SpaceX plans to build natural gas-fired power stations to supply the Terafab semiconductor plant it plans to establish in Texas, according to a report published by Bloomberg. The project also includes “very large battery arrays,” according to Riley Trittel, SpaceX’s head of energy and data center development, during a public meeting held on Wednesday.
Reports related to the project, including Bloomberg’s report and SpaceX’s other announcements about Terafab, contain no reference to using ground-based solar power to operate the facility, even though Tesla, which is also a developer of solar energy projects, is a partner in the project.
Growing reliance on natural gas
The choice of natural gas comes as Elon Musk, the CEO of SpaceX and Tesla, has relied on it more heavily recently, despite his investments in solar power. xAI’s data centers in Memphis operate almost entirely on fossil fuels, and Musk recently acquired a company specializing in natural gas power plants.
SpaceX also said it plans to purchase $2.8 billion worth of gas turbines over the next three years. The source does not identify the company Musk acquired or provide additional details about the purchase.
Project cost and Texas incentives
Terafab will be built in Grimes County, about 45 miles northwest of downtown Houston. SpaceX received a full 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 initial phase of the plant is currently estimated to cost about $16.8 billion, after SpaceX had previously estimated it at $55 billion. The plant is intended to produce chips for the data centers that SpaceX and its subsidiary xAI will operate.
Data centers drive demand for gas power plants
The boom in data centers associated with artificial intelligence has triggered a wave of proposals to build new natural gas-fired power plants across the sector. As a result, the cost of natural gas power plants has risen by 66%, while Google, Meta, and Microsoft have announced major projects in recent months.
Texas is a major hub for the growth of the data center model that relies on what is known as the principle of “self-supplying power,” with plans identified for capacities exceeding 70 gigawatts. This approach aims to accelerate project development and address concerns about rising electricity prices for consumers.
Pollution concerns
Despite the advantages of on-site power generation in terms of speed of implementation, natural gas turbines can release large amounts of pollutants. A lawsuit has been filed against SpaceX subsidiary xAI over its use of natural gas turbines without the necessary permits in one of the most polluted areas in the United States.