SpaceX announces plans to build natural gas power plants and battery storage for its $16.8 billion Texas chip factory

SpaceX isn’t waiting on the Texas grid to power its next big bet. At a public meeting in Grimes County on Wednesday, Riley Trettel, SpaceX’s director of energy and data center development, announced that the company plans to build its own natural gas-fired power plants and large-scale battery arrays to supply electricity to Terafab—the semiconductor manufacturing facility SpaceX and Tesla are developing together.

SpaceX and Tesla confirmed Thursday that the plant will be located in Grimes County, with an initial phase projected to cost $16.8 billion.

SpaceX to self-power Terafab with gas plants and batteries

The announcement came Wednesday at a Grimes County public meeting, where Trettel laid out SpaceX’s energy strategy in plain terms. “We’re bringing our own power,” he said. “We’re going to be building natural gas-fired power plants, and we’re going to be building very large battery arrays to store energy.” Gas generation paired with battery backup gives SpaceX direct control over electricity for a facility that’ll need enormous amounts of power around the clock.

The State of Texas is backing the project with a $30 million Texas Enterprise Fund grant, a program the state uses to attract large employers and capital investment.

Construction isn’t some distant plan. Trettel made clear the timeline is aggressive: “We are going to be moving nearly immediately to get going on the project. We need to get our civil work started. We need to start to get foundations in place, and we’re going to get cracking.” The first phase centers on civil engineering and laying foundations before the larger manufacturing infrastructure goes up.

Why SpaceX is generating its own electricity

If you follow how Musk runs his companies, building independent power infrastructure isn’t surprising. Vertical integration—owning as much of the supply chain as possible—has been a consistent operating philosophy across Tesla, SpaceX, and his other ventures. Handing the Texas grid responsibility for a facility this size would introduce exactly the kind of dependency that model is designed to avoid.

Timing adds its own pressure. Surging power demand from data centers and new industrial facilities has already strained grid infrastructure across the country, and new gas plants have become an increasingly common solution for large-scale projects that can’t wait years for utility-scale upgrades. SpaceX is following that same logic.

Musk has been vocal about the chip shortage problem, arguing that the semiconductor industry isn’t producing chips fast enough to meet demand from artificial intelligence, robotics, and space exploration. That urgency is part of what’s driving the pace here—power supply delays aren’t an option when the broader goal is getting chips faster.

Geopolitical risk is another factor Musk has cited. Building domestic semiconductor manufacturing capacity reduces dependence on overseas supply chains, particularly for chips critical to defense-adjacent applications like SpaceX’s space systems.

Scale of the Terafab project and expected economic impact

The numbers attached to Terafab are hard to fully absorb. The facility will cover 100 million square feet—roughly the size of a small city’s industrial district—spread across approximately 3,000 acres. SpaceX currently controls over 13,000 acres in the area, leaving significant room for future expansion.

Three thousand new jobs are expected. That’s a meaningful economic event for Grimes County, a largely rural area northwest of Houston. The State of Texas is backing the project with a $30 million Texas Enterprise Fund grant, a program the state uses to attract large employers and capital investment. The $16.8 billion figure applies to the initial phase only—total investment over the full buildout could be considerably larger, though no figures beyond the first phase have been confirmed.

What chips Terafab will produce and who is involved

Terafab isn’t a general-purpose semiconductor foundry. Musk has described plans for two specific categories of chips: one designed for Tesla’s Optimus humanoid robots and its electric vehicles, and another built for space applications—presumably for use in SpaceX’s satellite and launch systems. That dual focus reflects the facility’s core purpose: securing a dedicated chip supply for Musk’s own companies rather than competing in the broader commercial foundry market.

Intel joined the project in April. The company is expected to contribute expertise across chip design, fabrication, and packaging—three stages of semiconductor production that require highly specialized knowledge and equipment. Intel’s involvement adds real technical credibility to a project that, before its announcement, would’ve seemed unlikely for a rocket company and an automaker to pull off together.

SpaceX and Tesla’s existing footprint in the Texas energy market

Neither SpaceX nor Tesla is new to large-scale energy infrastructure in Texas. Tesla manufactures Megapack battery storage systems—utility-scale devices used by grid operators and large industrial customers—and operates a dedicated Megapack factory west of Houston. The company has previously connected large battery installations directly to the Texas grid.

That experience matters here. The battery arrays Trettel described for Terafab aren’t a novel concept for Tesla’s engineering teams—they’ve built and deployed systems like this before, just not for their own internal manufacturing use at anything close to this scale.

A $16.8 billion price tag

Terafab sits at the intersection of several converging trends: the push for domestic chip manufacturing, the energy demands of advanced industrial facilities, and Musk’s consistent preference for controlling critical infrastructure rather than outsourcing it. SpaceX will build its own natural gas power plants and battery storage to supply the facility. The initial phase carries a $16.8 billion price tag; Intel is involved, and construction is starting now. Whatever comes next, the project is already moving.

Kelly Lippke

Kelly is an experienced writer with 15 years of experience exploring the big stories that shape our world, from tech breakthroughs and space exploration to climate, energy, and the fascinating quirks of science. She has a talent for turning complex ideas into sharp, memorable insights that stay with readers long after they’ve finished reading.