SpaceX’s Terafab will rely on natural gas power plants, not Tesla solar panels

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SpaceX’s Terafab will rely on natural gas power plants, not Tesla solar panels Tim De Chant 7:07 AM PDT · August 7, 2026 SpaceX said this week that it will build natural gas power plants to supply electricity to the Terafab semiconductor factory it plans to build in Texas, according to a report from Bloomberg.

Riley Trettel, who leads energy and data center development for SpaceX, said in a public meeting on Wednesday that his company will be “bringing our own power” for the project, which will also include “very large battery arrays.”

Notably absent from the Bloomberg report — and other SpaceX announcements related to Terafab — is any mention of terrestrial solar power for the facility. Tesla, which is also a solar developer, is a partner in the project.

Despite his investments in solar power, SpaceX and Tesla’s CEO Elon Musk has bet heavily on natural gas lately. The xAI data centers in Memphis run almost exclusively on the fossil fuel . Musk also recently bought a company that specializes in natural gas power plants, and SpaceX has said it plans to buy $2.8 billion worth of gas turbines over the next three years.

Terafab will be built in Grimes County, which is about 45 miles northwest of downtown Houston. SpaceX, which recently went public in an IPO that raised $87.5 billion , received a 100% tax abatement from the county 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 initial phase of the fab unit is expected to cost $16.8 billion, though SpaceX had previously estimated it would cost $55 billion. The fab is intended to build chips for data centers that will be run by SpaceX and its xAI subsidiary.

The AI data center boom has driven a surge in proposals for new natural gas power plants across the industry, which has in turn driven up costs for natural gas power plants by 66%. Google, Meta, and Microsoft have all announced massive projects in recent months.

Texas has been ground zero for these “bring your own power” data centers, and more than 70 gigawatts of capacity has been charted out.

Such schemes are intended to speed up project development while addressing concerns about rising electricity prices for consumers, but natural gas turbines can release significant amounts of pollution. SpaceX subsidiary xAI has been sued over its use of unpermitted natural gas turbines in one of the most polluted parts of the country.

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Tim De Chant Senior Reporter, Climate

Tim De Chant is a senior climate reporter at TechCrunch. He has written for a wide range of publications, including Wired magazine, the Chicago Tribune, Ars Technica, The Wire China, and NOVA Next, where he was founding editor.

De Chant is also a lecturer in MIT’s Graduate Program in Science Writing, and he was awarded a Knight Science Journalism Fellowship at MIT in 2018, during which time he studied climate technologies and explored new business models for journalism. He received his PhD in environmental science, policy, and management from the University of California, Berkeley, and his BA degree in environmental studies, English, and biology from St. Olaf College.

You can contact or verify outreach from Tim by emailing tim.dechant@techcrunch.com .

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