A $2.5 million geothermal training grant for Unalaska sits 3 percent spent

A federal grant to train Unalaska residents for geothermal jobs is nearly halfway through its five-year term and 3 percent spent. The Department of Energy revised it eight days ago without saying how.

Federal records show $2.5 million obligated to the Qawalangin Tribe of Unalaska, with a little more than $75,000 spent. The grant runs through April 14, 2029. It is meant to educate, hire and train disadvantaged and displaced populations in all aspects of the geothermal industry, for the Makushin Geothermal Project. The award narrative describes a grid stretched to capacity, fishing companies generating their own power, and power costs that deter other industry.

The Department of Energy signed the award April 10, 2024. Thirty-three days earlier, on March 8, the city had announced that its council would not extend or renegotiate the power purchase agreement for the plant. That 2020 agreement had expired the previous December for lack of financing, and the city was the plant's only prospective buyer.

The same city release said Unalaska, the tribe and Ounalashka Corporation remained committed to moving from diesel to renewable power, "including wind and geothermal."

Thirteen months after the grant was signed, the council declared the geothermal capital project abandoned for its intended purpose. The city had budgeted $5.87 million, spent about $1.39 million, and returned about $4.48 million to the fund it draws capital money from. Minutes record no discussion and a unanimous vote.

The reasons had been accumulating. City Manager William Homka wrote in February 2024 that grid investment deferred in anticipation of the geothermal connection had worsened power surges and outages that fishing season. The city put the project's cost at $250 million against a $5 million state commitment, with the developer seeking 22 cents per kilowatt-hour, up from 16. And the resource itself was never confirmed. A well drilled in the 1980s proved insufficient and was never retested, and the developer resisted testing estimated at about $25 million. David Matthews, program manager for the developer, called demands to borrow more and hire expensive contractors "a complete disservice to the residents of Unalaska."

The same night it wrote off the project, the council adopted a ten-year capital plan redirecting the returned money to power line upgrades. It also created a new city project to drill for the resource itself. As of the city's January 2026 update, that effort carried $1 million from the city matched by $1 million from Ounalashka Corporation, for three exploratory wells and possibly a fourth. Nothing had been spent, and the agreements with the corporation were still listed as work to be done. The city submitted a preliminary application to the Department of Energy in February 2025 seeking $25.3 million, and its status is not established.

The training grant, meanwhile, remains open. Spending held flat at $75,106 through all four reported quarters of fiscal 2026. The award carries two entries: the original obligation and a zero-dollar modification dated Aug. 21, 2026, whose contents the record does not state.