SpaceX will build natural gas power plants and large battery systems to supply electricity for the chip factory it is developing with Tesla in Grimes County, Texas, according to comments at a public meeting reported by Bloomberg.
The companies are proceeding with the first phase of the Terafab project, which is projected to cost $16.8 billion. This phase will create 3,000 jobs and receive a $30 million Texas Enterprise Fund grant. To meet the significant and steady electricity needs of chip manufacturing, the developers plan to supply part of the power themselves.
Intel joined the project in April and is expected to provide chip design, fabrication, and packaging expertise.
SpaceX and Tesla’s Power Plan for the Texas Chip Factory
Riley Trettel, head of energy and data center development at SpaceX, stated that the companies will manage much of the project’s power needs internally.
“We’re bringing our own power,” Trettel said at the Grimes County meeting. “We’re going to be building natural gas-fired power plants, and we’re going to be building very large battery arrays in order to store energy.”
This decision addresses the high power demands of the semiconductor plant and aligns with Musk’s strategy of maintaining key supply chain elements within his companies. Tesla already manufactures Megapacks, utility-scale battery storage systems, and operates a Megapack factory west of Houston.
The factory will span 100 million square feet across several phases on approximately 3,000 acres. SpaceX controls over 13,000 acres in the area, providing space for the factory, power infrastructure, and future expansion.
Trettel indicated that work will begin promptly. “We are going to be moving nearly immediately to get going on the project,” he said. “We need to get our civil work started. We need to start to get foundations in place, and we’re going to get cracking.”
What the Texas Chip Factory Will Produce
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, CEO of both SpaceX and Tesla, has stated that the chip industry is not keeping pace with demand from his companies and the broader technology sector.
He has also expressed concerns about geopolitical risks in the semiconductor supply chain. Intel’s involvement since April brings established fabrication expertise to the project.
Why SpaceX and Tesla Are Building Their Own Power And What’s Still Unknown About the Factory
Growing demand from data centers and advanced factories has increased interest in new natural gas plants and battery storage across Texas and other major markets.
For SpaceX and Tesla, developing power assets alongside the factory may reduce reliance on external power sources as the Terafab project advances from site work to production.
For the broader chipmaking and energy sectors, this approach indicates several trends:
Large advanced factories are increasingly integrating on-site generation and storage during construction, rather than relying solely on the grid.
Vertical integration of power supply reduces exposure to external development schedules and grid limitations.
Combining natural gas generation with large battery arrays addresses the need for steady, high-volume electricity required for chip fabrication.
The developers have not disclosed the generation capacity of the planned natural gas plants or the size of the battery arrays. The complete timeline for all factory phases, total investment beyond the $16.8 billion first phase, and the production start date have not been specified.
It is also unclear how on-site generation will interact with the Texas grid or whether future phases will require additional power infrastructure.
