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Nevada

Company Behind Unalaska Geothermal Energy Project Reaches Major Construction Milestone, Closes Financing

 

A company seeking to bring geothermal power to Unalaska plans to pay more than $90 million to an engineering and construction firm to build a project powered by the volcano, according to a contract announced Jan. 18.

Ounalashka Corporation/Chena Power, LLC, behind the project, is a joint venture between Unalaska Native Corporation and Fairbanks-based Chena Power. And while OCCP project manager Dave Matthews has said they plan to begin building the plant this summer, the company has yet to announce funding.

“We look forward to resuming operations here in the next few months, in the field,” Matthews said. “It’s contingent on getting full funding for the project, which is in development and hard at work over the last few months, but we’re not ready to make an announcement about that yet.”

Earlier this month, OCCP said it had reached a milestone in the project by entering into a construction agreement with Ormat Technologies, an alternative energy company founded in Israel and now headquartered in Reno, Nevada. According to its website, the company has built more than 190 power plants, including geothermal power plants in the US, Kenya and Indonesia.

OCCP President Bernie Carl said the Ormat contract marks “the largest and most technically challenging part of the entire project.”

At more than $90 million, Ormat’s share is more than a third of the total project cost, which is about $235 million.

According to Matthews, Ormat provides a turnkey product, which means they will provide all the building materials for their part of the project, deliver them to the site and provide installation. He said that this is the “heart” of the whole project.

“This is a turnkey project, a complete contract to supply and build a power plant, a remote collection system around the power plant that delivers geofluidics, and to develop SCADALink that integrates the plant’s location into the city’s network,” Matthews said.

Ormat will build the three main parts of the entire geothermal project. They will produce a power plant that includes six geothermal turbines rather than just one, to allow for more flexibility in operation. They will also construct a remote collection site where production wells will divert fluids and gases from the resource to the plant, and injection wells will utilize geothermal fluids. They will also build a communications network to enable local or remote control of the plant.

Matthews said they would need to announce and secure funding in the next few months, by the end of the financial quarter, to be in good shape to begin construction in the summer. He said the OCCP is in talks with several groups, but did not give details yet.

In 2020, OCCP entered into a power purchase agreement with the city of Unalaska, under which Makushin Volcano will supply the heat used to generate electricity on the island. The following year, they began building a driveway to the volcano, which is about 13 miles from downtown.

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

According to Matthews, during this time they were not idle.

“Some residents of the city may have felt like it was stagnant,” Matthews said. “Be sure it didn’t happen. We are doing our best to keep this going. We have come a long way with permitting and engineering. We have chosen a contractor. We have completed most of the contracts in the queue. So a lot of behind-the-scenes work was done to make the investment decision and we are now at that point.”

Matthews said securing this contract with a single fee from just one contractor to build the plant from start to finish should give lenders a better sense of security and move the loan portion of the project forward faster.

According to the OCCP website, the project will be financed by both debt and equity. The company is exploring a range of options, including self-financing, grants, share sales and monetization of existing investment tax credits.

In addition to Ormat’s contribution, they still need to complete utilities, build staff camps, deliver drilling rigs, lay land and submarine cables to transport power, and provide maintenance, Matthews said.

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

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