We present the theory, concept and design of an efficient, megawatt coherent Cherenkov radiation source based on a two-dimensional periodic surface lattice (2D-PSL) cavity combined with a novel energy recovery system for the generation of highly efficient (> 50%) single-frequency radiation. We demonstrate the scalability of the transverse dimension of the 2D-PSL cavity of the Cherenkov source and thus the potential for efficient, continuous-wave, high-power (> 1 MW) operation; fundamental to the eventual realization of clean, fusion energy. These new sources, with the capacity to operate in the 0.1-10THz range, hold strong promise to address the long-standing “Terahertz gap”. By combining a Cherenkov oscillator driven by a non-gyrating beam with an innovative four-stage depressed collector energy recovery system, the overall device efficiency can be increased to be competitive with gyrotrons in the requirements for heating and current drive in fusion plasma. In these Cherenkov devices, the frequency independence of the magnetic guide field enables advantageous frequency scaling without deployment constraints, making them especially attractive for high-impact applications in fusion science, turbulence diagnostics, non-destructive testing and biochemical spectroscopy. The novel energy recovery techniques presented in this paper have broad applicability to many electron-beam driven devices, bringing revolutionary potential to future THz source technologies.