efficient, power stations are facing very challenging economic conditions as a result of high gas input prices.
"However we have been successful in securing a contract for Barry Power Station to provide peak power.
"This will involve some changes to plant operating parameters to enable full load to be reached within minutes."
He added that the reconfiguration would lead to redundancies as the plant would require a smaller on-site team, and staff have been told that the number of employees will be reduced from 32 to 20 by May.
"Our priority now is to work with our employees who are affected, to support them through this difficult time and help them identify suitable employment opportunities within Centrica or externally," he added.
"Redeployment opportunities may exist for employees across our business, and our priority now is to help those impacted by the announcement."
In October last year Mike Macdonald, of the union Prospect, said that the power station could face closure.
And this week he warned that the future of Barry Power Station was still unclear.
"If things don’t change, then regrettably I can’t see Centrica making any further investment in Barry in 2013 or 2014," he said.
"I think there needs to be a change in government policy to secure the future of Barry Power Station, as at the moment the government highly favours renewable power to the extent that people will no longer invest in gas power as they can’t make a profit."
AES Corporation built Barry Power Station, which opened in September 1998. In July 2003 the 235MW gas combined cycle gas turbine (CCGT) power station was acquired by Centrica Energy.
After confirming that Barry Power Station would continue to operate, Centrica announced that its 340MW Kings Lynn gas-fired power plant will be withdrawn from service from April 1.