Koda Energy, whose combined heat-and-power plant in Shakopee shut down after an explosion and fire in April, says it will invest $6.8 million to replace two damaged biomass-storage silos with a new structure that promises to be safer.

The accident, believed to have been caused by airborne dust that ignited, underscores how industrial-scale burning of natural materials poses the same risks long associated with flour mills and grain elevators, which have a history of dust explosions.

Koda's two silos contained wood chips and oat hulls that are burned to produce industrial process heat and electricity.

"Fine particles of dust are very combustible when they mix with the air — they just need a spark," said Shakopee Fire Chief Rick Coleman.

Stacy Cook, Koda Energy vice president and general manager, said it appears that a spark or other ignition source set off a dust-related blast and fire at the top of one silo, and that flames spread to a second silo via a conveyor. The fire shut down the plant, but no workers were injured.

Cook said the company, after hiring engineers to study ways to improve safety, decided to demolish the silos and build a new biomass-receiving building. It will have advanced air handling equipment designed to avoid a combustible mixture of dust and air, he said.

"The new design was determined to be safer than we could make the silo storage system," Cook said.

Coleman said the fire department has worked with Koda Energy on the design and is pleased with it. He said the final investigative report on the April 25 fire has not yet been released.

The silos already are being torn down, and the new building is expected to be finished by Nov. 1, with the plant back online at the end of the year.

The plant, completed in 2009 for $60 million, sells power to Xcel Energy Inc., the Minneapolis-based utility serving 1.2 million Minnesota electric customers. The plant also supplies process heat and power to nearby Rahr Corp., a producer of malt. Rahr built the plant with the Shakopee Mdewakanton Sioux Community, which owns Mystic Lake Casino and Hotel in Prior Lake.

In addition to dust reduction, the project also will cut particulate emissions by 20 percent, increase the plant's reliability and offer more efficient fuel unloading, the company said. The plant's fuels include wood chips from tree removals, ground-up wood pallets, oat hulls, malt byproducts and sawdust.