SpaceX and Tesla plan their own natural gas power plants for massive $16.8 billion Texas chip factory

SpaceX and Tesla are planning to construct natural gas power plants and extensive battery systems for their upcoming $16.8 billion Texas chip factory, known as the Terafab project. The companies have confirmed that the factory will be built in Grimes County, with the initial development expected to generate 3,000 jobs and receive a $30 million grant from the Texas Enterprise Fund.

Riley Trettel, who oversees energy and data center development for SpaceX, stated that the companies will meet much of the project's power requirements independently. They plan to build natural gas-fired power plants and large battery arrays to store energy. The decision highlights the power demands anticipated from the semiconductor plant, as chip factories consume significant amounts of steady electricity.

The factory will occupy 100 million square feet across multiple phases and will be constructed on approximately 3,000 acres, while SpaceX owns over 13,000 acres in the region.

Intel recently joined the project in April, providing expertise in chip design, fabrication, and packaging. The factory will produce two types of chips: one for Tesla electric vehicles and Optimus humanoid robots, and another designed for space applications. Elon Musk, the CEO of both SpaceX and Tesla, has expressed concern over the semiconductor industry's pace and geopolitical risks within the supply chain.

The energy strategy aligns with Musk's approach of maintaining key components of the supply chain within his companies. Tesla already manufactures Megapacks, utility-scale battery storage systems, and operates a Megapack factory west of Houston. As demand from data centers and advanced factories increases, interest in new natural gas plants and battery storage has risen across Texas and other significant markets.

For SpaceX and Tesla, developing power assets alongside the factory may reduce reliance on external power development as the Terafab project transitions from site work to production.