The utility will invest $55 million to $70 million to convert a coal-fired boiler to one that would convert chipped waste wood from northern Wisconsins forests into a gas for power production.
Xcel is an eight-state utility company based in Minneapolis.
Its Wisconsin electric and natural gas utility is based in Eau Claire.
The initiative is part of Xcels strategy to become a leader in production of renewable energy, a plan that could reap financial rewards if the federal government moves to regulate emissions linked to global warming.
Through its wind farms based primarily in Minnesota, Xcel is the largest producer of wind energy in the country, according to the American Wind Energy Association. The company also has 19 dams generating hydroelectric power on rivers in northern Wisconsin.
The Ashland power plant consists of three boilers, two of which burn both biomass and a small amount of coal, and one that burns coal exclusively. The new proposal, to be filed with state regulators this fall, would replace that coal-only boiler with a biomass-to-gas system, company spokesman Brian Elwood said.
One concern, he said, was whether there would be enough waste wood to supply the plant. A study by the Madison-based Energy Center of Wisconsin found there would be enough wood left after forests are logged to supply an expansion, he said.
One of the nice things about that plant is where its located. Its obviously a very wood-rich area, Elwood said. There is available waste wood that could be used.
In 1979, the Bay Front Power Plant in Ashland became the first utility-owned plant in the country to burn waste wood.