SpaceX Terafab Will Run on Natural Gas, Not Solar
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- SpaceX will build natural gas power plants and "very large battery arrays" to supply its Terafab chip fab in Grimes County, Texas, according to energy lead Riley Trettel at a public Wednesday meeting (via Bloomberg).
- The Terafab power plan notably omits any mention of terrestrial solar, despite Tesla — a project partner and established solar developer — sitting under the same Elon Musk umbrella.
- Musk has bet heavily on natural gas across his empire: xAI's Memphis data centers run almost exclusively on the fuel, he recently acquired a natural gas power plant company, and SpaceX plans to spend $2.8 billion on gas turbines over the next three years.
- Grimes County granted SpaceX a 100% tax abatement and Texas is providing $30 million in state incentives, conditional on at least $5 billion in spending by 2030 and 1,800 full-time jobs by 2035.
- The Terafab initial phase is now estimated at $16.8 billion (down from a prior $55 billion projection) and will manufacture chips for SpaceX and xAI data centers.
- The broader AI data center boom has pushed natural gas power plant costs up 66% industry-wide, with Google, Meta, and Microsoft all announcing massive projects and Texas charting more than 70 gigawatts of "bring your own power" capacity.
- xAI has already been sued over its use of unpermitted natural gas turbines in one of the most polluted regions in the country.
Why it matters: SpaceX is doubling down on Musk's natural-gas strategy at a time when AI data center demand has already inflated gas turbine costs 66% industry-wide. By skipping solar despite Tesla's involvement as both partner and solar developer, Terafab locks in fossil-fuel infrastructure for a project requiring $30 million in Texas incentives and a full county tax abatement — while xAI already faces litigation over unpermitted turbines.
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