SpaceX to power Texas Terafab with gas plants and battery arrays
SpaceX plans to build natural-gas power plants and very large battery arrays to supply its planned Terafab semiconductor factory in Grimes County, Texas. Riley Trettel, who leads energy and data-center development for SpaceX, said at a public meeting on Wednesday that the company would be “bringing our own power” for the project.
The initial fab unit is expected to cost $16.8 billion. Terafab is intended to manufacture chips for data centers operated by SpaceX and its xAI subsidiary, and the site is about 45 miles northwest of downtown Houston.
On-site power without a stated solar component
Bloomberg’s report and SpaceX announcements on Terafab did not mention terrestrial solar power for the facility. Tesla, a solar developer, is a partner in the project, but the stated electricity plan centres on natural-gas generation and battery storage.
SpaceX has increased its commitments to gas-fired equipment. The company has said it plans to buy $2.8 billion in gas turbines over the next three years. Musk’s xAI data centers in Memphis run almost exclusively on natural gas, and Musk recently acquired a company specialising in natural-gas power plants.
Investment commitments and local incentives
Grimes County granted SpaceX a 100% tax abatement in exchange for spending at least $5 billion by 2030 and creating at least 1,800 full-time jobs by 2035. Texas is also providing $30 million in incentives. The announced initial-phase cost is below the $55 billion estimate SpaceX had previously given for the fab.
The new power plan adds detail to the Texas investment behind Terafab’s $16.8 billion Texas investment, whose $16.8 billion initial phase is linked to a larger semiconductor manufacturing effort for SpaceX and xAI operations.
Part of a wider data-center power buildout
AI data-center demand has prompted a wave of proposed natural-gas plants, increasing the cost of natural-gas power plants by 66%. Google, Meta and Microsoft have also announced major projects, while Texas has become a focal point for “bring your own power” data centers. More than 70 gigawatts of capacity has been charted out in the state.
These arrangements are intended to accelerate development and respond to concerns about higher consumer electricity prices, but gas turbines can produce significant pollution. xAI has been sued over its use of unpermitted natural-gas turbines in one of the country’s most polluted areas.
For businesses developing large computing or manufacturing sites, Terafab shows that power supply, storage, permitting, incentive obligations and environmental exposure must be planned together rather than treated as separate workstreams.