Unalaska is closer than ever to building a geothermal power plant on Makushin Volcano, but the project is facing investment challenges and the city is weighing its options.
The City of Unalaska signed an agreement in 2020 to purchase power from Ounalashka Corporation/Chena Power, LLC, a partnership between Unalaska’s Native corporation and the team behind Chena Hot Springs. OCCP originally said it could bring a geothermal power plant online by 2023, but difficulties securing investors have led them to push that date to 2027.
Dave Matthews, program manager for the project, said rising interest rates and the cost of doing business have raised the project’s price tag by 22% since they signed the original power purchase agreement. Now, the company needs to raise the rate.
“We’ve asked the city to consider new rates for the project, and we proposed some rates to them that we thought would be acceptable for our lenders, and also acceptable to the city,” Matthews said.
Matthews didn’t disclose the proposed rate but said it would still save Unalaskans money on their electricity bill.
“We think it will still provide geothermal power at a lesser rate than the current cost of diesel-generation electrical power,” he said.
The new terms also add another year to the timeline, which has already been extended three times. The new agreement says the project will be up and running in 2028.
OCCP has sent its new terms to the city, which says it expects to make a decision this quarter.
Matthews says if the city doesn’t agree to the new terms, “it would probably kill the project.”
The city hasn’t announced a decision yet, but it’s weighing other options, like pursuing wind energy and expanding diesel-generated electricity. Unalaska City Council voted Feb. 13 to fund an energy study that would look into expanding the city’s diesel generation.
City Manager Bil Homka said the city wants to move towards renewable energy, but it needs to explore all options to meet future demand.
“I don’t think anyone wants to commit us in our future for the next 30, 40 years to diesel generation,” Homka said.
He told city council members the study doesn’t necessarily mean geothermal is out of the picture. Increased diesel could be more of a stopgap.
“What can we do here in the short term to shore up our system? What are we going to do in five years if, indeed, geothermal is a reality, in between now and then,” Homka said. “Our system is enduring stressors. Just the last two weeks alone, we’ve been working with outages and trying to deal with planned outages and unplanned outages to understand what’s going on.”
On top of current demand, the community’s power needs are likely to skyrocket. Seafood giant Trident Seafoods has begun the process of relocating its flagship processing plant to Unalaska.
Trident representative Stefanie Moreland told KUCB in July 2023 that the company wants to purchase power from the city, rather than generate it themselves. And they showed a particular interest in Makushin.
“We’d love to be a customer. We’d love to see renewable energy. We’d love to see geothermal be a part of that solution, if it can be done in a manner that’s affordable and reliable,” Moreland said.
Trident even explored options to help fund the geothermal project. They sought state funding last year but were not successful.
Unalaska’s city council voted unanimously to approve the power study, authorizing the city manager to enter into a contract with the consultant, Electric Power Systems, Inc., for $130,000.
