SpaceX will build natural gas power plants to supply electricity to a massive new computer chip factory it plans to build in Grimes County, Texas, about 45 miles northwest of downtown Houston, according to a Bloomberg report TechCrunch.

Riley Trettel, who leads energy and data center development for SpaceX, said in a public meeting that SpaceX will be "bringing our own power" for the project, which will also include "very large battery arrays" TechCrunch. The on-site power plant will use 41 gas turbines, each generating between 16.48 and 50 megawatts of electricity TechCrunch.

The factory, called Terafab, is planned as a 100-million-square-foot facility where SpaceX will make, package, and test advanced computer chips all in one place Reuters. SpaceX and Tesla will initially spend $16.8 billion on the plant, though SpaceX had previously estimated the cost at $55 billion Reuters. Texas Governor Greg Abbott announced the project as bringing more than $16.8 billion in investment and 3,000 jobs to the state Governor's Office.

Grimes County granted SpaceX a 100% tax break for Terafab in exchange for SpaceX spending at least $5 billion by 2030 and creating at least 1,800 full-time jobs by 2035 TechCrunch. The state of Texas is providing $30 million in incentives TechCrunch. The chips produced at Terafab are intended for data centers that will be operated by SpaceX and its xAI subsidiary TechCrunch.

The decision to generate its own power rather than rely on the local electricity grid places SpaceX within a broader trend. Texas has charted out more than 70 gigawatts of capacity for "bring your own power" data centers TechCrunch. Data center demand has already driven a 66% surge in natural gas power plant costs TechCrunch. Building its own gas turbines lets SpaceX avoid the long waits and capacity limits that come with connecting large facilities to the existing power grid.

The choice of natural gas over solar or other renewable sources is notable given SpaceX's close ties to Tesla, whose solar panels and battery products would seem like a natural fit. But a chip factory needs enormous amounts of electricity around the clock, with no interruptions. Solar and wind power depend on the weather, so they can help but cannot be the main source for a facility of this size. Natural gas turbines can run constantly and deliver power on demand, which makes them the practical choice.

The turbine plan also raises regulatory questions. SpaceX's xAI subsidiary has already run into trouble in Texas over gas turbines used for data center operations without the proper permits. In late July, reporting indicated that SpaceX would not remove all of xAI's unpermitted turbines for another year TechCrunch. That history raises the question of whether the Terafab power infrastructure will face a smoother permitting process or similar obstacles as it scales up to 41 turbines.

SpaceX has applied to list its Class A common stock on Nasdaq and on Nasdaq Texas under the ticker symbol "SPCX," according to prospectus documents filed with regulators SpaceX Prospectus. A public listing would give SpaceX access to stock market funding at a moment when it is committing to one of the largest chip manufacturing investments in recent memory.

The scale of Terafab is difficult to overstate. A 100-million-square-foot facility would rank among the largest single-building manufacturing complexes in any industry. Making, packaging, and testing chips all under one roof is an approach that leading chipmakers have adopted to speed up production and reduce defects caused by transporting chips between facilities. Whether SpaceX and Tesla can pull off chip manufacturing at this scale is an open question, given that neither company has prior experience running a commercial chip factory.

The power strategy may ultimately be the most repeatable part of the plan. If generating its own electricity works at Terafab's scale, it could become a model for other companies facing the same grid connection delays. The trade-off is emissions. Forty-one gas turbines running around the clock to feed a chip factory and its data centers will produce a substantial carbon footprint, and that will factor into any honest assessment of the project's environmental cost.