SpaceX's Terafab chip plant in Texas will run on natural gas, not Tesla solar panels
SpaceX plans to power its Terafab semiconductor plant in Texas with natural gas plants and large battery arrays rather than solar, even though Tesla is a project partner. Solar power is notably absent from all project announcements.
SpaceX will build its own natural gas power plants to supply electricity to the Terafab semiconductor factory planned for Texas, rather than relying on solar panels, according to a Bloomberg report. Riley Trettel, who leads energy and data center development at SpaceX, said at a public meeting on Wednesday that the company will be "bringing our own power," including "very large battery arrays."
Notably absent from the announcement is any mention of terrestrial solar power, even though Tesla — also a solar developer — is a partner in the project. Elon Musk, who leads both SpaceX and Tesla, has recently bet heavily on natural gas despite his personal investments in solar. His xAI data centers in Memphis run almost entirely on the fossil fuel, and he recently acquired a company specializing in natural gas power plants. SpaceX has said it plans to spend $2.8 billion on gas turbines over the next three years.
Terafab will be located in Grimes County, roughly 45 miles northwest of downtown Houston. SpaceX, which recently completed an IPO raising $87.5 billion, secured a 100% tax abatement from the county in exchange for investing at least $5 billion by 2030 and creating at least 1,800 full-time jobs by 2035. Texas is contributing an additional $30 million in incentives. The plant's initial phase is projected to cost $16.8 billion, down from an earlier SpaceX estimate of $55 billion. The facility is meant to produce chips for data centers operated by SpaceX and its subsidiary xAI.
A wider trend
The AI data center boom has fueled a surge in demand for new natural gas plants industry-wide, pushing construction costs up 66%. Google, Meta and Microsoft have all recently unveiled similarly large projects. Texas has become a hub for these "bring your own power" data center schemes, with more than 70 gigawatts of capacity already planned. Such arrangements aim to speed up development and ease concerns about rising consumer electricity prices, but gas turbines can generate significant pollution. xAI is already facing a lawsuit over its use of unpermitted natural gas turbines in one of the most polluted areas of the country.
