The group said the takeover of small business supplier Opus - which has more than 265,000 customer meters - will combine with its existing Haven Power provider to create Britain's fifth biggest non-domestic energy retailer.
Shares in Drax - owner of Britain's biggest power station - soared by as much as 20% at one stage after chief executive Dorothy Thompson unveiled the acquisition as well as a move to buy four gas stations.
The group wants to switch to direct energy supply and back-up power, given that its station in North Yorkshire faces an uncertain future with coal plants forced to close by 2025.
Half of the plant has been converted to run on biomass, but the Government has not supported the conversion of the remaining coal units.
Alongside the Opus deal, Drax said it would pay £18.5m to buy four projects to build open cycle gas turbines.
Thompson said: "These initiatives mark an important step in delivering our strategy, contributing to stronger, more predictable, long-term, financial performance, through greater diversification of the businesses."
Opus Energy is the biggest provider to the business market, outside of the Big Six.
It was founded in 2002 and has around 870 staff across offices in Northampton, Oxford and Cardiff.
Drax's existing supplier business Haven Power supplies the industrial and commercial market.
But while Drax said the announcements would boost its financial performance in the future, it warned 2016 underlying earnings would be around the bottom end of City forecasts.
Energy experts at Jefferies said the moves signalled a "reinvention" for Drax.
But they added: "This is the first time that the company is making a step into the small and medium-sized business retail market, therefore it remains to be seen whether Drax has the necessary expertise to manage this successfully."