A massive Texas chip project is turning to in-house power as AI data centers intensify pressure on electricity supplies and gas turbines.
According to Bloomberg, SpaceX announced this week that it intends to build natural gas power plants to supply electricity to the Terafab factory planned for construction in Texas.
Riley Tretter, who leads SpaceX’s energy and data center development division, said during a public meeting that the company would power the project with its own electricity and deploy very large battery arrays.
We will provide our own electricity for the project, which will also include very large battery arrays
– Riley Tretter
Neither Bloomberg’s report nor other publications about Terafab mention ground-based solar power for the facility. Tesla, which is also involved in solar energy, is a project partner.
Despite its investments in solar energy, Elon Musk, the head of SpaceX and Tesla, has recently been leaning heavily toward natural gas. xAI’s data centers in Memphis are powered almost entirely by fossil fuels. Musk recently acquired a company specializing in gas power plants, while SpaceX announced plans to purchase approximately $2.8 billion worth of equipment over the next three years.
Terafab is planned for Grimes County, approximately 45 miles northwest of downtown Houston. SpaceX, which recently became a publicly traded company following an IPO that raised $87.5 billion, received a 100% tax exemption from the county in exchange for spending at least $5 billion by 2030 and creating at least 1,800 full-time jobs by 2035. The state of Texas is also providing $30 million in incentives.
The factory’s first phase is estimated to cost $16.8 billion, down from an earlier projection of $55 billion. The facility is expected to produce chips for SpaceX’s data centers and its subsidiary xAI.
The AI data center boom has driven up demand for new natural gas power plants, pushing the cost of gas turbines up by approximately 66%. Google, Meta, and Microsoft have also announced large-scale projects in recent months.
Texas has become the epicenter of such data centers operating under the “bring your own power” model, with more than 70 gigawatts of capacity planned. These arrangements could accelerate project development and reduce price increases for consumers, but gas turbines can cause significant pollution. SpaceX’s subsidiary, xAI, is already facing a lawsuit over its use of gas turbines without permits in one of the most polluted regions of the country.