SpaceX Terafab picks natural gas over Tesla solar
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- SpaceX announced it will build natural gas power plants and "very large battery arrays" for its Terafab semiconductor factory, with energy lead Riley Trettel telling a Wednesday public meeting the company will "bring our own power".
- Tesla's solar business is conspicuously absent from Terafab's power plan despite being a project partner, as Musk has steered xAI's Memphis data centers to run almost exclusively on natural gas, acquired a natural gas plant specialist, and committed to buying $2.8B in gas turbines over three years.
- Terafab will be built in Grimes County, roughly 45 miles northwest of downtown Houston, where SpaceX secured a 100% county tax abatement plus $30M in Texas state incentives in exchange for $5B in spending by 2030 and 1,800 full-time jobs by 2035.
- Terafab's initial phase is now estimated at $16.8B, down from a previous $55B projection, and the fab will produce chips intended for SpaceX and xAI data centers.
- The AI data center boom has driven natural gas power plant costs up 66%, with Google, Meta, and Microsoft all announcing massive projects and Texas alone charting more than 70 gigawatts of "bring your own power" capacity.
- xAI, SpaceX's subsidiary, is already being sued over unpermitted natural gas turbines operating in one of the most polluted regions in the country — a regulatory risk Terafab may inherit.
Why it matters: The natural gas pivot is notable because it sidelines Tesla's solar capability even though Tesla is a Terafab partner, while Musk's parallel moves — xAI's gas-heavy Memphis data centers, a gas-plant acquisition, and $2.8B in turbine purchases — all point the same direction. SpaceX locked in a 100% county tax abatement and $30M in Texas incentives, but xAI is already in court over unpermitted turbines in a heavily polluted area, a regulatory pattern Terafab could face if it follows the same playbook.
