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Company behind Unalaska’s geothermal energy project hits major construction milestone, clams up on funding

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Lauren Adams
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KUCB
OCCP announced they had reached a major milestone in the project by finalizing a construction agreement with ORMAT Technologies — an alternative energy company founded in Israel and now headquartered in Reno, Nevada.

The company aiming to bring geothermal energy to Unalaska plans to pay more than $90 million to an engineering and construction firm to build the volcano-powered project, under a contract announced Jan. 18.

Ounalashka Corporation/Chena Power, LLC, the company behind the project, is a joint venture between Unalaska’s Native corporation and Fairbanks-based Chena Power. And while OCCP Project Manager Dave Matthews said they plan to start construction of the plant this coming summer, the company still hasn’t announced that it’s secured any funding.

“We hope to resume work here in the next few months, on the ground,” Matthews said. “It's contingent on getting full project financing, which is in the works and has been in the works diligently for the past several months, but we're not ready to make an announcement on that yet.”

Earlier this month, OCCP said they had reached a major milestone in the project by finalizing a construction agreement with Ormat Technologies — an alternative energy company founded in Israel and now headquartered in Reno, Nevada. The company has built more than 190 power plants, according to its website, including geothermal plants in the United States, Kenya and Indonesia.

OCCP President Bernie Karl said the contract with Ormat marks “the largest and most technically complex part of the overall project.”

At more than $90 million, Ormat’s part makes up over a third of total project costs, which come in at around $235 million.

According to Matthews, Ormat’s providing a “turnkey” product, which means they’ll provide all the building materials for their part of the project, deliver them to the site and provide installation. He said this is the “heart” of the overall project.

“It's a turnkey engineering, total procurement and construction contract for the power plant, the remote gathering system around the power plant that brings in the geofluids and for developing SCADALink that integrates the plant’s location into the city's grid location,” Matthews said.

Ormat will construct three main parts of the entire geothermal project. They’ll manufacture the power plant, which includes six geothermal turbines rather than one to allow for greater flexibility in operation. They will also construct a remote gathering field where production wells take fluid and gasses from the resource to the plant, and injection wells provide disposal of the geothermal fluids. And they’ll also construct a communication network that allows for local or remote control of the plant.

Matthews said they’ll need to announce and secure financing in the next few months, by the end of the fiscal quarter, to be in good shape to start construction in the summer. He said OCCP is in discussions with a few groups, but wouldn’t provide details at the time.

In 2020, OCCP entered into a power purchase agreement with the City of Unalaska, in which Makushin Volcano would supply heat used to generate electricity for the island. The following year, they started developing utility access to the volcano, which is about 13 miles from the city center.

OCCP was supposed to obtain financing by the summer of 2021, but was unable to meet that deadline. Since then, the city has twice agreed to give them more time to raise funds. And in February of last year, the company’s funding deadline was extended to the end of 2023.

According to Matthews, they have not been idle during that time.

“It might have seemed like this has been stagnant to some of the people in the city there,” Matthews said. “Rest assured it has not been. We've been doing the best we can to keep this going. We're very far along with permitting and engineering. We have a contractor selection done. We've got most contracts in the queue done. So there's been a lot of the behind the scenes work that’s required to get to an investment decision — and we're at that point now.”

Matthews said having this contract secured with one sum coming from just one contractor providing the construction of the plant from start to finish should give lenders a better sense of security, and move the lending part of the project along more quickly.

According to OCCP’s website, the project will be funded by both debt and equity. The company is exploring a number of options, including self funding, grants, selling equity and monetization of available investment tax credits.

Beyond Ormat’s contribution, Matthews said they’ll still need to finish utility access, build camps for personnel, bring in drilling rigs, put in terrestrial and subsea cables to transport the energy and provide maintenance.

The LLC is still aiming for a completion date of 2027, he said.

Hailing from Southwest Washington, Maggie moved to Unalaska in 2019. She's dabbled in independent print journalism in Oregon and completed her Master of Arts in English Studies at Western Washington University — where she also taught Rhetoric and Composition courses.
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  • King crab and snow crab fishery closures, the Makushin Geothermal Project, and developing Dutch Harbor as an Arctic port: Unalaska has big things in the works, both in terms of opportunities and challenges. And the steps local leaders take in the next few years could change the community’s path for decades. Each year, representatives from Unalaska travel to Washington, D.C. to advocate on behalf of the city’s interests. Unalaska City Councilmember Shari Coleman was on the latest lobbying trip in December. She sat down with KUCB to talk about Unalaska’s priorities.
  • The Qawalangin Tribe of Unalaska has received more than $2 million in federal dollars to go towards the Makushin Geothermal Project to harness a local source to power the island’s community and industry. The power project is being led by Ounalashka Corp./Chena Power, LLC, a joint partnership between Unalaska’s Native village corporation and a Fairbanks-based private energy firm. Although the Qawalangin Tribe is not a partner with OCCP, the tribe’s chief executive says they are helping out and providing funding.