SpaceX Will Use Gas Plants, Not Solar Panels, for Its Terafab Factory in Texas

According to Bloomberg, SpaceX has announced that it will build natural-gas power plants to supply electricity to the planned Terafab semiconductor factory in Texas. The major industrial project is attracting attention not only because it requires advanced technological infrastructure, but also because of its unusual approach to energy supply. Experts say that the energy needs of facilities producing microchips for AI and data centers should not place additional strain on traditional grids. Techcrunch.com reports .

Riley Tretter, head of SpaceX’s energy and data center development division, said at a public meeting on Wednesday that the company would “bring its own electric power” to the project. The complex is also expected to include very large arrays of battery storage systems. Interestingly, neither the Bloomberg report nor the company’s other official announcements mentioned the use of ground-mounted solar power at the site.

Elon Musk’s Energy Strategy and Gas Turbines

Despite actively investing in solar power, Elon Musk, the head of SpaceX and Tesla, has recently been placing a major bet on natural gas. In particular, xAI’s data centers in Memphis operate almost entirely on this fossil fuel. In addition, Musk recently acquired a company specializing in natural-gas power plants, and SpaceX has said it plans to purchase $2.8 billion worth of gas turbines over the next three years.

The Terafab factory will be built in Grimes County, about 45 miles northwest of Houston. SpaceX, which raised $88.5 billion through a recent IPO, received a 100% tax exemption from the county. In return, the company must invest at least $5 billion by 2030 and create at least 1,800 permanent jobs by 2035. The Texas government is also providing $30 million in incentives for the project.

Financial Figures and the Impact of the AI Boom

The factory’s initial phase is expected to cost $16.8 billion, although SpaceX previously estimated the expense at around $55 billion. The facility is primarily intended to produce chips for data centers owned by SpaceX and its xAI subsidiary. The global boom in AI data centers has sharply increased proposals to build new natural-gas power plants across the industry.

This demand, in turn, has driven up the price of natural-gas power plants by 66%. In recent months, giants such as Google, Meta, and Microsoft have also announced similar large-scale projects. Texas has become a major hub for this type of self-powered data center, with more than 70 gigawatts of capacity planned across the state.

Such arrangements are intended to speed up project development and ease concerns about higher electricity prices for consumers. At the same time, gas turbines can release significant amounts of pollutants into the environment. For example, xAI, a SpaceX subsidiary, was sued for using unauthorized natural-gas turbines in one of the most polluted areas of the country.