Preheat oven to 350°F and grease a 9x13-inch baking dish with butter or nonstick spray.
In a large skillet, heat 2 tablespoons olive oil over medium heat. Add diced yellow onion and cook, stirring occasionally, until deep golden brown and caramelized, about 15-20 minutes.
In a large mixing bowl, combine thawed hash browns, caramelized onions, French onion soup mix, sour cream, melted butter, garlic powder, and black pepper. Stir until evenly coated.
Fold in 1 cup shredded cheddar cheese, reserving the other cup for topping.
Transfer mixture to prepared baking dish, spreading evenly. Sprinkle remaining 1 cup cheddar cheese over top.
Cover with aluminum foil and bake for 35 minutes. Remove foil and bake another 15-20 minutes until bubbly and cheese is melted.
During last 5 minutes, scatter French-fried onions evenly over top. Remove from oven and let rest 5-10 minutes before serving.
Garnish with fresh chives and serve warm.