Oil and Gas

Xcel Energy to set up biomass power plant in Wisconsin

(Recasts, adds details, share movement)

Sept 30 (Reuters) - Utility holding company Xcel Energy Inc XEL.N said it plans to set up a biomass plant in Ashland, Wisconsin, the largest biomass-fueled power plant in the Midwest.

The project, which is expected to cost about $55 million to $70 million, is expected to begin in 2010 and the unit could be operational in late 2012, Xcel said in a statement.

Xcel said it will seek approval from the Public Service Commission of Wisconsin for the project, which will use waste wood to produce electricity.

Once completed, the plant can supply renewable electricity to 40,000 homes, the company said.

Xcel currently supplies electricity to more than 3.3 million customers and natural gas to 1.8 million in eight U.S. states, though primarily in Colorado and Minnesota.

The new plant, along with improvement in the environmental performance of existing plants, is expected to help achieve its goal to reduce carbon dioxide by 22 percent from 2005 levels on its Midwest generation system by 2020, it said.

Currently, only two of the three operating units at the Bay Front Power Plant in Ashland use biomass as primary fuel to generate electricity, and the new project will help convert the remaining coal-fired unit to biomass as well.

Shares of the Minneapolis, Minnesota-based company were up 4 cents at $19.81 in late morning trade on the New York Stock Exchange. (Reporting by Shradhha Sharma in Bangalore; Editing by Gopakumar Warrier)