SpaceX spent $295m on Tesla Megapacks in Q2

SpaceX announced that it will rely on natural gas power plants to supply electricity for its upcoming Terafab semiconductor factory in Texas, according to a report from Bloomberg. This decision came despite Tesla, also a partner in the project, being known for its investments in solar power. SpaceX's energy development lead, Riley Trettel, stated during a public meeting that the company will "bring our own power" for the project, which includes "very large battery arrays."

However, there was no mention of using solar power for the facility in the report. Elon Musk, CEO of both SpaceX and Tesla, has shown a preference for natural gas lately, with xAI data centers in Memphis running almost exclusively on the fossil fuel. Musk has also invested in a company specializing in natural gas power plants and plans to purchase $2.8 billion worth of gas turbines over the next three years.

Grimes County, located about 45 miles northwest of Houston, will host the Terafab. SpaceX received a 100% tax abatement from the county, committing to spend at least $5 billion by 2030 and create at least 1,800 full-time jobs by 2035. Texas is providing an additional $30 million in incentives. The initial phase of the fab unit is estimated to cost $16.8 billion, although SpaceX had previously projected it to cost $55 billion.

The facility aims to build chips for data centers powered by SpaceX and its xAI subsidiary. The rise of AI data centers has led to an increase in proposals for new natural gas power plants, causing a 66% rise in costs for these plants. Major tech companies like Google, Meta, and Microsoft have also announced substantial projects in recent months.

Texas has been a hub for such "bring your own power" data centers, with more than 70 gigawatts of capacity planned. While these schemes aim to speed up project development and address concerns about rising electricity prices for consumers, natural gas turbines can emit significant amounts of pollution. SpaceX's xAI subsidiary has faced a lawsuit over its use of unpermitted natural gas turbines in one of the most polluted areas in the country.