SpaceX's Terafab Will Run on Gas Turbines, Not Tesla Solar

SpaceX told Grimes County residents on Wednesday that its planned AI chip factory in central Texas, called Terafab, will run on natural gas turbines and large battery arrays. Solar did not come up. Tesla, a Musk-owned solar developer described as a partner on the project, has no role in powering the facility.

The pitch came from Riley Trettel, who leads energy and data center development for SpaceX, at a public meeting in the rural county about 45 miles northwest of downtown Houston. Trettel framed the project as "bringing our own power," per TechCrunch's account of Bloomberg's reporting. The Wednesday session had KBTX confirming SpaceX representatives met residents face to face to walk through the deal.

The choice lands as SpaceX closes the books on a freshly public balance sheet. The company's recent IPO raised $87.5 billion, and the governor's office announced the Grimes County expansion as one of the largest semiconductor projects in the state. With that capital base, SpaceX has the option to pay for clean power at a premium. It has chosen not to.

Taxpayers are funding the buildout. Grimes County granted a 100% property-tax abatement — a full break on local property taxes for the duration of the deal — in exchange for SpaceX committing at least $5 billion in capital spending by 2030 and at least 1,800 full-time jobs by 2035. Texas is contributing $30 million in incentives, per the governor's office. The first phase of the fab is expected to cost $16.8 billion, down from a prior $55 billion estimate that has not yet been confirmed in a SpaceX or Terafab filing, per TechCrunch.

SpaceX has said it plans to buy $2.8 billion worth of gas turbines over the next three years, per TechCrunch. Musk also recently acquired a company that specializes in natural gas power plants. The facility will pair the turbines with "very large battery arrays," Trettel said at the meeting — the kind of on-site storage that smooths gas output without displacing the gas baseload.

Terafab is not the only Musk-operated facility betting on gas. xAI's Memphis data centers run almost exclusively on natural gas turbines, and xAI has been sued over its use of unpermitted turbines in one of the most polluted parts of the country, per TechCrunch. Business Insider has tracked the regulatory backlash to the broader Texas buildout.

The AI data center boom has driven a surge in natural gas power plant proposals across the industry, pushing gas turbine costs up 66%, per TechCrunch. Google, Meta, and Microsoft have all announced gas-heavy projects. Texas is the ground zero for "bring your own power" campuses, with more than 70 gigawatts of capacity charted out, per TechCrunch.

For Grimes County, the deal now has a permitting track. The Texas Commission on Environmental Quality's pending air permits docket lists the project, and a wastewater technical package for the adjacent Gibbons Creek redevelopment property will shape how much the gas plan costs the surrounding air and water. Regional economic development site Austin.io has tracked the project since announcement.

Tesla is described as a partner on Terafab in the TechCrunch/Bloomberg reporting, but the power announcement names no solar contribution. If a solar role appears later, it will appear in a TCEQ filing, not in SpaceX's public-meeting pitch.