The PPA is worth about £75m over two years. The deal also includes electricity produced during commissioning of the plant, which is currently in its closing stages.
The 68MW plant is due to open in the late summer. It will burn about 570,000 tonnes of fuel per year, generating around 600GWh of low carbon electricity, enough to power about 160,000 homes.
Multifuel Energy is being jointly owned by UK energy firm SSE and US-based Wheelabrator Technologies.
Multifuel Energy director of engineering and operations Tom Maillet said: "Signing this Power Purchase Agreement is another step forward for the Ferrybridge Multifuel 1 facility and this will allow a new supply of low carbon electricity on the national grid at the earliest opportunity.
"We have been impressed by the approach taken by the SmartestEnergy team during negotiations and look forward to our business relationship."
SSE has agreed to buy the levy exemption certificates that are granted for power generated from renewable energy sources.
Multifuel Energy is also seeking to construct and operate a second power facility at the Ferrybridge site.
If approved, construction is expected to start later this year. Both plants will be capable of treating over one million tonnes of waste derived fuels per year.
