Prior to the series' events, Prometheus Halifax was conducting a extensive researching involving Max's T.U.R.B.O. Energy. In the process, he found out about Max and Steel's true identities and also the alien origins of Max's energy. The product of this research was Terror Energy, created especially to assist the Nexus legion to impose a new world order on Earth.
After Prometheus obtained a portion of Max's energy, he synthesized it and created Terror Energy. He later on experimented it on himself, when Max and La Fiera had invaded his building, and as result, he becomes a monster with Terror Energy based powers. Despite Max's best efforts to take Terrorax down, he defeated Max and his friends with ease. After his crushing defeat, Terrorax unsleashes three Terror Energy powered assassins: Night Howl (a technologically enhanced predator), Snare (a lethal assassin robot who executed his own maker) and Monstro (an horryfing product of science) to kill Max and his friends.
Like Max's T.U.R.B.O. Energy, the Terror Energy enhances the physical capabilities of the user, making him or her stronger and more agile than an average individual.
The energy is also shown to be highly destructive towards technology, like Max's equipment, as seen when Terrorax easily destroyed Max's power gloves or when Terrorax defeated Tempestra in seconds by just holding her with his hands. According to Steel, the Terror Energy drains all the power of the user or gear by desestabilizating it on a molecular level.