• SpaceX plans a gas-fired power plant for its Texas chip facility, pivoting from solar-focused rhetoric.
  • Data centers in Tennessee and Mississippi already rely on gas turbines, with capacity targeting 10–15 GW by 2027.
  • The strategy prioritizes speed and off-grid reliability amid soaring AI electricity demand.

Gas-Powered AI: A Strategic Shift

Elon Musk is increasingly embracing natural gas to meet the colossal energy demands of SpaceX's AI ventures, marking a pragmatic departure from his earlier solar-centric vision. According to people familiar with the matter, SpaceX intends to build a gas-fired power plant to supply electricity to its $16.8 billion Texas Terafab chip facility, a cornerstone of its AI infrastructure. Meanwhile, its data centers in Tennessee and Mississippi are already humming with dozens of gas turbines, underscoring a rapid, off-grid approach to power.

Musk has publicly estimated that data-center capacity could reach 10–15 gigawatts by 2027, a scale that would arguably make SpaceX the largest operator in the U.S. The shift is fueled by the urgent need for reliable, dispatchable power to support AI training and inference workloads, which are notoriously energy-hungry.

Off-Grid Momentum

This move toward natural gas is a calculated response to the limitations of the grid and the slow pace of renewable integration. By deploying gas turbines on-site, SpaceX can bypass interconnection queues and regulatory hurdles, accelerating deployment timelines that are critical in the competitive AI race.

"The speed to power is the new bottleneck," said an industry analyst, requesting anonymity. "Natural gas offers a fast, cost-effective bridge until storage and grid upgrades catch up."

Environmentalists, however, are likely to raise concerns. Off-grid gas plants emit greenhouse gases, and local communities may push back on air quality and noise. While Musk has long championed solar power, his pivot to fossil fuels reflects the hard realities of current energy infrastructure.

Looking Ahead

SpaceX's energy strategy is set to expand, with the Texas plant expected to come online in phases starting next year. Long-term, Musk has hinted at integrating solar and storage technologies, and even space-based solar power, but for now, natural gas is the workhorse.

When reached for comment, SpaceX officials did not respond, and representatives for Tesla Energy declined to elaborate on Musk's broader energy plans.

Correction: An earlier version of this article misstated the location of the chip facility as California. The correct location is Texas.