The majority of Keadby Power Station is to be shut down with the loss of up to 45 jobs.
A programme of upgrade works have been taking place at the facility over the last 12 months to upgrade efficiency.
But owners Scottish and Southern Energy (SSE) said current market conditions have forced them to delay the re-commissioning of the gas-fired plant.
It will instead be “deep mothballed” meaning many of the systems will be completely shut down.
Over the next six months there will be a phased reduction in staff numbers, falling from the current 55 to a total of between 10 to 15 by late summer.
Paul Goodson, power station manager, said: “The economics of electricity generation at gas-fired power stations remain very poor, and they do not appear likely to improve in the short to medium term, so it makes little sense to bring Keadby back into full operation during these challenging market conditions.
“This decision has still not been an easy one to take, particularly when we have had to make it despite the successful completion of the upgrade investment and the best efforts of the team at Keadby to do everything possible to improve the productivity and efficiency of their generation plant.”