Cost increase may halt Xcel biomass project

By Anna Austin
Posted May 19, 2010, at 1:26 p.m. CST

For the past several years, Xcel Energy has been investigating the logistics of converting its last coal-fired boiler at its Bay Front Power Plant in Ashland, Wis., to a biomass gasification technology. Two of the three boilers at Ashland's Bay Front Power Plant have been combusting woody biomass since 1979, and if the last boiler were converted it would be the largest 100 percent biomass-fueled power plant in the Midwest.

In November 2009, after a lengthy project approval process and feasibility studies to ensure that a sustainable feedstock supply would be available, the Public Service Commission of Wisconsin granted Xcel permission to move forward with the conversion. The PSCW's stamp of approval green-lighted Xcel and its consultants to complete the next phase of engineering and development work, during which an unforeseen discovery was made.

At the beginning of May, Xcel announced it had determined that additional enhancements would be needed to maintain stable combustion using synthesis gas produced from the gasification process. Without these enhancements the unit would need to significantly cofire with natural gas. That increased the project price tag significantly from the initial low-end estimate of $58 million to $79.5 million.

Now, the PSCW and Xcel will discuss the results of these studies, next steps and additional options-including determining whether biomass is still the optimal fuel for the project. Xcel spokesman Brian Elwood said that the company is working on its response to the PSCW's initial questions, and should be supplying them with answers within a few weeks.

According to Xcel, the Bay Front Power Plant has burned nearly 4 million tons of waste wood over the years, and through its purchases of waste wood and related services the plant has a $20 million annual economic impact on the six-county region surrounding Ashland.