Environmentalists sound alarm as plan to convert Cayuga Power Plant to data center advances

ITHACA, N.Y. — An ambitious but divisive plan has emerged for the long-term future of the Cayuga Power Plant in Lansing, which has remained murky in the six years since its last days as a coal-fired electric generating station. 

If the plan comes to fruition, the plant could soon take on a new life as a high-powered data center, amid burgeoning investment into the Artificial Intelligence (AI) industry by tech industry giants such as Google and Meta. 

Maryland-based technology company TeraWulf Inc. wants to use the infrastructure in the now-shuttered power plant to build a data center. Such facilities contain banks of energy-intensive computers necessary for high-performance computing operations such as bitcoin mining and artificial intelligence.

TeraWulf has secured an 80-year lease that calls for a data center at the Cayuga Drive site which could, at its max capacity, consume enough electricity in a year to power roughly 500,000 homes in New York, according to analysis of average annual energy consumption data from the federal government and New York State Energy and Gas (NYSEG). The project will be developed alongside an adjacent solar farm and a battery storage system. 

The proposal, formally announced in an Aug. 14 press release, has prompted renewed criticism from environmental advocates and hesitation from some local officials and Lansing residents. 

It’s not the first time TeraWulf — or one of its affiliate companies — has attempted a similar project. In 2022, a TeraWulf affiliate proposed a plan to use infrastructure at the Milliken Station facility to build a data center for cryptocurrency mining operations. The plan ultimately did not come to fruition and the facility has remained idle since the power plant stopped operating in 2019.

The new data center lease grants TeraWulf exclusive access to develop up to 400 MW of digital infrastructure capacity— more than double the energy needs of the plan proposed in 2022, which had a proposed capacity of 150 MW.

The company has undertaken similar plans at other sites Upstate. TeraWulf already operates a massive, multi-phase high-powered computing facility in the town of Somerset, an hour north of Buffalo. The facility, which the company calls its “Lake Mariner Campus,” was also originally a power plant.

Infrastructure in electrical plants like Milliken Station translate well to the needs of a data center — high-performance computing consumes a lot of electricity and generates a lot of exhaust heat, which must be dissipated. The plant has the high capacity electrical infrastructure necessary to transfer large amounts of power between the plant and the grid. Additionally, the plant’s lake water intake infrastructure, once used in power generation, may be used to keep the facility’s computers from overheating.

“A deal with himself”

The data center plan has been years in the making and involves a complex tangle of TeraWulf subsidiaries and affiliate companies, all of which are under the ownership or management of its CEO, Paul Prager.

In 2016, a TeraWulf affiliate, Riesling Power LLC, acquired the plant and the surrounding 183 acres. The plant is owned by Riesling subsidiary Cayuga Operating Company LLC, which continued to operate the facility as a coal fired power plant until 2019, when it was decommissioned. 

Riesling’s parent company is Heorot Power Holdings LLC, which is owned by TeraWulf CEO Paul Prager. The companies are all managed by BeoWulf, which itself is owned by TeraWulf.

Anna Kelles, who represents Tompkins County in the New York State Assembly, has been an outspoken critic of such projects. In 2022, Kelles spearheaded a landmark bill that placed a temporary moratorium on companies looking to convert fossil fuel power plants into cryptocurrency mining centers.

Kelles said she has concerns about TeraWulf’s complex ownership structure.

“[Prager] did a deal with himself,” Kelles said.

TeraWulf, which is a publicly traded company and thus subject to additional federal regulations, operates in part through affiliated limited liability corporations (LLCs), which do not have to meet those regulations. 

“This is how the wealthy play. This is how the rich play,” Kelles said. “They build a bunch of mega companies. They know how to manipulate the system.”

TeraWulf did not respond to multiple requests for comment. 

“A huge demand on the system: 24/7, never relenting”

Though the company will not resume burning coal to generate power for the data center, environmentalists and local officials have concerns.

Most of the electricity needed to keep the computers running will come from the local electrical grid. Unlike the average home, where energy usage fluctuates through the day and seasons, data centers require power at all times. 

On top of regular infrastructure, the “always on” nature of such facilities necessitates redundancy in the form of additional generators, batteries and internet connections.

In order to build out the full infrastructure plan, the company must still seek approval and permits from the New York State Department of Environmental Conservation and the Town of Lansing Planning Board.

While TeraWulf had not yet submitted official site plans, representatives from its parent company BeoWulf met with town officials late last year to present their vision for the property, which includes the data center itself, an adjacent solar farm and a battery array to store electricity.

But Town of Lansing Deputy Supervisor Joe Wetmore said there’s still a lot of questions.

“I’ve got a lot of vague things that have been said, but without a site plan, it’s really hard to say, ‘Oh, it’s going to have this impact,’” Wetmore said.

Wetmore said he was told by the plant operator that while a cryptocurrency mine can be turned on and off, AI data centers cannot. 

“That’s an issue because that’s going to put a huge demand on the system. 24/7, never relenting,” Wetmore said.

In recent years, many cryptocurrency mining operations have shifted their focus to meeting the computing needs of the rising AI market — an industry that some see as relatively stable compared to cryptocurrency.

