Plans including an application for listed building consent have been submitted to Powys County Council by building contractor Anthony Roberts to turn the building into a dwelling.
Part of the scheme would include building a 'bat house' nearby.
This would provide a home for brown long-eared and lesser horseshoe bats to make up for losing their habitat.
The former depot, which is near to the Old Plas stables and kennels, is part of the buildings associated with Y Plas in Machynlleth, the former home of the Marquess of Londonderry.
It has a wall which is Grade II* listed.
Agent Nerina Vaughan, of NRV Architectural Design, explained that at the start of the project the applicant had wanted to build more than one dwelling on the site.
But, due to the “historical importance” of the area surrounding Y Plas, this was not appropriate and a proposal to convert the existing building was drawn up.
"The vision was to create a comfortable, sustainable family home with a spacious airy living area, constructed to a high standard,” said Ms Vaughan.
Poor state of repair
A Heritage Impact Assessment which accompanies the applications says: “The main objective is to preserve the building and stop it deteriorating any further.
“The building has been unused for some time and is in a poor state of repair, the stone wall to the south has been coated in render which has largely fallen off and there is a large amount of ivy covering the building.”
The listed wall forms part of the boundary of the old estate.
Y Plas itself is a Grade II* listed building, originally a house called Greenfields dating back to the 1760s but remodelled extensively in the 1840s.
The former storage building is listed because of the “Group value with Plas Machynlleth and associated listed items.”
Mark Walters of Clwyd Powys Archaeological Trust, who consult on historic buildings, said: “The conversion will inevitably modernise and remove some elements of the building's current fabric and layout."
Mr Walters said it is important to obtain a record of the structure in its near original state before being redeveloped.
He believes that if the project is given the green light by planners in the future, a condition should be put on the permission that calls for a photographic record to be made of the building.
Mr Walters said: “The condition in this case would be: suggested planning condition to facilitate a programme of historic building recording, the equivalent of an Historic England Level Two building survey, in order to allow an adequate analytical record of the buildings to be made prior to alteration.”
After the Second World War the seventh Marquess of Londonderry gave the mansion and its estate to the town, and it was adapted for use as council offices.
In 1995, after a £3 million refurbishment, funded by Montgomeryshire District Council and the European Union, the building became the 'Celtica' heritage centre.
For several years the centre was successful in attracting tourist and educational visits and conferences.
Eventually, Y Plas was taken over by the unitary authority, and Powys decided to close the centre in 2006.
Y Plas, is now used as a community and meetings venue and is also home to Machynlleth Town Council.