TeraWulf has agreed to expand the contracted power capacity for its Muskie Data Center campus in Grayson, Kentucky, to 1 gigawatt, doubling its original commitment as the company advances plans for a large AI and high-performance computing facility.
The amended agreement with Kentucky Power also moves the second phase forward by one year, from 2030 to 2029, subject to approval by the Kentucky Public Service Commission and Kentucky Power’s construction schedule. The first 500-MW phase is targeted to begin ramping power delivery in the second half of 2028.
Muskie campus targets 1 GW of contracted power
TeraWulf acquired the Muskie site in May 2026 through its purchase of Industrial Equity Partners. The property covers approximately 308 acres in Grayson, providing room for a large-scale digital infrastructure development.
The company is positioning Muskie as a hyperscale campus for AI and high-performance computing workloads.
TeraWulf has also said it is evaluating the site for potential expansion to as much as 2 GW of capacity over time. Any additional development would require further utility planning and infrastructure.
The expanded agreement gives the campus a substantial initial power commitment while leaving room for further growth at the site.
Kentucky Power plans new transmission infrastructure
The additional data-center capacity will require significant electrical infrastructure beyond the customer agreement.
Kentucky Power is planning a new 345-kV substation connected to the existing 765-kV transmission system to support the Muskie campus.
The planned infrastructure is intended to provide the high-voltage capacity and redundancy required by a large data-center load.
The utility is also planning a 760-MW combined-cycle natural gas generating facility at Big Sandy in Lawrence County, Kentucky.
Under the amended agreement, TeraWulf has agreed to pay the estimated financing costs associated with construction of the Big Sandy facility. The arrangement is designed to prevent the costs associated with serving the additional data-center demand from shifting to existing Kentucky Power customers.
The power infrastructure therefore extends beyond the Muskie property itself, linking the data-center expansion to new generation and transmission investment elsewhere in Kentucky.
Agreement includes customer protections
The Kentucky Power agreement also includes financial provisions for existing utility customers.
If the Kentucky Public Service Commission approves the amended agreement, TeraWulf would fund $100 million in winter bill credits for Kentucky Power residential customers during the first 10 years of the contract.
The credits would begin in 2029 and could provide a typical residential customer with approximately $25 per month during the winter heating season, according to Kentucky Power.
The agreement also includes collateral requirements and other financial protections intended to reduce the utility’s exposure to the additional infrastructure investment.
Kentucky Power plans to file the amended contract and seek the required regulatory approvals later this year.
Muskie adds to TeraWulf’s Kentucky data-center pipeline
The Muskie development forms part of TeraWulf’s broader expansion into large-scale digital infrastructure in Kentucky.
The company is also developing the Justified Data Center campus in Hawesville, where it has secured a long-term power and data-center arrangement for a separate large computing development.
Muskie gives TeraWulf another major site in the state, with the company evaluating whether the Grayson campus could eventually support up to 2 GW.
For Kentucky Power, the project creates a substantial new source of electricity demand that requires additional generation and transmission investment.
The next major step is regulatory review of the amended agreement. Until the Kentucky Public Service Commission approves the contract and the related utility construction proceeds, the accelerated 2029 schedule remains subject to those conditions.
Additionally, the TeraWulf’s 1 GW power agreement also reflects the scale of electricity infrastructure now being planned for major AI data center campuses. In Pennsylvania, the former Homer City power plant is being redeveloped into a proposed $10 billion AI data center campus, with the site’s existing power infrastructure forming part of the project’s strategy. Read more: Former Homer City Plant Set for $10 Billion AI Data Center Campus
Project Factsheet: Muskie Data Center Campus
- Developer: TeraWulf Inc.
- Location: Grayson, Kentucky
- Site size: Approximately 308 acres
- Project type: AI and high-performance computing data center campus
- Contracted power: 1 GW
- Initial phase: 500 MW
- Second phase: 500 MW
- First phase power target: Second half of 2028
- Second phase power target: 2029
- Original second-phase target: 2030
- Potential future capacity: Up to 2 GW under evaluation
- Utility: Kentucky Power
- Planned substation: 345-kV substation connected to the existing 765-kV transmission system
- Related generation: 760-MW combined-cycle natural gas facility at Big Sandy
- Residential customer benefit: $100 million in winter bill credits over 10 years, subject to regulatory approval
- Regulator: Kentucky Public Service Commission
- Latest milestone: Amended agreement expands Muskie’s contracted power capacity to 1 GW and advances the second phase to 2029
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