SpaceX's Terafab to rely on natural gas, not solar power
What's the story
SpaceX has revealed its plan to build natural gas power plants to supply electricity for the upcoming Terafab semiconductor factory in Texas, according to Bloomberg. Riley Trettel, who heads energy and data center development at SpaceX, announced this strategy during a public meeting on Wednesday. He said that the company will be "bringing our own power" for the project, which will also feature "very large battery arrays."
Energy sources
Surprising absence of solar power in energy mix
Interestingly, the Bloomberg report and other SpaceX communications about Terafab don't mention terrestrial solar power as an energy source for the facility.
This is surprising considering Tesla, a solar developer and SpaceX's partner in the project.
Despite his investments in solar power, SpaceX and Tesla's CEO Elon Musk has been leaning toward natural gas lately.
Natural gas focus
Musk's reliance on natural gas
Musk's xAI data centers in Memphis run almost entirely on fossil fuel. He also recently acquired a company specializing in natural gas power plants.
SpaceX has also announced plans to purchase $2.8 billion worth of gas turbines over the next three years.
The Terafab plant will be located in Grimes County, about 72km northwest of Houston's downtown area.
Financial support
Tax incentives and job creation commitments
SpaceX, which recently went public with an IPO that raised $87.5 billion, has secured a 100% tax abatement from Grimes County.
In return, the company has promised to invest at least $5 billion by 2030 and create at least 1,800 full-time jobs by 2035.
Texas is also providing $30 million in incentives for the project.
Project details
Cost considerations and AI data center boom
The first phase of the fab unit is estimated to cost $16.8 billion, much lower than SpaceX's earlier estimate of $55 billion.
The fab will manufacture chips for data centers operated by SpaceX and its xAI subsidiary.
The AI data center boom has led to a spike in proposals for new natural gas power plants across the industry, increasing costs by 66%.
Industry trend
Environmental concerns and legal challenges
Texas has become a hotspot for "bring your own power" data centers, with over 70 gigawatts (GW) of capacity mapped out.
These plans are designed to expedite project development while tackling concerns over rising electricity costs for consumers.
However, natural gas turbines can emit large amounts of pollution.
SpaceX's xAI has even been sued for using unpermitted natural gas turbines in one of the most polluted areas in the country.