SpaceX to Build Gas Power Plants for Terafab Chip Factory in Texas

SpaceX has announced plans to build natural gas power plants to supply electricity to its Terafab chip factory in Texas. The project, which is expected to cost $16.8 billion for its first phase, will also include very large battery arrays, according to Riley Tretter, who leads SpaceX's energy and data center development division.

Texas has become a hub for data centers, with more than 70 gigawatts of capacity planned. The 'bring your own power' model, which allows companies to build their own power plants, could accelerate project development and reduce price increases for consumers. However, gas turbines can cause significant pollution, and 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.

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. SpaceX received a 100% tax exemption from Grimes 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 providing $30 million in incentives for the project. Elon Musk's company has recently been leaning heavily toward natural gas, despite its investments in solar energy. In fact, xAI's data centers in Memphis are powered almost entirely by fossil fuels, and SpaceX announced plans to purchase approximately $2.8 billion worth of equipment over the next three years.