Data center developer wants to reboot a Potomac River power plant with natural gas

A prominent Eastern Shore developer has reached a deal to take over and expand an oil-fired power plant on the Potomac River to run data centers.

The proposal for the more than 50-year-old Morgantown Generating Station, which retired two coal-fired units in 2022, has stirred concern in Charles County even as developers claim to have the backing of Gov. Wes Moore and state environmental officials.

TeraWulf, an Easton-based energy and cryptocurrency mining company, says it would use natural gas — not Morgantown’s decommissioned coal units — to power the plant, which currently has oil generators capable of producing about 220 megawatts.

The company’s deal, reached with Morgantown’s operator last month, requires approval by the Federal Energy Regulatory Commission, a five-member panel appointed by President Donald Trump.

TeraWulf wants to restore output at the fossil fuel plant in Newburg, about an hour south of Washington, where Route 301 crosses the Potomac, to a gigawatt of generation and add 500 megawatts of battery storage, all to power data center demand.

If approved, the proposal could mark a new frontier in Maryland’s nascent data center industry. Growing demand from power-hungry data centers is stressing the regional power grid, boosting energy bills and undermining efforts to decarbonize Maryland’s electrical grid.

As a result, state policymakers have pushed data centers to develop their own power sources, the approach TeraWulf says it would bring to Morgantown.

Whether TeraWulf can pull off such a big job isn’t clear.

Founded in 2021, the publicly traded company has pursued data center projects in other states. It has yet to turn a profit, however, and last year reported losses of $661 million.

Meanwhile, Morgantown doesn’t appear to have easy access to the pipelines that would be needed to repower with natural gas.

“There’s nothing about this that’s realistic,” said Tyson Slocum, energy program director for the advocacy group Public Citizen, which has opposed the plant sale in filings with FERC.

Slocum believes TeraWulf lacks the resources and expertise for its vision, but he nonetheless worries the company’s acquisition could revive hundreds of megawatts of fossil fuel-fired power.

In response to emailed questions, TeraWulf Chief Strategy Officer Kerri Langlais said the company’s management team has decades of experience in the power sector, owning, operating or developing over five gigawatts of generation in the U.S. and abroad. The company’s financial losses are a result of long-term investments in large infrastructure, she said, not “a lack of operational capability or access to capital.”

Langlais said TeraWulf has no plans to repower Morgantown’s coal units, which she described as “permanently decommissioned.” Instead, TeraWulf would demolish the plant’s towering stacks as part of the redevelopment, she said, pointing to the company’s experience retiring and remediating two upstate New York coal plants as part of data center development.

Morgantown’s coal units once produced over 1,400 megawatts of power. They were retired in 2022, leaving four oil generators from the 1970s.

TeraWulf expects the redeveloped plant would have excess power it could feed back into the grid, Langlais said. She did not disclose potential data center customers.

The company has earned most of its revenue from mining Bitcoin but says it’s transitioning into a data center developer. A website for the project TeraWulf calls Chesapeake Data Campus states Morgantown would not be used to mine Bitcoin.

TeraWulf CEO Paul Prager, a longtime energy developer from New York, has become an influential figure in his adopted home of Easton. He owns much of the quaint downtown and has financed numerous high-end restaurants that, according a 2021 profile of the developer in Washingtonian Magazine, have divided locals.

Prager and his wife, Joanne, are frequent donors to Maryland politicians. The Pragers each gave maximum $6,000 contributions to Moore and Lt. Gov. Aruna Miller last year, according to campaign finance records.

Although data center expansion has drawn bipartisan backlash across the country, Moore has argued Maryland can attract the energy-sucking industry without the downsides of Northern Virginia’s data center alley.

The Democrat’s administration has been in touch with TeraWulf about plans for Morgantown since at least December, weeks before the company reached its deal with the current owner, Houston-based GenOn Holdings. Terms of the sale were not disclosed.

That month, state Environmental Secretary Serena McIlwain told Prager in a letter she was pleased to learn about TeraWulf’s redevelopment plan.

She promised to help. The Department of the Environment, McIlwain wrote, would expedite TeraWulf’s application to a state cleanup program and “any other necessary permits,” including rights of way for natural gas supply to the plant.

“We look forward to working with TeraWulf as you move toward remediating this historically significant site,” McIlwain wrote.

In response to emailed questions this week, a Moore spokesperson said the governor believes new data centers in the state should create local jobs, engage communities and cover the costs of their energy needs. His support for Morgantown’s redevelopment depends on the project’s alignment with state law and data center guidelines, along with plans for the polluted site’s cleanup, spokesperson Rhyan Lake said.

“The Administration will continue to monitor the project closely and evaluate it based on those standards,” she said.

TeraWulf’s bid has drawn opposition from an array of groups. The Sierra Club has filed an objection before FERC, while Maryland’s state-appointed ratepayer advocate and an independent watchdog for the regional grid operator have raised concerns about the ratepayer implications of removing Morgantown’s generation from the grid.

On Tuesday, residents turned out to a Charles County meeting to voice their concern.

Many complained that TeraWulf has failed to meet with community members beyond closed-door meetings with county officials. Some worried about impacts to local air quality, noise and the possibility the complex would draw water from the Potomac River — an approach TeraWulf has pledged not to take.

Tina Wilson, president of the Port Tobacco River Conservancy, has watched warily as data center companies have bought land around the country. She worries about the local health and environmental implications of expanding Morgantown and expressed frustration that state and local leaders haven’t disclosed more information.

Last Friday, Wilson and Public Citizen’s Slocum discussed the issue with senior staff from Moore’s office. The two advocates said they were told the governor has expressed no position on the data center plan.

But, to Slocum, McIlwain’s December letter to TeraWulf shows otherwise. He sees the support from state environmental regulators as the ticket TeraWulf needed to ink its deal for the power plant.

“We’re not just saying no to a gargantuan fossil fuel-powered data center,” Slocum said. “We’re saying we need to consult with the people of Charles County.”