Nov. 3--Plans to develop power plants using wood waste as fuel are advancing in Wisconsin.

Xcel Energy Corp. has won state approval for a project that would replace a coal-fired boiler in Ashland on Lake Superior with a biomass gasifier power plant.

Meanwhile, Milwaukee-based We Energies is planning to build two biomass-fueled power plants by 2013, at a cost of $500 million.

Biomass power plants rely on wood chips, sawdust and other waste wood left on the forest floor after areas are logged for timber.

Xcel's project, slated to cost $58.1 million, consists of converting one of three boilers at its Bay Front power plant in Ashland to burn waste wood. The project received the go-ahead Friday from the state Public Service Commission.

"The Bay Front project demonstrates our continuing commitment to the environment and a clean energy future," said Mike Swenson, president and chief executive of Northern States Power-Wisconsin of Eau Claire, an Xcel utility, in a statement Monday. "We're helping our customers and communities practice sustainability while increasing local economic development."

Bay Front would be the largest power plant burning wood in the Midwest. Detailed engineering work and construction are expected to begin in 2010, with the plant scheduled to be open by late 2012, said David Donovan, Xcel manager of regulatory policy.

'Energy plantations' planned

As part of the project, Xcel will work with local farmers in northern Wisconsin to establish "energy plantations" that would grow fast-growing poplar trees and possibly black willow trees that could be burned in the plant. The plantations will begin with four test sites, two of them 10 acres each and two smaller ones.

The Ashland plant already burns wood in two of its three boilers, but this project would enable the entire power plant to be run on renewable energy, Xcel said.

The Bay Front power plant would continue to generate about 60 megawatts of electricity, or enough to serve 50,000 to 60,000 typical homes.

"We are at a critical crossroads in energy policy," said Lauren Azar, a commission member. "Every decision we make today needs to be considered in the context of the fact that we will soon be engaging in a transformation of our energy infrastructure. I believe this biomass gasifier will be a component of Wisconsin's energy future."

Michael Vickerman, executive director of the renewable energy advocacy group Renew Wisconsin, praised the PSC's decision.

"This proposal is an excellent resource fit for this part of the state," he said.