Power Purchase Agreement

 

The Ounalashka Corporation and Chena Power signed a 30-year power purchase agreement, (PPA), with the City of Unalaska on August 31, 2020 for a 30MW of geothermal produced electrical energy.    

 

The agreement satisfies a key step enabling the Makushin Geothermal Project to proceed to financing and continue to a scheduled commercial operation date in the final quarter of 2024.   The capacity of the facility will accommodate all of Unalaska’s current and known potential customer base.  The benefits of geothermal offer greatly reduced greenhouse gas emissions, provide the region and its customers energy security, as well as accelerate the diversity of its economic base.

Funding

 

The project will be financed by a combination of debt and equity.  Options currently being explored and combinations thereof are:

 

  1. OCCP self-funding

  2. Sell equity in the LLC

  3. Debt financing

  4. Re-structure project to include Investor and management shares

  5. Financing via energy related bonds

  6. Grants

  7. Monetization of available investment tax credits

 

OCCP has compiled its due diligence studies, pro-forma analysis, a Class 2/3 level estimate and is working on arriving at the right combination of investment/banking partners in the short term and long term.

 

OCCP expects to invest over $65M in cash and value to the project. 

Permitting

 

There are many nuances to the requirements and by far, the outline below is not comprehensive, but in nutshell;

 

Federal:  The leased land has all been conveyed to Aleut Corporation and OC, i.e. the lands are private (and now entirely in OC’s control).  The major Federal agencies that will be involve are the USACE as lead agency, and NOAA as a consulting agency for the submarine crossing. The USACE will authorize under the Nationwide linear permit, and dredge and fill of waters and coastal alterations.  Because of the expected low impact of this project, a EIS will not be required.

 

State:  The Alaska Department of Fish and Game (ADF&G) will have active permitting interest.  The utility access corridor will affect road and pipeline development will affect streams with fish resources, so permits will be needed for bridges, culverts, buried pipes and cable stream crossing, etc. The Alaska Oil And Gas Conservation Commission and Alaska Department of Environmental Conservation (ADEC) may be involved with permitting re-injection of geothermal fluids through its wastewater discharge permit program. ADEC will also be involved with air quality permitting. 

In October 2021 the permitting for the subsea cable portion of the project began.  It is expected this permit will be issued in second quarter of 2023.

 

The USACE issued NWP14 in May 2021. This permit covers construction requirements from Broad Bay to the site of the power plant.  The installation of the utility access corridor began shortly after the permit was issued.

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