Xcel Energy Inc. this week halted plans to build a biomass power plant on Lake Superior in Ashland, Wis.
The company informed the Wisconsin Public Service Commission of its decision Monday.
Xcel had planned to build a biomass gasification plant that would have made the Ashland power plant the largest wood-burning power plant in the Midwest.
The decision came, in part, as a result of a significant increase in the cost of the project. The utility also cited "considerable regulatory uncertainty at the state and federal level."
The announcement was made one day before the start of Public Service Commission hearings on a separate biomass power plant, proposed by Milwaukee-based We Energies to be built at the Domtar paper mill near Wausau.
The timing of the announcement was coincidental and not linked to the We Energies proposal, said David Donovan, Xcel's manager of regulatory policy.
"Although we are disappointed with the outcome, we have gained considerable value from the evaluation that we have completed," said Mike Swenson, president and chief executive of NSP-Wisconsin, a unit of Xcel Energy. That includes gasifier technology as well as procuring sustainable biomass supplies "that can be adopted in future projects," Swenson said.
As part of the defunct project, Xcel helped fund the development of two biomass energy plantations in northern Wisconsin, which are testing the development of hybrid poplar and black willow trees for harvesting and burning at the power plant.
The company had initially pegged the project at $58.1 million, but the cost reached $79.5 million. The project would have created more than 100 jobs.
The utility studied other technologies for burning waste wood but all of them came in at least $10 million higher than the construction cost the utility had forecast for its project, Donovan said.
"Based on those costs, and the fact that other renewable resources are becoming more cost effective, and natural gas prices are dropping, it was real hard for us to go ahead and push the project through now," Donovan said.
Milwaukee Journal Sentinel