In its press release, the company claims that by 2026, 138 MW of the total 400 MW allocated for the data center would come from “predominantly zero-carbon” sources. The release claims that nearly 90% of the electricity generated in upstate New York comes from zero-carbon sources. In reality, according to data from NYSEG, which owns the local grid that would supply the data center, only around 35% of their total energy mix is from zero-carbon sources.

The press release also touts TeraWulf’s involvement in plans for a 67 MW, 400 acre solar energy farm, though that project would be located separately on a nearby site. 

A spokesperson with the company that would operate the solar project said the 67 MW solar facility would not directly power the potential data center at Milliken Station. Wetmore said the solar facility doesn’t do much to allay his concerns.

“If we are trying to reduce our need [for] fossil fuels, we can’t be building new uses of electricity at the same rate we’re bringing in renewables because we are just standing still,” Wetmore said. 

Karen Edelstein, a long-time resident of Tompkins County and a coordinator for a fossil fuel accountability organization, shares Wetmore’s energy use concerns. 

“We need to look at the complexities of [these data centers] really cradle to grave,” Edelstein said. “We need to look at what’s happening upstream and downstream of that energy use.”

Edelstein said data centers are starting to become a significant environmental issue because of their large electricity needs, which in turn often increase demand for fossil fuels  “upstream” of the data center.

Over the summer, Edelstein has been working mapping proposed and permitted data centers around the country.

For Lansing residents, the downstream effects of such a facility could also impact the air, water, and sound quality they enjoy today, Edelstein and others warn.

Edelstein’s concerns aren’t without merit. TeraWulf’s Lake Mariner data center facility has a massive 360 MW capacity with access to infrastructure capacity of up to 750 MW — almost twice the size of the maximum capacity proposed for the former Cayuga Power plant.

Even though some of the newer facilities at the Lake Mariner site tout their use of quieter static venting cooling systems, residents near the Somerset, N.Y. facility report constant noise pollution. Residents say the fans that cool some of the on-site computers produce a constant 95-decibel hum — about the same as standing next to a running lawnmower or motorcycle.

The noise is more than just a nuisance to human ears. The National Park Service reports that excessive noise pollution can impact mating and food seeking behaviors among animal species and can cause dramatic changes to local ecosystems.

“The noise pollution is not just impacting humans, and we always forget that,” Kelles said. 

Kelles, who holds a degree in environmental studies, said she is also worried about the project’s impact on the Cayuga Shores Wildlife Management Area, formerly known as Bell Station. The 480-acre site conservation project lies just north of the Cayuga power station, and is home to critical bird habitat and threatened plant species.

Part of what makes the Milliken Point facility so lucrative for high-demand computing is its water intake system. A system of pumps draws cold water up from the depths of Cayuga Lake, which can then be used to cool down equipment.

In 2014, when the power plant was still operational, it was permitted to draw a maximum of about 245 million gallons of cool water from the lake per day, according to permits from the New York State Department of Environmental Conservation. After cooling the plant’s equipment, the system would release millions of gallons of heated water back into the lake. 

The long-time practice had significant impacts on the surrounding environment: local anglers discovered fish were attracted to the warm water around the outflow and Milliken Point became a popular year-round fishing site.

The proposed data center will use the plant’s existing water intake system to pull water from the lake to cool computers, but company representatives told town officials the facility does not plan to release warmed water back into the lake.

Instead, their plans currently call for the plant to use an evaporative cooling system, where water taken from the lake would dissipate into the atmosphere. According to the National Renewable Energy Laboratory, high-performance computing data center cooling systems still require a continuous source of water. 

“More costs than benefits”

The impact of the power-hungry facility may go beyond environmental concerns. Similar computing facilities have allegedly had an impact on local utility costs for nearby residents and businesses. 

In 2022, officials in Plattsburgh, N.Y., claimed bitcoin mining operations drove up electricity costs for individuals and businesses. Energy use by miners was so high, it exceeded the city’s normal allotment, necessitating the purchase of more expensive electricity on the open market. The city became one of the first in the nation to ban cryptocurrency mining operations in 2018.

Despite the bevy of power-generation and consumption statistics provided by TeraWulf to Lansing officials, it’s still not clear how the Cayuga project will impact local electricity prices, Lansing Town Supervisor Ruth Groff said. 

“At this time, we do not fully understand how these projects will affect local utilities, but the town will continue to pursue all avenues to evaluate potential impacts and will work to mitigate any negative effects if they arise,” Groff said.

The solar component of the project will be owned by Cayuga Lake Solar, LLC, an AES Solar subsidiary and is currently under state review. The 67 MW facility will cover about 400 acres. The battery storage project is being operated by Colorado-based Bear Peak Power, which in June 2023 leased 5.7 acres from Cayuga Operating Systems to build a 800 MWh battery energy storage system.

Bear Peak representatives have presented their design to the town, but have yet to submit a formal design plan.

Gay Nicholson leads Sustainable Finger Lakes, a non-profit that advocates for more environmentally sustainable living, working and infrastructure systems in the Finger Lakes region.

 “Communities and their democratically elected representatives need to grab the steering wheel and refuse to be the next sacrifice zone,” Nicholson said, referring to places that have been permanently altered by environmentally harmful development or operations.

She also pointed out that while TeraWulf might pay more in property taxes, and a handful of construction jobs will be created to build the facility, the computing industry does not generate many local jobs. 

“Lansing will get far more costs than benefits out of this,” she added.