A Minnesota wholesale electric cooperative said Friday that it will build a $155 million ethanol plant next to its idle coal-burning power plant in Spiritwood, N.D.

Midwest AgEnergy Group, a newly formed company that is majority-owned by Maple Grove-based Great River Energy, broke ground on the 65-million-gallon-per-year ethanol plant, which is called Dakota Spirit AgEnergy.

"Dakota Spirit AgEnergy creates value at the intersection between agriculture and energy," company President Greg Ridderbusch said in a statement.

It will be the second ethanol plant developed by Great River Energy, an electric cooperative that serves 645,000 Minnesota customers and is owned by 28 local power co-ops, including some that serve Twin Cities suburbs.

Blue Flint Ethanol operates next to Great River Energy's Coal Creek power plant near Underwood, N.D. Blue Flint, formerly wholly owned by Great River Energy, is now a unit of Midwest AgEnergy under the deal that brought in minority investors.

Like the Blue Flint plant, the new ethanol refinery will use steam heat from the adjacent power plant. Such facilities, which combine heat and power production, are designed to be more efficient than power plants alone.

Larry Johnson, an ethanol industry consultant based in Cologne, Minn., said the Spiritwood plant likely will be a highly efficient operation, thanks to the steam heat from the power plant. "They have some synergies up there, and that is an advantage," he said.

Spiritwood Station, which can generate up to 99 megawatts of power, was completed in 2010 at a cost of $437 million but sat idle as demand for electric power dropped and an earlier plan for an ethanol plant fell through, leaving just one other neighboring company interested in buying steam. Great River has said it intends to start the plant next year.

In a securities filing last November, the company said it hoped to raise $70 million from equity investors for the ethanol project. Great River will retain a majority stake in the two ethanol plants, a company spokeswoman said

The company said the new plant will purchase 23 million bushels of corn annually in the area. The plant also will produce distillers grains, which are sold as animal feed, and industrial corn oil also used in animal feed or to produce biodiesel.

In a statement, the company said construction will begin this fall and production is scheduled for the first quarter of 2015. It will employ 36 people and create 275 jobs during the 18-month construction period, the company said.